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Market stalled but didn't reverse

 There was a lot of confusion in the markets last week but the confusion was uncertainty not bad news.   Investors like to make decisions and projections based on solid assumptions not seat of the pants data.  Step back and look at our 3 yardsticks to objectively analyze the market action.  We stalled, we didn't reverse.

We will use Barchart as alway to get our data.

Value Line Index -- Contains 1700 stocks so it represents the broader market much better than the S&P 500 or very narrow Dow 30 --  Stalled, not reversed

  • 48% Barchart technical buy signal
  • Trend Spotter (tm) buy signal
  • Off 2.03% for the week
  • Still up 3.15% for the last month
  • Only off 2.38% from its recent high
  • Closed Friday at 2653.75 which is 12.75% above its 50 day moving average of 2539.94
  • Relative Strength Index 57.35% but falling
Barchart Market Momentum -- Contains approximately 6000 stocks -- Percentage of stocks closing above their Daily Moving Averages for various time periods -- Above 50% is always good
  • Friday 51.89% closed above their 20 DMA, 70.46% closed above their 50 DMA, 79.40% closed above their 100 DMA
  • Last Week 78.38% closed above their 20 DMA, 83.61% closed above their 50 DMA, 87.23% closed above their 100 DMA
  • Last Month 75.55% closed above their 20 DMA, 83.24% closed above their 50 DMA, 83.24% closed above their 100 DMA
Ratio of stocks hitting new highs/new lows for various time periods -- 1.0+ bullish, 1.0 neutral, under .99 bearish -- Slight short term bearish signal
  • 1 month new highs/new lows -- 272/454 = .60
  • 3 month new highs/new lows -- 219/96 = 2.28
  • 6 month new highs/new lows -- 142/62 = 2.29
Summary and Investment Strategy --  I'm cautious but not in panic.  The upward momentum has stopped but not reversed.  I'll make my decisions one stock at a time and prune those that have reversed but not replace till I see some market recovery.

Jim Van Meerten is an advisor to Marketocracy Capital Managementwho uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or emailJimVanMeerten@gmail.com.

 


Disclosure: No specific stocks mentioned