Modest Distribution on the S&P 500 and Dow is playing into our Buyer’s Caution bias.
We’re taking a recent boost in volume coupled with mostly sideways action as a sign that the rally is finding it harder to continue.
This type of grinding often sets the stage for a pullback, where we’ll gauge its potential of being subtle vs. a more significant correction.
We’re very eager to buy some of the hotter Growth Stocks out there at more reasonable prices. The market has been extended for some time now, testing the patience of wanting buyers like ourselves.
An uptick in volume over the last two weeks coupled with stagnant price action tells us this rally has cooled.
We’re sticking with a Buyer’s Caution bias, though will turn it to Sell if we see some Distribution Days notched in.
Distribution, where volume exceeds the previous day and accompanies a price drop, gives us indication that institutions may be unloading. And that’s something we don’t want to be on the other side of given the institutions dominance in moving the market.
The major indexes all experienced heavy selling Tuesday, putting the 50-day moving averages in play as support.
Bears have been waiting a long time for a significant correction. The fact that the day marked Distribution, where volume outpaced yesterday’s, suggests institutions are taking cover.
We’re going with a Yellow Flag Buyer’s Caution bias in light of this selling. We want to pay close attention now to how recent leadership holds up to better guage the prospects of this being a mild pullback or something more significant.
Market players everywhere are waiting for a pullback or correction.
Yes, the market has its way of screwing over the most amount of people as possible. Given the high short interest out there we can’t be surprised to see Bears tested as the major indexes continue to ring new highs.
We’re in the camp that believes recent high volume with lack of significant follow through, or grinding, is enough warning to lay low.
Like a tiger in the jungle, we only want to pounce when we know we’ll get our prey. That’s why we’ll wait as long as it takes to get a broad market pullback, ideally setting us up for long entries in the plethora of recent Growth Stock breakouts.
Heavy selling from banks threatens the broader market pullback.
For the second day in a row financial stocks (XLF) fall below major moving averages. Without the support of this key sector the rally is suspect.
Meanwhile, breakouts from select growth stocks hold up in support of the Bull.
Another seller dominated day gives the Naz its second day of Distribution in a row, while the Dow and S&P drift.
We’re not shifting from our Buy bias just yet. In fact, we’d like to see a gentle broad market pullback give us some better opportunities to scoop up select Growth Stocks that broke out recently.
Any further Distribution, where volume on a down day out numbers the previous day, will make us cautious.
Another concern is the semiconductors (SMH), which have yet to conquer its key 200-day moving average to the upside, and drags heavily on the Bull for its historical tendency to trade closely with the market’s longer term direction.
Our fine rally has hit a round of heavy selling – though nothing to get to excited over, yet.
Seller domination in Tuesday’s action ended with the S&P 500 and Nasdaq posting their first days of Distribution in weeks.
This institutional grade unloading of shares suggests the big boys took some profits.
We want to see the selling dry up to maintain our Bullish bias. More distribution will put us back on defense.
As for Growth Stock breakouts, we haven’t seen it this good in a long time. Ideally, we’ll get a nice pullback to buy in at better prices. Subscribers to our report will get a better fix on this.
Last week’s Follow Through Day, suggesting institutions are on board with a bullish leg in stocks, has been working thus far.
As up-volume outpaces down-volume over the past several weeks we’ve had the confirmation of a number of new highs from our top-ranked and beloved Growth Stocks.
We’re holding our Buyer’s Edge bias until Distribution, or institutional grade selling, shows up.
The S&P 500’s testing of just above its 200-day moving average might pose just the location for some type of pullback to take place.
The key sectors of Financials (XLF), Semiconductors (SMH) and Retail (RTH) all remain below their 200-day moving averages, giving us further indication we’re hardly out of the woods.
September is also notorious for corrections, so hold on.
A round of accumulation for the major indexes goes well for our Bullish bias.
We have no reason to alter our position as the Dow, S&P 500, Nasdaq and Russell 2000 all hold ground above their 50-day moving averages.
New Highs from top-rated Growth Stocks are further confirmation: APKT, ARMH, BAP, HMIN, NFLX, OPEN and PCLN.
These stocks, along with a new crop of potential breakout candidates, were listed in our report for subscribers. This Leadership is important to watch as an indicator for the potential of others.
The game is simple. We go with what we got, ignoring what “should be” or whatever emotion may strike us for the day.
Any indication of the Bear coming back, we get out. Let the winners run and cut the losers quick. Gain a dollar, lose a quarter.