From: tom lloyd <[address removed]>
Date: February 28, 2016 at 12:51:02 PM EST
To: [address removed]
Subject: [MITT] How now Dow?
Reply-To: [address removed]

More Demand Than Supply

The Dow doesn't look too bad at what is probably the peak of this short term buying cycle.  If you go the bottom totals of the 30 Dow stocks you will see that 19 are showing Demand vs only 11 showing Supply. As it transitions to a short term selling cycle these numbers will reverse with the  majority of stocks showing Supply and taking the Dow down.

Half Bull Half Bear

Also notice that exactly 15 or half of the stocks have fundamental and technical buy signals, not bad. But during a bull market both of these numbers would be above 20 at the peak of a short term buying cycle. Since this is a price weighted index, I want to make sure the 15 stocks include the high priced stocks like GS,MMM,IBM, HD and UNH. Yes UNH and HD are among the 15 positive stocks.

Typical Index Return

The total implied return for the 30 stocks is 11.5% which includes dividends. Not great but not bad and inline with what an Index return should average.

Failing Grade for the Index

The SID average grade is a failing 54.6 but no surprise since it is not a bull market. For a really bad bear market I would expect this grade to be much lower. This grade is close enough to 62 passing so as to be considered borderline. But at the peak of a short term buying cycle this grade needs to be well above 61 and that is not happening. That is the problem with this market.

Which Stocks to Hold in a Bear Market?

Finally which of these stocks can you hold in a bear market? I certainly want to look at the high SID grade stocks and they are JNJ,VZ and UNH with SID grades 80 and above which are color coded green. Also CSCO has a high passing grade of 78.

Which Signal Is Most Important?

Don't forget that our SID grade is not a technical indicator but an overall grade for the stock that includes both fundamentals and technicals. It is our most important signal and the first signal I look at before looking for any other buy signals, implied returns or even a chart.

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Disclosure - I have no position in these stocks, but may be long or short anytime in the future.

Sent from my iPad

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