If you look at the charts of just the Nasdaq and S&P, you probably wouldn’t be too worried about the overall market as both continue to ride their nine day EMAs higher. If you look closer, however, you can see some divergences with price and moneystream that is a bit worrisome. If the nine day EMA does break at some point this week (it’s held the ENTIRE YEAR so far for the Nasdaq), I think there is a very good chance of seeing a sharp, quick move lower of 2-4%. Hopefully, the market could right itself from there but it is probably not something you want to sit through if you have a lot of long positions.

On the other hand, if you look at the chart of the Russell 2000, you probably would be worried. This chart has been lagging for about a month now, both in not being able to challenge 2011 highs like the Nasdaq and S&P did and also moving sideways while the other two indices ground their way higher.

Breath has deteriorated as well over the past few weeks and my breadth indicator is as close as you can be to being on a sell as you can be. If we see anymore selling early next week, it will turn to a sell. What we need to see based on this chart is for the bulls to step back up and show some strength soon. They (the bulls) have been weakening for a week or two now and although we haven’t seen a ton of heavy selling, we’ve seen virtually no heavy buying and that’s the problem.

In terms of setups, this was not a great weekend of scans as I went through my charts. There are still some out there, but the number and quality of setups is certainly not what it was in January. Perhaps that’s telling us something as well. There are a few really, really, really thin names out there that look decent like SVN, BIOS, KH, and STV, but when a $4 stock averages less than 100K volume a day, it is certainly not one that has “buy” written all over it. I am not opposed to entering long positions here even with the market being “iffy”, but just be aware that it is more risky here.

Recommended Posts

Stocks

What Affects Stock Markets During the Earnings Season

During the earnings season, investors and stock market traders pay attention to many different variables that affect the stock market. This includes financial data and world issues. This article will cover these factors. Economic data Several major indicators, such as unemployment, GDP and GDP growth, can affect the stock markets. Although not every piece of economic data has a direct impact on the stock market, these indicators can trigger expectations of government action. One of the biggest economic indicators is GDP, which is the dollar value of all goods and services produced in a country during a particular time period. While a good GDP figure can boost share prices, a bad one can have the opposite effect. Another indicator is the Purchasing Managers Index. This is a measure of the growth of the manufacturing sector. A positive figure suggests that businesses are performing well and that their earnings are likely to increase. The housing and construction sector is considered an important part of any economy. The number of construction projects is another indicator of a healthy economy. High construction activity […]

SwingTrader
Charts

A Good Trader Uses Stop Losses Always

Using stop losses can help you limit your losses. Depending on how much money you have to lose, you can set a limit of one to three percent of your portfolio value. You may want to set the limit lower if you have had some losses recently. You can also choose to use a trailing stop loss. The downside to using stop loss orders is that they lock in your losses. This means that if you sell at $97 and then a buyer comes along, your order will be cancelled. It may also cause you to take a large loss if you place it too far off the current price. When you use a stop order, make sure it’s far enough from the current price to avoid a large loss. Stop-loss orders are often used by investors to limit their losses when they open new positions. For example, a trader might buy a hundred shares of a new tech stock at $25 a share. To avoid a large loss, he or she would set a stop-loss order at twenty percent […]

SwingTrader