The market distribution of stocks intensified on Wednesday as presidential comments and fed comments could do nothing to stop the slide of stocks into a deeper sell off on higher volume.
Since the election results, the markets are down over 5 percent. As far as the speculation of whether Obama is or isn’t the reason for the selloff, I will leave that discussion for the talking heads from both sides of the Isle. One thing is clear though. With This type of added selling, the investing community is showing overall continued discontent in the political process and the ability of our elected officials to drum up an alternative solution to the many fiscal problems facing the United States.
As we have maneuvered through this latest correction here on Stock Market Plan by keeping limited exposure to stocks. This has been proven to be a better strategy. The market will show its hand when it is ready to level off to go higher. Those signs have not shown up yet.

Political events in the US and abroad took markets into a deeper sell off Wednesday. One can say that it was because of the election of President Obama or the continued protests in Greece. Regardless of reason, this round of selling should not be of any surprise as we have treaded lightly here at Stock Market Plan by keeping stock allocations slim to none.
Technical indicators have recently pointed out that initiating new positions would proof a riskier decision.
I did not predict anything. I just managed the risk. Stops that were in place should have been either triggered or close to it.
The 200 day moving avg is the new line in the sand now and I am looking to that level to provide support for the SPY.
Any close below this level will be even more bearish in my view.

Stocks managed to eke out a gain on Monday after Last Fridays’ sell off. The gains came with dismal activity from traders. It looks like the money is waiting on the election results Tuesday.
The SPY has showed that it wants to hang out at this level. It is building a base which is constructive and always a welcomed pattern to the early stages of any potential new rally.
With that said, the SPY is still stuck under the all-important 50 day moving avg. The longer we trade below that avg., it will remain difficult for the market to break out into new high ground. It is still a very tough market for individual stock investors.

In regards to when to get back in this market, one can see that patience has been beneficial as stocks in general keep struggling.
Stocks opened up descent on Friday but as I am always quick to point out, it is not how the markets opens that is important to me but more what the market looks like at 4 pm EST. Well, it looked awful as it shed most if not all of Thursday’s gains.
A load of economic data was announced Friday. Although the payroll numbers looked better at the surface, investors could care less as they let the ongoing selling pressure speak on their behalf.
I don’t try to pay as much attention to the data but more to the reaction of investors. In other words, what is the money thinking?
Higher closes on higher volume is what I am looking for now. This will lead to a confirmation that the market is catching a bid again from market movers like mutual funds.
Patience is key.

Stocks continued their downward spiral Wednesday as the number of shares traded increased across the board.

I mentioned on Tuesday’s Stock Market Watch, the SPY would reach the 50 day Moving avg., I just didn’t think it would happen the next day.

The 50 day avg is definitely a line in the sand now and I will be looking to it to provide support for the SPY. Any closes below this level will be very negative in my view.

Establishing new positions is not in the cards right now and protecting profits is key. Don’t let your winners become losers by too many percentage points.

The overall market came under pressure on Tuesday as it digested a gloomy outlook from the IMF. The IMF announced that they see a slower than expected slow down in global economic growth.

The banking sector was also battered across the board when news came out that Wells Fargo Bank is getting sued by the U.S. Government for writing dangerous mortgages during the housing boom, IMAGINE THAT!! REALLY?

The market has been in bull mode and still is. It is just taking a breather from some very hefty lifts that it has had since June. Strong stocks should still be holding above critical levels and for now the market is still trading above key support levels.

Good Luck,

Marvin