Climate Check July 13

  • Posted by
  • on July 13th, 2011

The market is up, so does that mean it’s stronger?  Not really, in fact my universe of potential longs continues to shrink despite the bounce.  That tells me we’re not ready to expand in any way; the 82 buyables easily outnumbers the 42 shortables but the long candidates are shrinking by the day.  While a shrinking pool of strengthening stocks doesn’t preclude making money on longs, basic math says it’s an easier road when the candidate pool is expanding.  I still don’t see expanding weakness either, so for now we’re stuck in a muddy balancing zone awaiting the next tipping point.  The evidence just after 2pm today broke down as follows:

A total mess.  Not bad, not good, not improving, not deteriorating.  Mixed news landscape with Bernanke hinting at QE3 but lingering debt drama around the globe.  The biggest problem I see is the massive # of stocks that put in highs on July 7, likely need weeks to overcome that big anchor overhead.  A period where the market stays flat but stocks trend on their own merit would actually be quite refreshing, but I’ll continue to track and share the breadth evidence as it rolls in.  For now, I’m a believer that expansions away from this $SPX 1320 range will be swiftly rejected; index scalpers delight until the picture changes, which we all know it will.  Buy fear, sell hope continues…

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Derek Hernquest Blog