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At the 2nd Quarters End . . . June 29, 2013

Posted by Tom in Thoughts.
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Amazing that we’re half way through 2013 already.  Time flies when you’re having fun.  🙂

I am (somewhat) back to “normal” and have a bunch of research to do, plus my monthly client newsletter, so I’d don’t feel very “talkative” now.  But be sure to watch for my monthly letter (which covers the big picture) to be posted here by Monday.

I exchange ideas with a number of other professional technicians and there is a stratification of ideas out there.  But one thread is common, in that most money managers feel conflicted with market direction.  I think that’s because many of us are working on different time frames and some of us are trying (too hard) to pick a turning point.  So let’s take a short step back and look at the chart.

NASDAQ

What I see is a Distribution pattern.  It’s not the “classical” type since it slopes down but it has all of the signs.  I see: lower Highs and lower Lows (price swings; a Sign of Weakness), broken trend lines, and volume (supply) coming in on down bars (i.e. selling).  I noted the very high volume levels on the last two Fridays, that got my attention.  This Friday was the end of the quarter, so likely alot of “window dressing” going on.  The Friday before was options / future quad expirations.

Next week will be a light week because of the 4th holiday, so I don’t think much will happen.  We’ll have to wait until the 2nd week in July to see IF the Resistance level of (roughly) 3395 or the Support level of 3300 will be broken.  I still think that we’ve entered into the “Summer Doldrums” where we just stay in a trading range.  Picking select stocks will be even more important if we are to make any money in such an environment.  As Ed Esterline would say: “we must learn to row and not just sail”; the market may become becalmed for awhile.

I’ve had the privilege of reading the galley copy of Charles Kirkpatrick’s new book coming out near the end of July.  For any stock picked out there this is an excellent read.  It’s given me a few ideas to test and deploy.

For now I’m pretty well “hedged out” and heavy in Cash.  My market model is Short and I hold a few strong stocks; they are holding up well in this market.  There is really not any sector that is strong enough to merit my interest right now; I was Short Emerging Markets, but I feel holding that any longer is too risky.  Patience.

Have a good holiday.         …………..  Tom  ………….

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