If this market has to roll over, this is a perfect set up.
So task is cut out for dip buyers.
At this stage my primary focus is on three things:
Episodic Pivots on stocks with explosive earnings
Top 20 Sector stocks (for hit and run)
Modified Double Trouble (for hit and run)
Market Monitor Market monitor is market breadth based market timing tool
Current Readings Market has had a very shallow correction.
# of stocks up >4% on high volume
6 stocks with 100 million plus dollar volume.(M$V)
# of stocks down>4% on high volume
Some selling. But failed to make a 300 plus day. T his is slow selling and so far buyers have stepped in on such dips. Let us see what happens this time. A 500 plus day on this will be probable start of selling and correction.
The dollar volume 100 million plus b/o had 16 stock today. Bulk of them are minerals related stocks. These stocks were not leading the rally. Some of them were laggards. If market turns this is where you would notice 100 M$V stock dominating the action. As of now the large stocks are in sideways pattern. But with market being at extreme readings on MM a cautious approach is warranted. I reduced my exposure to around 50% by closing many positions yesterday. And I am ready to aggressively close more positions if weakness develops. The first phase of fast selling in any weakness can be harmful to open position. Once that passes, one can get back in.
# of stocks up >25% in a quarter
# of stocks down>25% in a quarter
260 to 300 is the range on this for a week or so. If you are looking for shorts, this is where you will find some of them now. the solar stocks clearly have topped out and some of them might be good shorts on a small rally. Watch FSLR, YGE, STP , LDK Also keep an eye on RST. When IPO break down like this, they tend to go much lower as the original subscribers abandon them.
# of stocks up> 50% in a month
Finally this goes below 20. So we are no more at extreme on secondary indicators.
# of stocks down>50% in a month
In ideal scenario you would want this to climb to 20 so that you can then expect a counter trend bounce.
# of stocks up>25% in a month
Rapid deterioration in this. Highest readings was 875 in last 20 days.
# of stocks down>25% in a month
No edge on short side as of now, for those attempting it .
# of stocks up>13% in 34 days
This will be the first ratio to turn negative in correction.
# of stocks down>13% in 34 days
Again a place to find shorts. AMZN might be rolling over. Looks like lot of distribution going on here in this stock. Tops take long time to form. But this looks vulnerable for more downside pressure.
% of stocks in confirmed uptrend
% of stocks in confirmed downtrend
POT GILD FSLR NEM APOL YHOO LLY ERTS SWN LMT HES ICE are the stock I would put on possible shorts opportunities watch list. When market rolls over or corrects such stocks can make good short candidates. Weak stocks become weaker.
10 day cumulative breadth ratio
#of stocks up> 4% in last 10 days/ #of stocks down>4% in last 10 days
Cumulative readings tend to have lag effect. So this is reflecting strong breadth in last 10 days. Also a large downside number of 796 got dropped from negative breadth numbers. A reading of below 0.5 on this will confirm bearish trend.