Climate Check July 20

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  • on July 20th, 2011

“I’m a little divided, do I stay or run away?”  Foo Fighters

As long as it doesn’t interfere with my own trading, I’m going to try and share this during the lunch hour each day.  Any earlier lacks clear information, any later the implications are a little obvious already; this should be a closer match for how I actually plan my afternoon.  I have no clear evidence to share, but that in itself is evidence of the climate.  Nimble traders are killing it with a holding period of hours…beyond that, the danger comes in.  For every $AAPL there is a $RVBD, every $ISRG a $FTNT.  For every $GS drubbing, there is a $GS bounce.  I keep my efforts outside the days before and day after for just that reason; if a big move is at hand there are plenty of other days to enter.  A look at the evidence today:

Highlights:

1) Trend- flat from yesterday.  If this market was about to add onto yesterday’s thrust, I’d expect that number to separate from yesterday even on a flat day.  It’s not, no rush to commit.

2) Leadership- the median stock has recovered far less of its post-July 7th losses than $SPY, clearly a negative and something that needs to change fast.

3) 50s and .00s- those numbers are WAY too prevalent here, indicating complete indecision.  Trend by each measure sits around zero; I want to see above .25 or below -.25 to exploit a trend(or above .75/below -.75 to exploit a reversal).  % Aboves linger between 45% and 55% vs. both the 10 Day and 10 Week Averages, exploitable only if they signal failure for an index trying to push away from the middle.

Bad news from DC or Europe would offer a nice excuse for stocks to quickly drop back below the $SPX 1320 level marked by a growing confluence of price memory…to me, that offers a more precise buy entry with a chance to eventually pull away from the magnet.  Conversely, good news that triggers a rally too far away can still be safely sold if the broad market isn’t leading the charge.  The where and when are just as important as the “what” that I discuss here.

I hate to be this fuzzy, but right now the moments of edge are fleeting…too fast to do anything but trade ’em.  There WILL be clues before a longer move, but for now it continues to be a fade the fringes market that right now is being pulled from the lows toward some $SPX resistance between 1335-1339 .  Individual stocks can do their own thing in earnings season, fine for traders as long as we’re not banking on a market tailwind or headwind.  My hope is that we’ll see a couple days of a sideways index with advances taking charge vs. decliners, ideally absorbing some bad news along the way.   With the dominant psychology being anxiety as opposed to fear, long $NIMBLE remains the game until it’s not.

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.

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