Monday, October 15, 2012

Bulls Have a Chance Here But They Have to Push

We finally saw a bounce attempt today that didn't meet immediate selling.  So is this the start of something or just another tease?  It's really too early to tell.  The S&P is holding up well and is clearly the leading index at the current time, something I never like seeing.   That doesn't mean however that the market can't move higher.  

S&P 500

Ideally, I would like to see the Nasdaq and small caps lead the market as that is where the high-beta and high-growth names lie, but they certainly are not leading at this point.  Until the Nasdaq clears the trio of moving averages directly overhead, it is hard to get very bullish on this market.  I am not discounting the possibility of the market rallying, but I need to see some follow-through on today's higher close, something that we haven't seen from the bulls since early September.

Nasdaq

I saw virtually nothing from my scans this weekend so I went into today with very few names on my watchlist.  I currently have two short ETFs with stops set.  If the market rallies further, I will be out of these with some small losses and I am OK with that.  My main breadth signal turned bearish over two weeks ago and has shown no signs of changing, so I have to follow what I see.  

While I don't think we have put a significant top in over the past month or so, we are in a slight correction that could continue for longer than some think, so I am playing it accordingly.   If I do see the market move above the overhead levels mentioned above, I will go back to playing longs only.   That is always my preference, as much more money can be made on the long side and it is much "easier" to play.  I actually added a long position today at the close as a hedge and will be watching the charts below closely over the next few days. 

Housing is very strong and one of the few areas that was on my watchlist today.  Of course, I ignored them and passed on KBH and PHM, but they are worth watching as they seem to be a leading industry right now.

Housing is Strong

I did enter one long today off of its 50 day moving average.  There are some others looking similar.

ANN
URBN

Coal has been strong but ideally I would like to see some more rest in this group.  I saw some steel names too so perhaps commodities/materials will pick up in general.

ACI
SID

Other names I am watching are below.   Again, it all depends on the bulls showing some sort of continued strength tomorrow.  One day does not make a rally, so tomorrow will be important.  Good luck.
PCYC
NSM
SRPT
WTR
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

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