Skip to main content

Weekly Review - a tale of two markets

This past week the major averages for the most part turned in poor performances. The S&P 500 and the Dow both lost 0.7% and the NASDAQ lost a full 2%. As it turns out, that was not the whole story. There was actually some decent action in the small and mid-cap arenas. The Russell 2000 was up 0.3% and the S&P Midcap 400 Index was up 0.1%.

Our Alert HQ process bears this out. Each week we scan over 7200 stocks and ETFs and record their technical characteristics. Rather than seeing a continuation of the previous week’s downturn, we actually saw a bit of an uptick.

The following chart based on daily data summarizes the state of our technical indicators.


Moving Average Analysis –

All the moving average indicators moved up in unison this week. This means that the number of stocks above their 20-day moving average increased, the number of stocks above their 50-day moving average increased and the number of stocks whose 20-day MA is above their 50-day MA also increased. The increases were not large but, significantly, they show the underlying strength still apparent in the recent market rally.

Trending Analysis and Buying Pressure --

We use Aroon analysis to identify stocks exhibiting strong trends. The good news for the bulls is that the number of stocks in strong down-trends decreased. Unfortunately, the number of stocks in strong up-trends showed a even more of a decrease.

Our Chaikin Money Flow analysis shows a small increase in the number of stocks exhibiting strong buying pressure and a corresponding decrease in the number of stocks exhibiting strong selling pressure.

In the chart below based on weekly data, we see the same kinds of moves only somewhat more subdued.


S&P 500 Sector Analysis --

Below we present our sector analysis for the S&P 500. We have looked at three characteristics:

  1. Percentage of stocks in a sector whose Aroon analysis indicates they are in an UP trend
  2. Percentage of stocks in a sector whose DMI analysis indicates they are in an UP trend
  3. Percentage of stocks in a sector that are trading with their 20-day moving average above their 50-day moving average.


There hasn't been too much change from last week's sector analysis post. We do see some small improvement in the Energy sector. Meanwhile, Health Care, Consumer Discretionary and Technology sectors all gave up some ground.

In summary --

Our Alert HQ data on moving averages and trending generally shows a market that is tentatively bouncing back from the previous week's decline. It shows that the upward bias in the current market trend remains intact despite the drooping numbers turned in by some of the major averages.

Our S&P 500 sector analysis shows some weakness from the previous week but does not indicate a market particularly over-bought or over-sold. It is a portrait of a market that is muddling along.

The fireworks last week were in large part due to market reactions to the economic reports that were released, rising on better than expected GDP and durable goods numbers (read our take on durable goods) and falling on worse than expected personal income and PCE inflation reports.

This coming week the markets will have plenty more opportunities to bounce around based on economic reports. The week's busy calendar includes construction spending, ISM index, auto and truck sales, factory orders, ADP employment, initial claims, Non-Farm Payrolls, ISM Services and the unemployment rate.

With many institutional traders returning from vacation, we can also expect to see volume begin to pick up. After hearing various pundits offering that recent low volume indicates a market trading without conviction, the coming week should give us a good read on whether the strength we have discussed above is just temporary or for real. This should be an interesting week, indeed.

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…