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Treading Water February 16, 2013

Posted by Tom in Thoughts.
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Good Day to all.  After 2 weeks on the road (have laptop – will travel) I’m finally back in the office and trying to catch up on a wide variety of things.  I’ll try to put some additional content in the blog over the next few weeks to make up for the  light posts in the past.  Here goes . . . .

Last week my concerns about this market topping out were heightened by the wide range gap up bar a week ago Friday.  That could have been an Up Thrust” bar, a classic formation of a market in its last “dyeing breathe” just before the fall.  While the classic reaction (the market heading down afterwards) did not play out, this week was not a big mover in any direction.

NASDAQ Composite

The NASDAQ Composite Index (above) finished the past week  down 0.06% . . . basically breakeven.  When the market moves sideways there is indecision; everyone is trying to figure out the next move and whether to buy more or sell out.  I’m still concerned about the 3125 level as a support area and the heavy blue upward sloping trend line.  As long as these hold there is hope that this is a consolidation area and the move up will continue.

As we have seen in the past, bad news can turn a market fast.  The whole multi-issue environment in Washington has the potential of providing a big news event.  All we need is some Senator or Congress Person to make an off the wall comment.  With this market (one that’s due for a correction), that may be all it takes.  I remain concerned.

Let’s look at where the broad market is:

S&P 1500 Money Flow

The chart above is “money flow”, that is green shows money flowing in, yellow neutral and red shades flowing out.  A fair amount of green so overall money is generally flowing in.

S&P 1500 Price Strength

The chart above is “price strength”, that is where the price is based on its recent past.  Again green is generally a positive up movement, yellow neutral and red down / lower.  Both charts are of the stocks in the S&P 1500 index so this is a very broad indicator of where the market is right now.  Over half of the stocks are “green”, that is showing price strength upward.

These are all very positive indicators, so IF a market correction develops, it will likely be modest and brief (unless conditions or environments deteriorate more).

Top 10 Sectors

The table above shows the strongest sectors in this market.  We certainly see a wide variance in the performance of some sectors over others.  I feel that stock and sector “picking” will be an important factor this year.  Selection will be the difference between poor and way above average portfolio performance.

I have built up additional Cash as stocks and sectors have provided me with sell signs but overall I remain fairly well invested.  I’ll let the market and the specific stocks tell me when it’s no longer a good place to be.  Right now I don’t see many opportunities to make new buys, so I’ll wait and watch.  My time will come.

Have a good week.        …………  Tom  ………..

charts by MetaStock and www.HighGrowthStock.com; used with permission

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