I expected a bad day today after the sad news last night of the demise of the most certifiably looney national leader in the world, Kim Jong Il. Sure, we still have Hugo Chavez, and that clown in Iran, but they couldn't hold a candle to Mr. Kim. Now we are in danger of having a sane and rational government in North Korea. The market responded at first with a small up move at the open, but that was erased in short order, and it was downhill from there. Volume is coming down to holiday levels, as anyone who is still sane on Wall Street is taking the week off, but that did not stop the carnage. CMF is now down near the level it was at the bottom of the summer mini crash, which means it has a really good chance of reversing soon. Other than that the chart has nothing going for it, and is decisively below 1215, the 50% retracement of the last move up. Especially considering this is normally a time of seasonal strength (even in 2008 in the midst of the worst market panic since 1929 we had a Santa Claus rally), you have to conclude that the market is in a lot of trouble.
The Nasdaq has, at least temporarily, stopped under performing, but that is probably a temporary situation. TYhe trend in price relative is down, and this is quite a bit weaker, in terms of position within the trading range, than the SPX. Volume is also a little higher on a relative basis. Remember that stupendous October we had? We just gave back half of it.
The price relative on the DOw industrials keep mioving up, and that is not good news. The best you can say here is that this will drop less than the rest of the market. If you have a billion dollar mutual fund and have to stay invested, you put it here. If you have a few bucks like me, you stay away from this.
The Russell 2000 continues to hold up well on a relative basis, and the price relative line is still in a mild up trend. CMF on the tracking ETF IWM is relatively higher, which may be significant in that there is less selling pressure here. It is still in the upper half of it's trading range, but did break the simple 50dma today. This is a potentially bullish sign, but not enough to bet on. One reason for it's relative strength may be the same reason for it's big cap brethrens' weakness - No QE3. The small caps are hurt, not helped, bu a declining dollar, and with dollar strength lately there may be a thesis out there that these will do much better.
KiM Jong Il stole the show in one of the funniest movies of all time, "Team America: World Police". Here is a "best of" clip:
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.