8-30-15 Comments

Watch lists are posted. Only one stock made the regular long list (TYL). The cause of the very short list is the many damaged bases after the very volatile market action. The market is in correction and technically we could have a follow-through day at any time. My expectation is that a follow-through day this close to the sharp market drop would not lead to a robust rally. The really short watch list is an indication that the market hasn't set up properly yet.

I think Jerry has it correct, watch the NASDAQ action as it approaches the 200-day ma. Stalling action at this average might be shorted. Success or failure at the 200-day could be confirmation about the general market direction. In the last few years anyone who predicted a market top was run over by the bulls. Buying into the sharp pullback was very profitable for the undaunted short term trader, the question is where to from here? I watch the weekly NASDAQ Coppock because a coppock buy signal (bottoming out in negative territory and then turning up) in the vicinity of a follow-through day often correlates with a trade-able rally. The coppock looks more than a week away from a confirming signal. The coppock indicator is supported at freestockcharts.com

Another indication I look at is the percent of the IBD 6000 index that are showing heavy distribution (E). %E in the range of 7.4% to 16% is the range that best supports a trade-able rally. There is a bit too much blood in the streets right now with %E = 20%. This could change rapidly in a matter of a few days if calmer conditions continue.