10-10-14 Comments

I see the NASDAQ has touched the 200-day moving average and volume is running 28% above yesterday's volume. This could be a bounce here or possibly Monday.

I normally run a screen when the market sells off for stocks that are maintaining a high RS and the RS is making a new high. This screen produced the following stocks: GMCR, HD, JACK, ICLR, HNT, ACT, AGN, THS, HRL, ABC, AMGN, AAPL, MNST, DPS. In theory if the market goes on to rally into new highs these might be interesting.

However currently I am not interested in new long positions as the market has shown the kind of volatility I associate with a deteriorating market. We had a Hindenburg Omen on the 19th as the market was making its last high, this was a warning that a significant number of stocks were in their own private bear market. Now only 34% of all NYSE stocks are trading above their 200-day moving average something we haven't seen since the mini bear market in 2011. The percentage of stocks in the IBD6000 index is running over 20%, a level in the past that has not produced successful follow-through days. We are still waiting for a Rally Day (possible day-one in a new advance) and then we wait for the shorts to clear by day 4 until we can see a follow-through day. This places the soonest FTD at next Thursday.

Best guess is a relief rally and then possibly a roll over to new lows. It will be the beaten down stocks that rally into overhead resistance that I will be watching for for possible short set ups.