Regular Meeting - Could be an important meeting see my current take on the market below. Steve Swadley,Organizer.
Note the market environment continues to cloud or clarify depending on your viewpoint-We are now experiencing a cluster of distribution days which usually does not bode well for the success of the current rally. The NAS failed to breach 3000 before turning back. That index stalled today as did the Russell 2000. The new IBD market school portfolio exposure count system turned down to zero so no new buying and consider more selling until we have a new Follow Though Day(FTD). More breakouts of current leaders failed this week and last week. Retail sales declined for the 3rd month in a row, the most since 2008. Europien banks, fiscal cliff,national elections, federal reserve stimulus, unemployment rate,corporate earnings season,economic forecast revisions---Lots for consumers and businesses to worry about and to make them hesitate on or delay any financial related plans.(7/17/12 update).
Be quick to take losses in this environment. Sell when down 2-3% or less depending on the daily action in your stocks. The market is still not trading on fundamentals. If the action in the stocks mirrors the action in the market, sell with the market. If the stocks act better than the indexes hang on until the market direction clarifies, or sell a little –weakest position –for safety. You could sell to 25% if you were 50% invested.
The fact that many top fundamental stocks have formed symmetrical bases and either are pending breakout (b/o) or have not had a failed breakout says that institutions would like to buy. The indexes are not selling off on more than average volume may mean a lack of conviction on the part of sellers. The fact that we are seeing more distribution so close to the FTD could indicate short-term players profit taking. Some of the earlier buying may have been short covering. It certainly looked like algorithmic trading in these last two rallies. Recent action could clear the decks for strengthening of the current rally or produce a better rally to come.
Earnings season begins in earnest this week. Some say the uncertainty and choppy stock market could last through the election in November and even beyond.