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At The Lower Edge August 8, 2015

Posted by Tom in Thoughts.

The “Reversion to the Mean” trade continues.  So far the price oscillation between the price channel (purple lines) continues, with a slow slope upwards.  This has been going on since March of this year.


The thing that concerns me is the general lack of stocks that are advancing compared to the number declining.  Also the sectors that were leading (biotech, healthcare, semiconductor and consumer discretionary) are now falling back into the pack of all other stocks.  This could be a temporary thing, but if not it is cause for concern if other sectors don’t pick up the leadership.

Sentiment is bouncing around and Money Flow is Neutral.  My price support line (level) is holding at roughly 5020 on the NASDAQ.  (It turned in a dime last Friday as buyers come back into the market.)  As long as buyer step back in during this reversion environment, then things will be OK.  If not . . . we’re in trouble.

I don’t see excessively high volume on big down days (yet), so wholesale selling has not shown itself (yet).  This is the time to “keep your powder dry”.  I’m in no hurry to add positions and have culled out my weak ones.  Strong sectors lately have been SHORT oil and SHORT Latin America, followed by SHORT Emerging Markets.  The Internet sector is about the only thing holding up relatively OK, but just barely.

Got to go, but have a good week.    ……..  Tom  ……..


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