5 days of stalling and no progress
2 days of high volume selling
100 points loss in 2 days in high volume
Top leaders down in high volume
( first photo source : trading view )
FFTY etf a proxy for top 50 beat stocks in the market down by 2%
Market is already in rally.
Basic principle –RSP gives me general market direction. The moment RSP crosses up the 75 day moving average. I will buy QLD. Same is true for just QLD. Entry: 75 day SMA, exit 75 day SMA.
accumulation distribution (money flowing in and out of the market) gets a grade of C to D. Which means that there is a net flow of money out of the market. (A, A+ is the best time to keep the money in the market).
Delta Market Sentiment Indicator is below 50.
So, the bottom line is this : Stay in the sidelines, till the big money (Mutual funds, Institutional investors) get back in.
PS: Source of the above article is Delta Investment Management newsletter and Investors Business daily.
So again we find the talking heads coming in droves. Reminds me of the song from talking head (the band, not the pundits of wall street).
Henry Blodget is giving us
Three basic reasons:
- Stocks are still very expensive
- Corporate profit margins are at record highs
- The Fed is now tightening
Now yours truly traveltrading will give you one singular reason
1) Japan economic index dropped 2.5 percent which effects its exporting capacity and the chief harm is done to Germany which is one of the biggest trading partners and hence we find EU indexes and Asian indexes following the US indices and hence we can see further correction.
I just made it up.
Who cares what the reasons are for our style of trading. We have only one thing to look at, and that is price. If the price is going up we buy, if it going down we sell (trend following, counter intuitive).
this morning i read this in yahoo finance (note the 20/20 vision looking at the past) – “To those poor souls Trennert suggests backing up and remembering that valuation always matters. Corrections lead to selling that takes down blue chips as well as garbage names.”
I am not a poor soul, I did not get into the market. Because the market is still in correction (How long or how short time will tell).
Let me again empathize the fundamental difference. I trade based on one and only one thing – Price.
I have one and only one signal – 75 day Simple Moving Average.
DMSI, and IBD big picture help me a lot in confirming my signal.
So valuation based on opinions don’t matter in my style of trading.