This is What a Crash Looks Like
For the past month, I have been cautious on the market for one main reason: Too much distribution. Since I first mentioned it on this blog, the institutional selling has accelerated and the Nasdaq Composite has now seen 15 distribution days in the past 31 trading sessions (since 9/3/14). I am NOT saying a crash is coming, nor am I trying to scare people. I am simply saying that there are warnings signs in our current [...]
4 Things To Do During Downtrends
This article is mostly for traders who vary their investment levels. If you are a passive long-term investor who is fully invested at all times, just realize that there are sacrifices. In other words, you might ride things up or down longer than you expect. That's why it's important to define yourself and have conviction in your strategy. Right now, the market is going through a downtrend. Some people call it a correction, a Bear Market, [...]
Continued Caution is Warranted
In a Blog Post on September 22, I wrote: "If you are a trader, there is nothing wrong with raising some cash and waiting for more positive signs to appear." Since then, the market has continued to see distribution (professional selling). Last Thursday and Friday (10/2 and 10/3), the market bounced from an oversold condition and I wrote another post describing What The Bulls Need To See. Specifically, the Bulls needed the gains from Thursday/Friday [...]
What The Bulls Need To See
Today (10/2/14), the market sold off early but rallied back on strong volume. Here are my thoughts: 1) I like how the Russell 2000 $IWM undercut the low it made earlier this year (2/5/14) and outperformed today. The index has led us on the way down. Now, we need to see if it can lead us on the way up. 2) The Nasdaq Composite and S&P 500 retested the area they emerged from in August. In [...]
The Market’s Pattern The Past 2 Years
Here is a pattern I have noticed in the market about 10 times over the past 2 years: 1) The market goes on a 3-6 week run. 2) The run usually stalls when we get extended from the moving averages, bullishness increases (based on many sentiment measures), and active investment managers are aggressively long the market (based on the NAAIM survey). 3) Leaders start to break down, the market starts to correct down to (or [...]
Updated Thoughts on the Recent Price Action
I always try to keep an open mind when it comes to the stock market. I look at the positive and negative signs and adjust my investment levels accordingly. Unfortunately, I am seeing more negative signs right now and feel that some caution is warranted. NEGATIVES: 1) The number one sign I use to evaluate the health of the market is the price action of leading growth stocks. The recent selling in many leaders is [...]