Climate Check

  • Posted by
  • on July 7th, 2011

I’m going to try and make this a regular feature, putting out a short summary in the afternoon after I do my “weight of the evidence” look.  There are so many better places to get strong info on levels and charts; I think the best thing I can share is my take on market breadth.  I’m sure I’ll benefit more than anyone… looking at the evidence this way keeps me objective but sharing it keeps me more accountable to said objectivity.

I’ve shared ad nauseum my belief that there is valuable insight buried in the price action of the “market of stocks”.  Just because that term is overused doesn’t make it untrue, and clues from this micro movement often reveal themselves with index moves a day(or days) later.  The signals were screaming “Hidden Strength” so loud on June 23-24(hours after I wrote My List is Still Poor lol) that the words “meltup ahead?” entered my head, but I was lulled into the same doubt as many others.  Since there’s a good chance I’ll be too busy(or shy) to share it next time, I’ll just put it out regularly and folks can take it or leave it.

Through the bulk of today, the climate is quite easy to identify as follows:

As any monkey can guess, the current assessment is “Obvious Strength”.  Fairly useless info at these heights, though it keeps me from guessing when the party will reverse.  But someday soon, the verdict will change to “Hidden Weakness” and I’ll color those boxes red, at which point sales and even shorts will make sense again.  This summary offers a 1-5 day outlook in identifying the tailwind I’d like to catch; from there it’s a matter of waiting for setups to evolve.  Assembling the data once/day has provided me a timely fit somewhere between a little early and a little late…the best we can do in this game in my opinion.

As far as “candidates” go, the list changes each day but by no means is it a massive turnover…stocks like $HANS & $FOSL & $GMCR have been on the “buyables” for weeks and are now coming off, replaced by newer tickers like $ARMH & $SHW & $WY .  On the short side, only $LIFE is a new name to track, with most getting pulled from the brink each day with this tidal wave of buying.  Again, these are not trade ideas, simply stocks demonstrating the required patterns of supply & demand that I seek before considering for a possible long or short entry.  Climate doesn’t equal profits, but it sure is easier to live with the wind at our backs, isn’t it?

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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