Volatile Week Ends On Positive Note

Nick Perry (Schaeffer's Investment Research) submits: Last week, we saw a bounce back from 2 weeks of selling. This week, we once again see a slight skew to the upside:

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Without a doubt, the week was volatile but the graph above shows an upside bias. Roughly 75% of the funds on my list are higher with a number of funds gaining 4% or more. The PowerShares WilderHill Clean Energy (PBW) took the top slot followed closely by the SPDR Homebuilders (XHB). Other top-performing groups include realty, financials, small-caps, and utilities. Oil was the weakest area, followed by wireless, telecom, and silver.

I must admit that I was a bit surprised when I saw the graph above, I had expected to see a skew to the downside. The week did start on a strong note with a three-day rally but Thursday's sell-off felt brutal. The action today has been a mix of very weak to mildly strong - depending on what time you check the screen. One of the points I have been discussing in my blog is difference between how the action "feels" and how it "looks" on the chart. A quick pullback can feel nasty and leave you extremely nervous as you watch it play out, but looking at it on a chart can give you a different perspective.

In this case, the market has been very whippy, but stepping back and looking at the chart above shows that the week is poised to end on a mild up note. The question to ask yourself is this - if you weren't watching the market this week and only had the data above, would you have a different "feel" about it?

In other words, one of the reasons I like this sort of analysis is that if forces me to step back and objectively look at the action. The headlines are definitely weighed down with some disturbing issues on the credit front and I don't want to ignore that, but I think it is important to note that the many groups still managed a gain this week.

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Index performance this week

Index performance year to date

Charts: Google Finance