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JimVanMeerten (61.10)

We had a weak week



August 27, 2010 – Comments (1)

This week showed a little promise at the end but I'm not holding my breath. Lately we've had a lot of strong Fridays that ended up being a disappointment the following week. Let's step back and forget about the headlines and pundits on TV and use our 3 yard sticks to rationally evaluate where we stand. We use Barchart as our data source and use 3 yardsticks because no single one works all the time. I learned something from the Supreme Court - if you have an odd number you never have a tie. Let's see where we ended.

Value Line Index -- Contains 1700 stocks so its broader than the S&P 500 or very narrow Dow 30 -- recovering but still weak
1 - Index down .11% week over week

2 -  Index down 5.70% for the last month

3 -  Barchart short term 20% sell -- overall 1 buy, 4 holds & 8 sells

4 -  Trading below its 20, 50 & 100 day moving averages

5 -  14 Day Relative Strength Index 45.69% and rising -- a bright spot

Barchart Market Momentum - Contains approximately 6000 stocks -- Percentage of stocks trading above their Daily Moving Averages for various periods -- recovering slightly

1 -  Friday only 38.16% close above their 20 DMA, over 51.15% closed above their 50 DMA, only 44.91% closed above their 100 DMA

2 -  Last Week only 32.70% closed above their 20 DMA, only 49.22 closed above their 50 DMA, only 52.52% closed above their 100 DMA

3 -  Last month over 79.21% closed above their 20 DMA, over 72.16% close above their 50 DMA, over 52.33% closed above their 100 DMA

Ratio of stocks hitting new highs/new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- still bearish

1 month new highs/new lows -- 216/666 = .32

 3 month new highs/new lows -- 127/323 = .39

 6 month new highs/new lows -- 84/255 = .33

Summary and Investment Strategy -- The week looked like we may have found a bottom. I'll continue to trim from my portfolios stocks that have a downward momentum and I might add back new stocks if the Barchart Market Momentum keeps improving and the Value Line Index gets a 14 day Relative Strength Index above 50%.

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

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

1 Comments – Post Your Own

#1) On August 27, 2010 at 8:42 PM, weihou258 (< 20) wrote:

I see DOW can reach 10330 before Friday, if no bad numbers from China. If Friday's unemployement number is not bad or not too bad, it may reach 10450 which should be a good exit point.

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