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Market Softens . . Approaching A (possible) Turning Point August 16, 2013

Posted by Tom in Thoughts.
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I may be going against the grain, since so many market callers are predicting a significant fall, but I don’t see it just yet.  I see less participation of the broader stocks in advancing the market, but there are still many strong companies that are going up.   Since the strong remain strong and the “not so” ones are weak I’m calling this just a softening for now.  That could change quickly, especially if we get some weak or bad news, but for now . . . .

NASDAQ

On the chart above I see a support price level of 3592 (Friday’s close was 3602, so we’re getting close).  A close below the 3592 level would be cause for concern and likely a good time to put a protective hedge on even if stocks remain above stops.

Some other supporting evidence is a basic supply / demand “money flow” indicator (top window of chart) which shows me that while demand is not particularly strong, there is not much selling either.  “Ditto” for volume (window below chart).  I note that volume (a.k.a. “Supply”) remains about average and below the top red line, which would highlight excessive supply coming into the market (hence selling if prices are weak).  Also the price is in the mid-channel range (purple lines), and not cracking through the bottom as of yet.

So for now I’ll be patient and observe.  I’m not happy about this soft spot, but I just don’t see a reason to bail right now.  As I see it, there will be plenty of turmoil once Congress returns from its “vacation” and starts talk of a shut down.  (editorial: these Bozos can’t or won’t do anything, hence they do nothing . . at least nothing constructive !)

Watch for individual weaknesses and liquidate if your support level is violated . . . the market does not give points to heroes.  The next 2 weeks should provide us with enough information to take a good look at the next move . . . either up or down.  Have a good week.            ……………  Tom  ……………….

chart courtesy of MetaStock, used with permission

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