The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday.
Despite the potential bright spots for bulls, on top of headline-grabbing earnings pops fromCMG GOOG last week, the “sneak preview of coming attractions” thesis I advanced in a January 5th, 2014 Strategy Session has been playing out nicely for bears.
As I wrote back then:
A new wrinkle which I would like to add…is a sneak preview of what we may see from the S&P (500 Index) and Russell (2000 Index).
Both Costco and Starbucks are two all-American firms and stocks. They enjoyed steep, virtually uninterrupted uptrends throughout 2013.
Recently, though, both have struggled and appear to be bear-flagging for a deeper pullback yet. This circumstance need not mean that both stocks have topped out on a multi-year basis, or anything close to it.
However, you can see what happened when price became too extended from the 200-day moving average after a fierce, multi-quarter uptrend.
Updating not just COST SBUX, but also the consumer-sensitive Ford, you can see all three charts are now below their respective 200-day moving averages. While I would argue all three are almost assuredly too steeply oversold in the short-term to consider shorting with fresh capital early this week, the take-home message is that the major averages could easily follow these important stocks lower–Recall how many bulls last fall were scoffing at the notion stocks like Costco or Starbucks, even Ford, could swiftly correct down below their 200-day moving averages.
For reference, consider the Nasdaq and Russell daily charts, and how extended they had become from their respective 200-day moving average with no test in over one full year. Not unlike COST F SBUX, the rubber band snapping back can happen quickly and undershoot to the downside in the same manner the overshot to the upside occurred.
In addition…
Please click here to for Part I. and to continue reading the rest of this weekend’s Strategy Session
yep . money is rebalancing portfolios for next run , it favors to take out a few technical nodes in the meanwhile .. would be very surprised to see bears come out for pushing things to crack-blood style this time around , as well as to see fed computers not going the way of softening and hard landing . all in all this late sell off as very few reason to exist other then finding a better or more natural homeostasis for the next market legs
in fewer words : recharge & reprise
yup!