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Market Resets April 18, 2015

Posted by Tom in Thoughts.
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Just when the market price action started to break out higher, it “reset” back into the established trading range.  It’s early in the earnings reporting season and the results have been rather mixed.   We saw narrow bars on Wednesday and Thursday at the top (showing uncertainty, hence distribution), followed by a large range bar down on heavy volume on Friday.

NASDAQ

Likely the biggest concern right now is our old friend Greece.  There is greater concern about whether Greece will stay in the Euro camp.  Before the odds were 10% that they would be leaving, now it looks more like 40-50% likely.  A big jump, and markets don’t like uncertainty.  Greece is not making much forward progress in it’s financial struggles, and the drama continues.  If Greece goes, so what?  The Euro currency could “re-base” moving higher.  That effects Germany’s ability to export, which is extremely important for them.  Then, are Spain and Portugal far behind?  Uncertainty.

The same sector stocks are on the list of ones to consider. (click on graphic to enlarge)

Sector Buys

But is it time to buy (more) or wait it out?

Price Strength

The pie chart above of the stocks in the S&P 1500 index shows that there is significant price weakness here.  Nearly 50% are in the short term “red zone”.  The first key support area is around 4905, and we’re getting close to that.  The next is at the lower end of the price structure / trading range, 4810.  With the exception of Friday, the price action has not shown much selling / distribution so let’s not get carried away with too much pessimism.  Market Sentiment remains neutral.

I am honoring stop levels for stocks and watching for sustained weakness in sectors (Japan comes to mind).  International and Emerging Markets have been doing well but international (Greece) issues could halt that progress.  The next week or two could set the stage for market activity over the Summer months.  Continued weakness would not be a good sign.

Have a good week.  …….. Tom  ………

price chart by MetaStock; pie charts by http://www.HighGrowthStock.com; used with permission

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