The good news is that we came off a nasty morning drop to rally back to near even, but the bad news is we gave half of it back before the close. While it is extremely premature to declare the recently confirmed uptrend over, it is also a bit bearish that we failed to reached the previous high before getting the first pullback. Volume was quite low, so the damage was minimized. All in all, today looks like it might have been a very good buying opportunity.
The Nasdaq had a near identical day, and in fact finished at exactly the same percentage down as the SPX. That shouldn't be surprising, since price relative has been going sideways for a couple of weeks now.
The Dow industrials are also trending a bit sideways in price relative, which may be a good sign since these tend to lead in times of market weakness.So far it suggests we may be range bound for a while, and the double top this just established strongly hints at that. We are now getting deeply into the big money vacation time, so low volume will most likely be with us until after Labor Day.
Well, this isn't good. The price relative on the Russell 2000 is dropping and is now lower than where it was at the previous low, depite the fact that price is substantially higher. The Russell is really lagging now, and that is almost always very bad sign (although when it lagged in 2006-2007, it was nearly a year before the market finally rolled over, so this is not a sign of immediate doom).
I am not a financial professional, just a guy that trades my own account.
I am also not a musical professional, just a guy that makes music on the computer. Thus, two blogs, one trading and on musical.
And, no, the picture is not me, it is the late, great John Belushi, one of the inspirations for these blogs.
This blog is focused on technical analysis of stocks and markets, putting heavy emphasis on chart analysis. My trading style is derived primarily from my mentor, William "Yoda" O'Neil, and the focus here is on leading and breakout stocks, but all forms of trading are covered to some extent. Economic and political news that effects the market are also topics here, and the blog may occasionally become a platform for my political and philosophical ranting. I keep several spreadsheets on Google docs which track various aspects of the market and readers are welcome to vies and comment on them.
Google Docs Spreadsheets
There are several spreadsheet that I maintain on Google docs to track various watchlists and trends in the market.
1. The earnings list - a group of small and micro cap, low float stocks that have exhibited recent rapid earnings growth. They are modeled along the lines of William O'Neil's CAN SLIM system, but limited to small cap, highly volatile stocks.
2. The relative strength list - a group of stocks which are near 52 week highs and have shown an increase in average daily volume. The list is limited to the top 200 stocks according to my methodology, which will be detailed on one of the pages of the spreadsheet.
It can be accessed here, and is also updates weekly.
3. Relative strength by industry - Uses industry data from Finviz.com to track the percentage of stocks within each industry that are in the top 25% of the 52 week price range, looking for trends.