Pros and Cons of the SP500

Pros:

  • The market gapped higher, sold off and then closed at the highs of the day on heavy volume.  1.5billion shares on the NYSE and 2.3 billion on the Nasdaq.
  • Short term momentum indicator breadth thrust is now bullish.
  • IBD current outlook is back to confirmed uptrend.
  • The market shrugged off some bad economic news, it continues to climb a wall of worry.
  • 1st day of the month phenomenon might be at work today along with 401k money coming into the market.

Cons:

  • Index put to call ratio closed below 100%  for the second day in a row, according to Helene Meisler 5 of the last 6 sub readings have resulted in a market pullback in the days ahead.
  • This market has been more of a mean reversion market.  The minute it looks like we are going to breakdown we end up having a V shape rally, and when we get the breadth thrust (confirm uptrend status) to the upside the market tends to peter out.
  • We are now up 4 days in a row, so a pause/pullback is expected here.
  • It is possible that yesterday was front running of the 1st day phenomenon.
  • McClellean Oscillator closed at +161, readings of +200 is considered an overbought reading, so we are close.
  • VIX is back to support levels that has given the market problems this year.

We also have some market moving data this week, mainly the job numbers.

The bottom line is, I am looking to take any stock that breaks-out from my watchlist.  Like always, I will allow my watchlist  get me in or keep me out of the market.  I will let the market guide my thoughts and actions not the other way around.

Watchlist: GPRO, WAT, CHRW, FTNT, LNG, DK, ROVI, CRUS, IPGP, SONC, QTWW, DK, BODY, FEIC, BBRG, KNXA, AZPN

First Day of the month phenomenon


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


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