US - Market Direction 36 (Oct 14 - Sep 15)

[winston]

MONDAY

Will this week continue the bounce in the small caps, SOX and midcaps that gelled the past week and paused Friday?

In other words, will there be follow through to the reversal that continues the rally for another week? Or will the bids fade after the end of the week bounce and more selling ensue?

As noted earlier, the pessimism is high and there is a litany of other reasons to support an argument the market, at least in terms of small and midcaps, has bottomed for a run to year end.

You can argue that, but that is not our position. Remember, we are just looking at playing a tradable rally and have chosen plays that can make great moves without having to plow new ground. If it goes further great. Not expecting it to, however, as we focus on working the trades.

If the ECB goes QE as it is threatening, then there is even more reason for investors to relax.

All conjecture. What we know are small and midcaps bottomed well last week and surged well. After a day off Friday we see if they can continue to the upside and buy the large cap indices time to form up.

Source: Investment House

[winston]

NEW HIGHS OF NOTE LAST WEEK

U.S. 20+ Year Treasury Bond Fund (TLT)... Treasury bonds
Invesco Value Municipal Income Trust (IIM)... muni bonds


NEW LOWS OF NOTE LAST WEEK

iShares Germany Fund (EWG)... German stocks
iShares Italy Fund (EWI)... Italian stocks
iShares Austria Fund (EWO)... Austrian stocks
iShares France Fund (EWQ)... French stocks
New Ireland Fund (IRL)... Irish stocks
Aberdeen Chile Fund (CH)... Chilean stocks
Market Vectors Gaming Fund (BJK)... casino stocks
PowerShares Clean Energy Fund (PBW)... clean energy stocks
iShares U.S. Home Construction Fund (ITB)... homebuilder stocks
United States Oil Fund (USO)... crude oil
BP (BP)... oil stock
Devon Energy (DVN)... oil and gas stock
Cameco (CCJ)... uranium stock
eBay (EBAY)... online auctions
Pfizer (PFE)... Big Pharma
McDonald's (MCD)... fast food

Source: Daily Wealth

[behappyalways]

S&P pulls back to neckline. A turn today would confirm target of around 1,790. But support is much lower at around 1,600.
https://www.facebook.com/bartonsglobal

[winston]

The Market Climbs a Wall of Worry

Source: Phoenix Letter Daily

http://phoenixletterdaily.com/2014/10/2 ... -of-worry/

[winston]

And We Are Speeding up to 2000

The long-term picture supports the bullish thesis and my portfolio is long to reflect my confidence in the strength of this bullish market.

Anyone that has been betting against the bullish run has been sitting on the wrong side of the fence for the last five years and the current fundamentals show that betting against the bullish momentum will continue to be WRONG.

Source: Phoenix Letter Daily

http://phoenixletterdaily.com/2014/10/2 ... p-to-2000/

[winston]

SUMMARY

- Another gain Friday but after good moves resistance starts to factor in.

- Great bounces but to what? Pretty ugly large cap index patterns.

- Excellent patterns still exist in the leading groups with new stocks break higher. The rebounding large caps, you would think, need to set up better patterns.

- Stocks are rallying even as wage growth stymies and huge percentages of US citizens make very little.

Source: Investment House

[winston]

SP500 Chart:-

SP500 rallied through the 50 day EMA and up to the 50 day SMA.

In seven days it recovered all it lost in the five days to the downside. Isn't that the way it always is? The downside is so fast.

Anyway, SP500 has recovered, but to what?

The pattern wasn't great BEFORE it tanked. It has the July peak at 1990ish (closed at 1964) then the September peak. Not saying it has to fail.

If it is going higher, however, it is going to have to take a breather at some point, regroup, and take on the highs.

