Monday, June 22, 2009

Commodities and Technology Crumble Weakening Leadership and the Overall Market

By Market Speculator

Once again Crude Oil took a major blow Monday as well as other commodity prices. The IMF revised its growth causing panic in the World Recovery thesis. Technology stocks also took a tumble Monday as investors were fleeing technology names. Stocks were simply sold today as sellers wanted to cut loose at all costs. Closing at the lows of the day is a signal that sellers are in full control. Leadership has been showing weakness for the past two weaks and is finally beginning to weaken further at an alarming rate. Very nasty action today on the indexes as the market is now in correction mode.

Big stock leadership is always a great barometer for the market. Big insitutional players love the liquidity and low beta these stocks have. The price and volume action of these stocks are very important because it displays the mentality of the big institutional player. We have seen the big stock leadership crack a bit last week but that crack widen today. Two big stocks that have performed well in this market uptrend put in very ugly days. Gold and Platinum subscribers are aware of the ones I am referring to as I posted in our forums about the stocks. This is not that time to be fighting the market trend here, do not be a hero.

Big news this week as far as news is concerned. Most notably is the $104Bn Treasury auction set this week with a 2 year Treasury auction set to start tomorrow. Stocks wil be eyeing these auctions very carefully as they will signal the whether or not buyers have confidence in the United States Treasury. In addition to the Treasury auction is the Federal Reserve rate decision set to close on Wednesday. Many expect them to keep rates as is but it will be the wording of their statement that will be scrutinized. It is a given the market will react to news events this week. At this point, the market is signaling CAUTION ahead.

Leading stocks are simply worn out and have begun to roll over. On Friday, many leading stocks held key moving averages but volume was very light on Friday. Although it wasn't a glaring "signal" they were headed for trouble, but it was a clue trouble might lay ahead. Seeing today's action, you can not ingore their action. They are not healthy whatsoever and we are certainly not going to argue with their price and volume action.

Tread carefully in this market as it is giving us caution signals. Keep your eye on the ball and your losses small.

top longs/(shorts) w/ total returns since purchase making me money TODAY: VOCL 44% TRIB 24% CRTX 23%///TSTR 30% KAD 49% (CYT 65%)

FREE YouTube video to help you interpret the daily market action correctly:

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