Do I hear a stall warning?
The market is giving some mixed signals. How can you weed through them all?
The market is right in that stall-warning place now, and you have to make your decision:
- False alarm; buy more on the dip.
- Tighten stop losses and ride it out.
- The market is in a true stall, and it's time top go short.
Value Line Index contains 1,700 stocks, so it's broader than the S&P 500 or Dow 30 a lot of others use. Not as strong as last week but still no sign of panic
- The Index was up 3 days and down 2 days for a net loss of 0.82% for the week.
- The Index is still closed above its 20, 50 and 100 day moving average.
- Nine of the 13 Barchart technical indicators give buy signals -- that's fewer than last week but still a 20% short term buy and a 56% overall buy rating.
Barchart market momentum -- approximately 6,000 stocks -- the percentage of stock trading above their daily moving average for various time frames -- still good but weakening on the short term.
- 20 DMA -- 66.84% are trading above the DMA
- 50 DMA -- 78.96% are trading above the DMA
- 100DMA -- 82.97% are trading above the DMA
Ratio of stocks hitting new highs to stock hitting new lows for various periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- Still more new highs than new lows but weakening
- 20 day new high/new low ratio -- 872/569 = 1.53
- 50 day new high/new low ratio -- 545/75 = 7.27
- 100 day new high/new low ratio -- 423/52 = 8.13
Summary and my investing strategy for the upcoming week: The market is strong but not as strong as it was last week. This week I will make sure I have all my stop losses were I feel comfortable. I will not replace any till I see what the market does each day.
I'm not ready to go short, but I do heed the warning signs. In order for me to present a "fair and unbalanced view" -- to paraphrase Fox -- I'd like to share an article by Michael Shulman: Shorting the Double Dip. He's one of the smartest guys I know, and although I don't agree with him 100%, he's that little horn on the wing giving out an early warning I'm not getting from the other instruments on my dashboard.
Over on Wall Street Survivor the contributors to Top Stocks that recommend stock still have that little friendly competition with our model portfolios. The S&P was up 0.42% month to date, but our leader so far this month, Anthony Mirhaydari, has a nice gain of 8.24%. I'm down in the No. 4 spot with a gain of 3.33% so far this month.
Disclosure: I do not hold positions in any of the stocks in my Wall Street Survivor portfolio.
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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