Broad Market Internals, May 2, 2014  
Volume in Apr failed to match the improving trend in Q1 overall down only modestly on Mar, but with activity especially soft on the rebound in the second half of the month. Best readings were in Internet, Biotech (again), Medical Equip & Supplies, Specialized Cons Svcs, Pharma, and Travel & Leisure.

Separately breadth deteriorated further after starting to lag mid Mar, having previously been firm earlier in the year in contrast to the LT lagging trend. 52wk highs early Apr were little more than 1/2 of the 2m record set early Mar that amounted to around 2/3rds of mid May +2.5yr record, before ending the month near negligible with the best concentrations currently in Integrated Oil & Gas, Pipelines (again), and Gas Dist. Conversely 52wk lows are building just shy of the early Feb 15m record and concentrated in Internet.

Short term indicators - measuring the percentage of stocks above their 10-day moving average - ended last week in neutral territory after the previous week falling just shy of extreme oversold levels that reliably trigger ST downside reversals. However, the 25-day indicator - which has recently done a better job of describing ST action - is also neutral but heading in the other direction having hit extreme oversold levels mid Apr.

At the same time the intermediate 50-day moving average is now mildly oversold, while the LT 200-day indicator is skirting with neutral territory, attesting to alarmingly narrow stock level leadership. Combined with increasingly weak 52wk highs the conclusion remains that the market is vulnerable to a correction of some magnitude.



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Broad Market Internals, April 4, 2014 
Volume in Mar was somewhat up on last year’s tally when Easter nevertheless fell in that month hampering comparisons. Even so volume appears to be picking up from depressed levels through Jan, with the best readings last month in Environmental and Fixed Line (both again), Biotech, Media, and IT Svcs.

At the same time breadth has started to deteriorate through mid Mar after previously having been marginally firmer since New Year, in contrast to the LT lagging trend. At the best levels at the start of Mar, 2m record 52wk highs amounted to around 2/3rds of mid May +2.5yr record before being cut to negligible levels by the end of last week, with the best concentrations currently in Electricity, Pipelines, and Water.

Short term indicators - measuring the percentage of stocks above their 10-day moving average - are mildly oversold seemingly rolling over after last Wed falling just shy of extreme overbought levels that typically trigger a downside reversal.

At the same time the intermediate 50-day moving average is mildly overbought, after at the early Mar highs barely making it into highly overbought territory consistent with the downtrend in peaks through last summer. Similarly the LT 200-day indicator is mildly overbought with a downtrend in peaks also having formed through last summer, attesting to generally narrowing stock level leadership as well as setting up important non-confirmations of subsequent index highs. Along with the failure of 52wk highs to expand with new index highs these factors set up the preconditions for tops of some importance in the market.



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Sector Rotation Model Portfolio, as at Februay 28, 2014  


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Broad Market Internals, at beginning of March 2014  
Volume remains very light but the tally for Feb was fractionally higher compared to last year indicating no further deterioration. Best areas were Fixed Line, Food & Beverage, Environmental, Autos & Parts, and Leisure Goods.

Breadth has been marginally better since the beginning of the year, in contrast to the LT lagging trend most recently generally in evidence since last summer. At the best levels mid Feb 52wk highs were around 2/5ths of the mid Oct 3yr record before deteriorating mildly in subsequent weeks, with the best concentrations currently in Infrastructure, Oil Equip & Svcs, Gas Dist (again), and Media.

Short term indicators - measuring the percentage of stocks above their 10-day moving average - are in just mildly overbought territory having hit extreme levels midmonth, but a move in either direction is possible in the current position.

At the same time the intermediate 50-day moving average is also mildly overbought, but a downtrend in peak levels associated with intermediate market tops since late summer suggests the market is entering an area where a tradable top could occur. Furthermore the LT 200-day indicator has settled into a clear downtrend since setting a 2yr record mid Jul, which along with the weak 52wk highs readings not only sets up significant non-confirmations potentially associated with market tops of some importance, but also more mundanely attests to a significant narrowing in stock level leadership.



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Sector Rotation Model Portfolio, as at Februay 7, 2014 


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