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June 28, 2014 – Weekend Market Comment

June 28, 2014 – The Dow and S&P 500 edged lower on Friday following a downbeat second-quarter forecast from DuPont, though consumer sentiment data helped support the market. Among the day's positives, U.S. consumer sentiment rose more than expected, according to the Thomson Reuters/University of Michigan's final June reading, though that follows weak reads on consumer spending and first-quarter economic activity earlier this week.

Trading volume, which has been below average in recent weeks, and saw heavy action going into the close as Russell Investments announces the final reconstitution of its indexes, affecting more than $5 trillion in assets.

After hitting a new high last week, the Russell 1000 iShares (IWB) was hit with sudden selling pressure on Tuesday afternoon. This reversal day certainly looked negative on an intraday chart, but it was not enough to affect the immediate uptrend, there was no downside follow through as IWB held above 109 the whole week. While the stock market may be vulnerable to a correction, selling pressure has been rather limited since mid April. At the very least, we need to see some follow through to Tuesday's reversal for proof that selling pressure is actually increasing.

Well let’s see where we are …. The Bull and Bear Lines tell us we are in a bull market, so no need to panic even in a pull back.

The Primary Sell Indicator is dropping but is still in positive territory, but clearly over confidence is fading.

The Green Arrows Graph is also fading and is telling us this is not a great time to put new equity money to work.  There is a new CME4PIF School on the Green Arrow Graph click here to read it.

The S&P 500 stocks above the 50 day average is showing that the bloom is off the rose. If we cross the 60% line expect a market pull back.

We can also see this in the cousin of this graph ... for the big firms on the NYSE now crossing below 80%.

The VIX continues to hover in the low range, you might consider picking up some low cost protection with VIX options or the VXX ETF. It is probably that the VIX can't keep dropping after looking at the above graphs, but don't go crazy here, buying VXX is a counter trend bet in a bull market, often unwise.

The days when the US market was way outperforming Canada are over --- as commodities again rise.
Here is Canada:

vs. American midcaps

What Works Now
Well I hope you followed my advice to pay safe in Canadian Banks like Bank of Nova Scotia

A good choice in the USA is my favorite Bank of New York Mellon, mentioned in my posts endlessly.

Tripadvisor continues to perform although it is now at a point of resistance. By the way at this time Tripadvisor in the last 90 days has been in the top 80% of stock performance on any US exchange.

Well July is here, there sure might be some fireworks this week! Have fun!

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