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At Support, Now It Gets Interesting July 2, 2015

Posted by Tom in Thoughts.
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Things took a decided turn for the worse on Monday of this week.  Market Sentiment (my combination of advancing / declining issues, Up / Down Volume, Put / Call option activity, etc.) turned from Neutral to bearish.  The world markets in general headed “south” as well.

NASDAQ

The big “reason” was the Greek debt and their ability to pay, but the markets were already nervous.  My 5020 level was broken (on the close) and the lower reverse trend line was also broken.  So we’re “out now”, right?  Well I have increased Cash, but many of the stocks I’m holding are doing at least “OK” for now.  Besides, my general rule is to wait for the Closing price to beak below a Support or Trend line, and then use that Low price as the trigger.  It sounds like a cop out, but we have not (yet) broken the Low that was put in on Monday.  (Technical Analysis is as much art as science.)

Sunday the Greeks go to the polls to vote on austerity measures.  So far the polling of voters is fairly split down the middle with many undecided.  The Greek problems have been well telegraphed so I doubt there will be a big market reaction in either direction.  Big picture, the US economy is getting stronger and the European economy appears to be recovering.  That’s the two largest economies in the world.  The bigger concern for this market is whether it’s overvalued or not (price to earnings wise).  Many eyes will be on the 2nd quarter earnings which begin coming out in a couple of weeks.  I believe those earnings will be fair more important to market direction than much of anything else.  The watch word is “Valuation”.

That’s it for this week.  I’ve posted my monthly client newsletter under that tab (above).  In it you can see overall market strength graphs and sector strength.  Have a Happy 4th and a good week.          ………….  Tom  …………..

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