Tuesday, May 16, 2006

Stock Market Indexes Try To Find Support.

Stocks did more of the same thing, today. This time it was just a lot more boring and with a lot less power. Stock market indexes fell across the board with the Nasdaq leading to the downside with a .42% drop. The SP 500 fell .2% and the DJIA fell .08%. The positive divergence was in the IBD 100 and the SP 600; which were both up for the day. Those two indexes rallying today should not be any shocker, considering these two indexes have been taken to the woodshed the past four days.

Volume was mixed with lower volume on the NYSE and higher volume on the Nasdaq. The Nasdaq's higher volume gave it another distribution day. However, this one is not very clear since the Nasdaq rallied off the intraday lows and held the 200 daily moving averages. However, it appears that this is just a rest. Most indexes are finding support at the 50 or 200 dma but there is not a lot of clear support as the rallies intraday are on lower volume than the downtrends the past two days.

Advancers beat decliners on both the NYSE and Nasdaq by slim margins. A positive divergence from the red closes of the indexes. A short-term bounce seems fair here, with the short-term indicators signaling positive divergences.

The NYSE and Dow and holding their 50 DMA's so far. But how long that last I am not sure. The selling is more intense in this pullback and new lows continue to expand to levels even higher than in October. That is a very negative divergence.

The Nasdaq and SP 600 have fallen so far the past four days that it is semi-oversold but not quite oversold yet on the NYSE and Nasdaq Overbought/Oversold oscillator. Which means we could still fall even more from here, without seeing a bounce. So don't try to be a hero and catch falling knives in stocks you really liked because they ran up a lot the past year.

It is a difficult market right now. This is not the kind of market I like investing in. The market will indeed start an uptrend again and we will find many stocks willing to runaway with major profits. For now, however, we are not going to find them. The markets character has changed.

Great luck and don't get to crazy on the short side. And I wouldn't be too forgiving to your weak stocks, if they have slowing or no fundamentals.

Great luck :P I shall see you tomorrow!


New Swing Longs: NONE

New Swing Shorts: VTI JOYG PNY BPFH SFD TNT BLDR USG

Longs Outperforming Market-number is % gain since purchase: HOM-103 KNOL-145 LMIA-139 CBG-122 ICTG-103 WIRE-175 BOOM-337 RATE-155 AKAM-104 BTUI-131 TFR-107 IED-107 SPNC-97 ACTG-81 CCI-90 JOBS-44 HSR SHFL SIM RADN LRCX-43 STRL-55 PNRG-58 FWLT-66 TTES-53 BAS RSTI-39 SNDK TGE MORN HEIA-33 BAM-32 BGC-83 AOM STKL-43 CYMI ARS-57 SYKE SMSI-46 DIS ING-29 DRH-25 PMTR-33 UVN AXE-35 CTCI SNTO-29

Shorts Outperforming Market: NVT ELY

Stocks On Radar Screen: ALCO CVN

2 comments:

Anonymous said...

josh, any thoughts regarding positive divergence IRIS is showing in this tape ?

Joshua_NControl said...

No thoughts. This stock has a LONG way to go before it deserves anyones attention.

It still has the 50 dma under the 200 dma. Too much resistance. So just watch it but don't think too much about it. There are a lot of stocks that go up in bear markets. It is what it is. Positive divergence. Nothing else needs to be understood besides that.