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Back Again July 24, 2021

Posted by Tom in Thoughts.
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July 23, 2021 – What a week. Last week Thursday and Friday were major down days (especially Friday). Monday opened a big price gap lower then recovered over the rest of this week. So, we’re basically back to where we were a week + ago.

click on chart to enlarge

I note that prices gapped right through the 14371 (gray line) level on Monday then bottomed out very near the 14196 level (red) before recovering to close just above the 14804 level. All pretty much holding the previously drawn support and resistance levels.

The Money & Volume Flow indicators are now positive, but the dip on Friday of the Market Sentiment indicator could be a concern IF it continues to show weakness. Also note the very low trading volume (lower chart pane), volume tapered off as the week progressed. This does not show a commitment by traders or investors to this market rally. More of a skeptical “wait and see” approach I’m thinking.

I did close out the Bullish Market Index portion of my portfolios as a precaution on Monday Morning, didn’t go short, but I’m not quite ready to re-enter that portion just yet. Most of my positions in sectors and stocks have held, so not much of a change there. Let’s look at sector strength.

The positive news is that our “old friends” the Technology sectors (less semiconductors) are in the lead and that’s encouraging. But recall that the overall market is narrowing leadership to those specific sectors (not so positive) and it sure would be nice to see Financials and / or Industrials joining in. We’re early in the second quarter earnings reporting cycle and so far things are looking good. But (again) ‘good’ to ‘very good’ is expected. This market does NOT want to be disappointed by earnings or news, and Covid is still in the mix. The next 2-3 week will be important and possibly set the stage for the Fall.

That’s it for now. Continue to be cautious but realistic about this market environment. Have a good week. … Tom …

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