Saturday, September 01, 2012

The Market-Disciplined Investing September 1

This week, the indices (DJIA 13090, S&P 1405) closed near the upper boundaries of their short term trading ranges [12022-13302, 1266-1422]. They remained well within their intermediate term uptrends [12280-17280, 1293-1873].

By Steve Cook
All American Investor

This, leaves the Averages in the upper quadrant of their short term trading ranges---a level at which generally I see no compelling technical reason to initiate any buying. Reinforcing this notion, numerous breadth indicators including the flow of funds, on balance volume and our own internal indicator are implying that the S&P 1422 resistance level will hold.

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Counterpoint (short):

On the other hand, the indices also remain within a very short term uptrend. So the technical issue is whether the resistance at the upper boundary of their short term trading ranges proves stronger than the upward momentum from the very short term uptrend. At this time, my bet is on the former for the breadth reasons mentioned above; thus, my focus remains on the Sell side---monitoring those holdings that are near to either their Sell Half Ranges or trading highs.

Volume on Friday was up, breadth improved. The VIX was down slightly but remained above the upper boundary of its very short term downtrend---a negative for stocks. However, for the week, the VIX spiked and that likely means this Market is about to get more interesting.

GLD smoked to the upside, finishing above the upper boundary of its short term downtrend. That re-starts the clock on our time and distance discipline. If this break is confirmed, our Portfolios will Add further to their positions.

Bottom line:

(1) the indices are in short term trading ranges [12022-13302, 1266-1422] and remain well within their intermediate term up trends (12280-17780, 1293-1873],

(1) long term, the Averages are in a very long term [78 years] up trend defined by the 4546-15148, 651-2007 and a shorter but still long term [13 years] trading range defined by 7148-14198, 766-1575.

Original content Bob DeMarco, All American Investor