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MARKET WRAP UP 07/21/10
After trading flat for most of the day, the market sold off fast and furiously in mid afternoon on the back of statements by Federal Reserve Chairman Ben Bernanke. Earlier this morning, the S&P 500 actually made it slightly above the crucial 50 day moving average when we printed 1088. By day’s end, however, we had tested the 20 day moving average below for support, during the selloff, and finished down 1.28% to 1069. At the close of today’s session, we are now sandwiched between those two significant reference points. The 50 day moving average is sloping down, currently at 1086, while the 20 day is sloping down at 1066.
This “sandwich” indicates the indecisive and choppy nature of the market at this point. Until we see a decisive break, and hold, in either direction, it is best to wait before making aggressive bets long or short. As the updated and annotated daily chart of the S&P 500 illustrates below, our recent price action has been squeezed inside the small range between the 20 and 50 day simple moving averages.
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The Nasdaq, Russell 2000 (small cap stocks), and Dow Jones Transportation Average all continue to tell the story of choppy price action within the middle to upper ranges of their respective falling channels (see charts below).
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The emerging markets remain on my radar, as their ETF has made a series of higher lows since late May, while we know during that time the S&P made some lower lows. Further, the 50 day moving average is now below price, and is flattening out with the 20 day crossing above it. Keep an eye on how this apex is resolved in the coming days, as seen in the daily chart below.
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I made no changes to the portfolio today, with $NR and $SWSI my top gainers, while $NTAP was the laggard.
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TOTAL PORTFOLIO:
EQUITIES: 36%
- LONG: 36% ($ARUN $NR $NTAP $SAPE $SWSI)
CASH: 64%
When will you sell NR and SWSI? They are impressive picks but is it too late to get in now their prices are up quite a bit? Thanks.
True–I only have 1/2 position in NR (full in SWSI). Their daily charts indicate that they are making major breakouts here. I want to let my winners run. HOWEVER, if the broad market cannot make any bullish progress this week, and instead falls apart, I will be forced to sell out quickly.
Thank you. Does PPT score things out in consideration of the broad market? Except NR and SWSI, quite a few other buys from ibc site went down with the market.
I guess you will not add the other half position in NR even if the broad market goes sideways?
I will see how NR develops–I may or may not add back.
The PPT takes into account the individual tech & fundies scores for each individual stock, and the broad market separately. But you’d be crazy not to read the two together, given how accurate it has been.
hey Chess – what do you think of weekly time frames? look at 200 top , 100 bottoms , 20 top and now 50 resistance.
turd thinks retest (and break leaving no MA support) of 100 in the works.
Definitely–they all indicate sideways or down price action. To me, it shows more chop than anything else….for now. If we get the big breakdown, then they will roll over and become even more so like a brick wall in terms of resistance.
If the SPY loses and holds below the 100 weekly, then you can probably short without limit. Backtest that 100 weekly on the S&P–great indicator of bear vs bull.
Hey Chess, thanks again for your analysis. You ever use the 300 sma for the S&P? I find the 20, 150, & 300 works like a charm!
interesting–havent looked at it recently, thanks for bringing it up.
Chess,
Your analysis is always great… saves me time and is probably more accurate than mine.
I am a regular reader!
Thanks Hawaii–appreciate that.
Thanks Chess. Hoping we get above that 50 day today. Futures @ 7:15 AM indicate we’re just below it I think. Yeah, I know about hope…
looks like we got it–see if it holds
on your first chart there wouldnt you want to see price actually close below the 20sma before “going with it”?
before going short?
Bought more UWM (25% cash).
NIce.
Hey Chess,
Although it’s been REALLY HARD to make any kind of profits these days, I’m kind of enjoying this. It’s a great learning experience to try and trade this market as a rookie. My only problem is I’m keeping my stops so tight I’m losing potential gains, but my losses have been minimized. But hey, I’ll take it. 🙂
Yup–in this kind of market a push is fine. Just come out alive for the next healthy market!