Archive for July, 2010|Monthly archive page
We can’t ignore the bull as price-action treads evenly with major moving averages.
A modest sell-off at the S&P 500’s 200-day average has collected one distribution day, which while a concern to bulls, won’t mean much unless more follow.
With semiconductors (SMH) and finance (XLF) convincingly above their 50-day and 200-day averages, the broader picture clearly suggests significant strength.
Though unless retail (RTH) can follow suit, it will threaten the sustainability of this four-week long rally off lows.
More heavy selling adds to an overall directionless trend.
Mixed messages continue to prevent us from taking a strong directional bias. We want to let the market take its own course and be ready to strike accordingly.
As long as the major indexes stay below their 50-day moving averages we won’t likely become Bulls. In fact, we’ve nibbled on some shorts for this very reason.
Wednesday’s Distribution also weighs in more than Tuesday’s Accumulation.
Though as Growth Stock buyers we our aware that a Follow Through Day marking a potential low in the market may ultimately win out. It’s simply too early to tell.
Higher buy-volume gives the Bull a vote of confidence, but chartwise we’re still in “no man’s land.”
With the 50-day moving averages still serving as resistance for the Dow, S&P 500 and Nasdaq, there’s much to prove before taking a bullish bias.
The same can be said for the majority of stocks out there.
Lack of conviction in either direction is also evident in the high/low counts, with the NYSE posting a dominance of 188 highs to 69 lows, and the Nasdaq showing a different scenario with 27 highs to 69 lows.
As mentioned in the weekly Growth Stock Report for subscribers, sometimes the best thing to do is simply nothing. Eventually we’ll get our break one way or another.
Major indexes are seeing some whip-saw at their 50-day moving averages. No surprise here.
Thursday marked the second day of Accumulation this week, suggesting heavy buyers are on the prowl. A better test of volume will come on a down day, where we’ll look to see if sellers have lost their conviction.
The bullish cause is clearly being endorsed with semiconductors (SMH), retail (RTH) and finance (XLF) all above their 50-day moving averages. How long this will remain ultimately means everything for the dominant direction of the market.
We also have a number of quality stocks holding high ground, though nothing truly stellar, but again, it’s summer, a time when sideways price action has been known to set a tone.
More on individual stocks in our report for subscribers.
This month’s rally had a little more fluff added to it Monday.
Nothing wrong with fluff unless you begin to read too much into it.
With an official Follow Through Day in the books for the S&P 500 and Nasdaq we’ve upped our bias to Buyer’s Caution.
But the bias is meaningless with nothing worth buying at this juncture.
If the rally is for real we’ll have plenty of time to seize opportunities. In a way, breakout growth stock buying is like farming – the crops will produce what they will, there’s little we can do to force it.
Subscribers will have a new report on stocks we’re watching posted soon.
It’s time for the bottom pickers to start chiming in after a late-day rally put the breaks on heavy selling.
While it’s true that smart money often closes the day, it’s also true that bear markets are prone to sharp counter rallies.
We’re still bearish, still short.
In order for us to consider changing our view we’d need to see what kind of buyers might step in over the next week.
But before getting ahead of ourselves, let’s just watch and see what kind of reaction we get from Friday’s employment data.
- Any rally on negative news would be taken as a positive.
- Any rally on positive news would be considered with caution.
- Any selling on positive news would be confirmation of the bear, as would any selling on negative news.