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JimVanMeerten (66.95)

Market ends up but barely

Recs

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August 07, 2010 – Comments (0)

As I do every weekend I like to take a step back from the trading and hype and look objectively where the market stands. I use Barchart to find my data and I use 3 yardsticks because although each one measures the trend of the market, each set of data has some inherent errors and each measures momentum in a slightly different way. Well where do we stand this week?

Value Line Index -- Contains 1700 stocks so I think it is more representative of the market than the narrow S&P 500 or very narrow Dow 30 -- Trending up but not very strong

1 - Index up .99% for the week but up 10.95% for the last 20 sessions

2 -  20% Barchart short term buy signal

3 -  8% Barchart overall buy signal with 5 of 13 indicators a buy including the Trend Spotter (tm)

4 -  14 day Relative Strength Index -- 56.00% -- above 50% is good

Barchart Market Momentum -- Contains approximately 6000 stocks -- Percentage of stocks that closed above their Daily Moving Averages for various time frames -- Strong but last week was stronger

1 - Friday 73.96% of the stocks closed above their 20 DMA, 73.14% closed above their 50 DMA, 57.53% closed above their 100 DMA

2 -  Last week 79.06% closed above their 20 DMA, 72.08% closed above their 50 DMA, 52.30% closed above their 100 DMA

3 -  Last month 52.26% closed above their 20 DMA, Only 42.87% closed above their 50 DMA, Only 38.28% closed above their 100 DMA

Ratio of stocks hitting new highs/new lows for various time frames -- 1.0+ bullish, 1.0 neutral, less than .99 bearish -- This month barely bullish

1 month new highs/new lows -- 492/318 = 1.55

 3 month new highs/new lows -- 210/204 = 1.03

 6 month new highs/new lows -- 121/148 = .82

Summary and Investment Strategy -- Although this week wasn't a gang buster we are trading above the 20 and 50 Daily Moving Average but below the 100 DMA. I think we should stick to our original plan and cull from our portfolios stocks with downward price momentum and replace with new stocks only if they are having an upward momentum that is better than the overall market. This is a time for disciplined portfolio management not for betting the farm on a speculative play you're not sure of.

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions in the stock mentioned at the time of publication

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