Miscellaneous Market Thoughts

ilene's picture

Miscellaneous Market Thoughts

So which way is the market going?

We tried to figure that out in Stock World Weekly (Technically Speaking), and are following up by visiting with Allan Trends, Lee Adler, Pharmboy of Phil's Stock World and Mark of Market Montage. ~ Ilene 

In Stock World Weekly we noted that most of the stock market indexes rallied higher last week and our insurance contracts didn’t pay off. However, our thoughts on the importance of downside protection stayed the same - we're keeping the downside hedges. 

Also skeptical, Mark Hanna of Market Montage summed up his observations of trading last Friday as follows: “Like I said earlier – interesting week. We are selling off here late in the day which has been the case four of the five days this week – the exception being the “rip your face off” rally Tuesday... Excluding Tuesday, much of the intraday action during normal hours has been down. Most of the gains have been in premarket...   

“So unless you are holding overnight and flipping positions into the morning, it’s a tough short term environment for longs. More strategically this is the complete opposite of January-February and parts of first half of March where we had morning weakness which would get bought aggressively and almost always close on or near the highs... This is the opposite.

“I will note Apple is again acting terrible and just sniffed its 50 day moving average...” (Ending Prices Not Showing the Tale.) 

In Rough Ride, Boxy Styling, Poor Suspension, Mark wrote, “...We are stuck in a ‘box’ of 1370ish to 1390ish… but within that box, the volatility is tremendous, and chopping people to bits.

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Screen Shot 2012-04-23 at 7.02.04 PM

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Each time you get the near the top of the box, the bulls position for a ‘breakout’ whereas each time you get near the bottom of the box the bears position for a ‘breakdown.’ The only consistent is Lucy, who is snatching away the ball from both teams..."

[Mark’s disclaimer notice: Disclosure NoticeAny securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog.]

Allan of Allan Trends shared his weekend update for subscribers. Reviewing his table of stock prices and signals, and many individual charts, he concluded that the single dominant trend in the market, right now, is DOWN.

Here are some of his charts:

INDU-SPX-Daily

Nasdaq-VXX-Daily

GLD-SLV-Daily

Allan surmised, today, "We are heading into a very weak seasonal period (“Sell in May and Go Away”) while most of the Trend Models, indices, commodities and individual stocks are in Short mode. Frustrating as it may be on a day-to-day basis, the market turned down via our trends two weeks ago (April 9th)... There are only two meaningful prices in a trend: Entry & Exit. Whatever happens in-between those two points is noise."

[*For a risk-free trial, click here for Allan’s standard service; or here for his premium service. The premium is for more active traders. For more information, see “Can you trade a chart like this?”]

Phil of Phil's Stock World agreed with Allan's overall negative assessment, "Now that options expirations are over, we are back to the cold, harsh reality of the last week of April and things have certainly NOT improved over the weekend. Our biggest fear in getting too bearish is Central Bank intervention but any weekend (like this one) where it doesn't happen – realizes the biggest fear for the bulls because without a constant flow of MORE FREE MONEY – what is their premise?  

"This weekend, in Member Chat, we discussed On Balance Volume and how that indicator was cutting through the crap and giving us a very clear sell signal on the S&P.  As you can see from StJeanLuc's SPY chart and, as we discussed last week, the minor bounce in the S&P and other indices is only masking continued deterioration of the OBV indicator – giving us a clear signal of real internal market weakness." 

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SPY OBV 4-20-2012 (2)

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For Lee Adler of the Wall Street Examiner's latest thoughts, check out the free podcast: Government and Wall Street Manipulation- Paranoia or Reality?  Russ Winter and Lee discuss how government and Wall Street, through clandestine operators and the media propaganda machine, manipulate investors and the public. Click here to listen. (To learn more about Lee's Podcasts, click here.)

Pharmboy likes buying into the weakness, and had some long trade ideas for stocks in his biotech world, including OPK, VRTX and IMGN.

We concluded the newsletter, "The activity of the last week has NOT improved our outlook. More downward movement wouldn’t be surprising, though not necessarily in a straight line. There are still many negatives overhanging the markets, and very few positives factors...

"The situation in Europe is worse than what the Main Stream Media seems to understand. Inflation is increasing, regardless of Mr. Bernanke's delusions. Many of the technical and econometric factors we follow are turning negative, including signals from rail shipment and transoceanic transport indexes..."

The question now is whether we will see continued weakness, giving Pharmboy better opportunities, and confirming Phil's indicators and Allan's trending signals, or whether the usual optimistic trade of buying the dips will be right once again?