Source: Invesment House

[winston]

NEW HIGHS OF NOTE LAST WEEK

W.R. Berkley (WRB)... insurance
Travelers (TRV)... insurance
Booz Allen Hamilton (BAH)... "offense" contractor
Union Pacific (UNP)... railroads
CSX (CSX)... railroads
3M (MMM)... manufacturing
Home Depot (HD)... home improvement
Lowe's (LOW)... home improvement
Automatic Data Processing (ADP)... payroll processing
Apple (AAPL)... consumer-products giant
Facebook (FB)... social media
Nike (NKE)... athletic apparel
Altria (MO)... cigarettes
CVS Health (CVS)... drugstores
United Health Group (UNH)... health care
Celgene (CELG)... biotech
Amgen (AMGN)... biotech


NEW LOWS OF NOTE LAST WEEK

IBM (IBM)... Big Cheap Tech
Amazon (AMZN)... market darling
Vale (VALE)... iron-ore stock
Barrick Gold (ABX)... gold stock
Kinross Gold (KGC)... gold stock
Yamana Gold (AUY)... gold stock


Source: Daily Wealth

[winston]

Forget Yesterday, Focus on Tomorrow

Source: Phoenix Letter Daily

http://phoenixletterdaily.com/2014/10/2 ... -tomorrow/

[winston]

Here's Why Stocks Could Be Headed Lower By Jeff Clark
Tuesday, October 28, 2014

It has been a long time since the stock market experienced a significant correction.

We used to get one or two corrections of 10% or more each year in a bull market. But we haven't had a pullback of that size for more than three years.

The brutal decline earlier this month pushed the S&P 500 9.6% below its September high… But there's likely going to be at least one more push lower.

Let me explain…

Typical market corrections unfold in either three or five distinct legs. The first move shakes up folks, gets the bears all loaded up with short positions, and shifts sentiment rapidly from bullish to bearish. That was the decline we saw two weeks ago.

The next leg is an oversold bounce. This move forces short sellers to cover – often at a loss, especially if they got too aggressive and sold short into oversold conditions. The bulls scramble to get back in, and sentiment shifts rapidly back to bullish. That's where we are now.

The third leg of a correction is a move back down to retest the lows of the first leg. It's usually a fast and uncomfortable move that gets the bulls to finally cry "uncle."

We're gearing up for that third leg.

Take a look at the mid-2011 correction in the S&P 500…

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The S&P 500 was trading near 1,350 toward the end of July 2011. Then it fell 225 points – nearly 17% – at the end of the first down-leg in early August. The index then bounced and recovered nearly 50% of the decline by the end of August. That was the second leg.

The third leg of the correction pushed the index all the way back down below the August lows. That's when we hit the final bottom.

If we go back a little further to mid-2010, we can see what a five-legged correction looks like…

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The S&P 500 peaked at 1,220 in mid-April 2010. It fell 9% to 1,100 by early May. The 60-point bounce that month recovered more than 50% of the initial drop. Then the index turned lower again and made a new correction-phase low in early June. One more oversold bounce and one more decline to a final bottom in July completed the correction process.

Of course, it doesn't have to happen that way. But that is usually how correction phases unfold.

People have short memories. We live "in the moment." And our investment biases favor our most recent experiences. It has been more than three years since the S&P 500 experienced a "real" correction of 10% or more.

Most people seem to be breathing a sigh of relief that the market rallied so strongly last week. Most analysts and TV talking heads confidently state that the selling is over and the market is now on its way to making new highs for the year.

I'm not so sure.

So far, the current correction has only completed two legs. Here's the chart…

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The S&P 500 peaked at 2,019 last month. It fell fast, all the way to 1,960 on a closing basis by October 15. (It dipped all the way down to 1,820 intraday. But since we're using daily charts to look at the 2010 and 2011 corrections, we should be consistent here.) On a closing basis, the S&P 500 lost 7.9% when it reached point 1 on the chart.

Last week's bounce recovered 56% of that decline. That's in line with the oversold bounces we saw in 2010 and 2011.

Guess what comes next?

It doesn't have to play out this way. But if previous corrections provide a roadmap, stocks have to endure at least one more leg down before we declare an end to this correction phase.

As I showed you last week, technical indicators like the McClellan Oscillator – which measures overbought and oversold conditions – are in extremely overbought territory. So it's not time to be rushing in to the market and buying stocks.

Be cautious. Wait for a retest or a slight breach of the lows from two weeks ago before buying stocks aggressively. Or at the very least, wait for a short period of consolidation to give the market a chance to work off the current overbought condition.

Like I said earlier, it has been a long time since the stock market experienced a real correction phase. Most people aren't prepared for another move lower. But based on history, you should be.

Source: www.growthstockwire.com