The markets opened strong and traded higher for the better part of the day, closing at the top of the day’s range, a very bullish sign indeed. Congratulations for those of you who have been in for most of this run that started back in January. In the Jan 9th edition of the Stock Market Watch I pointed out support levels the could provide a strong foothold for the SPY. This footage is archived under the Stock Market Watch link at www.stockmarketplan.com . The support trend line I drew then is now merging with the 50 day moving average. One thing still holds true though, volume patterns have been very noncooperative. I like to see the amount of shares traded increase as any market puts in a new advance. This tells me that the big money hedge funds are participating in a move and I want to ride their coat tails because they move markets in a great way but I have always said to myself to put price action before anything else when valuing a move.
In order for this market to be a long lasting bull though, I feel it needs to digest some gains and hold, especially as it surges on to higher ground. I have always noticed markets don’t just go straight up. So for those who still have a large position in cash like me, you will get your chance to average down in to stocks as this market tests former resistance levels that can and hopefully will become support. I think the 10 day moving average at 137.48 and the 50 day moving average at 134.21 will be the first true tests that the SPY will see. The last thing I want to do now is go chasing this price move with two hands. The market will retest and that will be my opportunity to load up again. Until then, I remain patient as I follow my discipline.
I am now waiting for the spy to pull back to the ten day moving average and at that point i will probably start averaging back into equities. I did this in a small way back on 03/06/12, buying a light 15 percent stake in SPY making my stock allocation a 15 % total and the rest in cash.
Thank you for visiting, good luck, and I welcome all comments.
The Canadian manufacturer of blackberry handheld devices has really been battered by the competition in a very strong group. Revenues have really taken a beating in the last five quarters and show no sign of stabilization.
I often talk about how easy it is to spot weakness in a given sector or industry group. The telecommunications — consumer products group has been one of the top performing spaces in the market for the better part of a year and a half to two years. So I ask you, what is RIMMs problem and more importantly can they survive?
I can tell you this. Don’t be surprised to hear lots of news coming from this company as they exhaust all options in trying to find a buyer. The rubber is finally meeting the road and the street has taken notice. Look for major moves from the board. I think unless the company takes some off-the-wall measures, it will be very hard to save it.
Consolidation patterns continue for the overall market indices today as the volume also quieted down.
Volatility in the stock market is starting to slow. Market consolidations can be very healthy for the market and new leadership can arise.
I now anxiously await for a confirmation day. A confirmation day is simply a session where the overall averages climb well in excess of 2% on very high relative volume. Until then my position remains cash with no exposure to US stock market.
Stock market fakes continue. Just when I thought the S & P was showing signs of new life, it gave up gains, forcing me back to cash. The value is in the small stake that I took versus conventional wisdom of loading up on stocks on the first signs of a rally. I always give myself a chance to be wrong. This market is still in bear mode and it is making it very difficult for stock investors to have an edge. There is no edge out there right now.
New trend lines show that the S&P 500 is trying to muster the initial stages of a short rally.
I say a short rally because the volume levels that are desired for long bull runs are still lacking.
However, when I look at the price advances in the spiders trust (SPY), it is hard not to start applying funds to this market. I’m not totally convinced that this short rally will last but feel compelled to allocate at least 25% of my retirement holdings back into stocks. The wonderful thing about being in cash for the recent drop in August is that I can now afford to get my toes back into this market with a small 25% stake and as the market shows a better hand, slowly add to the position. This is a good spot to be in because now one can give the markets a small chance to be right and not have fear of losing too much if it is just a small bounce.
The last six sessions the S&P 500 has mustered a bounce but one characteristic still remains present. Volume, or should I say lack thereof, in the market as it keeps wedging up on the charts. This pattern has repeated itself at least twice since I started coverage on the S&P. It is so obvious. Big institutional managers are just not getting involved like I will like to see has been extremely volatile the last few days. Traders love this kind of market but for long-term investors who I talk to, it can be a very serious and emotional roller coaster. I have when markets bounce. The intraday action on the S&P, Dow Jones industrial average, and NASDAQ saved a lot of money the last month by not having any of my retirement funds in stock. I am guessing to the tone of 15 to 20%. I keep telling myself that now is not the time to be playing superhero with my retirement funds. I keep reminding myself that just because prices are cheap, it doesn’t mean that they cannot get cheaper. The overall market breath is lousy and until it improves, I don’t see myself getting back into stock type investments anytime soon.
The markets took a tumble and never looked back today. The selling was large and ugly. In this video I look at the S&P spiders again. Symbol SPY.
I have talked at length here about my concerns in regards to the poor volume patterns that the spiders have shown over the last three months or so. Many have been dogging the us dollar as of late and this is warranted. However, I was again impressed how investors flock to the green back when things go horribly wrong. The dollar is still the king of safety for stock investors, individual and professionals.
The S&P 500 is now stuck in a trading range between 1300 and 1265. I am now looking for the market to push through and close above that 1300 resistance level before establishing any new positions . Again I am paying close attention to volume as it has been dismal these last couple of days. I have been allocated in cash for most of the past month and that has worked out well as the market finds itself in and out of mini bounces and corrections. Any close below the 200 day moving average will not be a good sign for the bulls. As you know, I have been calling this level, the last line of defense.