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July 12, 2014 – Weekend Market Comment

July 12, 2014 – The Dow in the past week declined 0.7 percent to 16,943, and the S&P 500 was off 0.9 percent at 1,967. The Nasdaq fell 1.6 percent, to 4,415. The worst performer, however, was the Russell 2000, off about 4 percent, to 1,159, in its worst weekly decline in two years.

Stocks were higher on the Fed release Wednesday but retreated Thursday on global growth concerns and worries about a Portuguese banks. But that overreaction was no doubt the result of a market that has become too complacent

The VIX, meanwhile, rose 22 percent in the past week to 12.59, still a relatively low level, but a sign that more market participants are hedging. The VIX is the CBOE's Volatility Index, a measure of market expectations of near term volatility based on stock index options prices. Here is the VIX buy sell Chart. 

Speaking of the VIX. If you followed me in to VXX and did not loose your nerve, you were rewarded this week. 

As we have been seeing the not only is the Primary Sell graph often the most reliable predictor it is often flashing concern way before the other indicators.  notice its steady decay heading for the zero line. To learn about this graph click CM4PIF School Lesson 2: Primary Sell

Perhaps more ominous is the NASDAQ summation index is not looking well either, with the first pull back in weeks.

Our Percent above 50 indicator also continues to degrade. Click her to learn about CME4PIF School Lesson 4: Overbought -- Index Percent Above 50-Day Moving Average.  

This is simple correction and not a full fledged panic, the bull bear lines are still strong and the On Balance Volume has not fallen off. So long as the red keeps up with the black things should be orderly. 

One of the weakest areas of the U.S. economy has been new home construction. Darling of the industry TREX is looking pathetic as less people are building plastic sun decks right now. This just goes to show ... don't fall in love with a stock. 

Ditto for real wood, as Canadian lumber company Canfor hits the skids. 

As I said before my stops are pulled in nice and tight under Under Armour as it appears to have got a hole in it earnings and it looks like a perfect double top is forming. 

What Works Now
Well of course we have pulled our horns in getting ready to buy in on the next turn. That means I am more in cash than usual and most of my pipeline stocks have had a small correction, except TransCanada still on the way up.

You could look at US Bonds probably all right for a little while, I have bit of this for safety in rough times. .

Also I still hold my uber safe Canadain Bank, the Bank of Nova Scotia, although I am expecting a small pull back there too and the stops are tight.

I sold this but the U.S equal to BNS is probably Bank of New York. Again probably headed for a pull back with the market.

In Other News
Well Since we have had a nice run this spring in the market and your wallets are now fat with cash consider buying one of these. The wait is finally over, ladies and gentlemen! Dodge has unleashed its most powerful Challenger ever — the Hellcat. Rumored since early last year and initially expected to show up at the 2014 Detroit Auto Show, the monstrous muscle car was raised from the dark pits of Hell with a huge, supercharged, 6.2-liter, V-8 mill under the hood. Chrysler officially confirmed that the new Challenger SRT Hellcat will deliver a whopping 707 horsepower. This make the Challenger Hellcat the most powerful muscle car ever. 

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