Ian Woodward's Investing Blog

Friday’s Bounce Back saved the Market from heading down further while the Market Indexes are hanging on by a thread at the crossroads.  The Market Indexes are trying to hold here at Support, but as those who have followed my blog notes for years will immediately recognize that with %B at the ~ 0.2-0.3 area we are hoping for a further move up, and yet can trundle down very quickly:

It is touch and go, but as we see all the Market Indexes are trying to find support this past week:

Likewise, the Canaries are showing some renewed strength, and is a good sign to counter some of the gloom:

The VIX has been bouncing around just below going into oscillation.  Watch carefully for moves above 18:

Past History shows we have reached the Depths of Distribution, and we need a quick reversal to the upside:

The 6.4 Buckets down killed the momentum of the Rally, and we are now 11 days down, so should see a reversal soon, which may have already started with this past Friday’s decent move up:

As we will see %B for the Major Market Indexes is between 0.2 to 0.3, and this is no man’s land where either the recovery continues to force %B above 0.5, the mid point, or we fall back again and the Market moves down:

The next two charts show the cliff edge that %B is on and confirms that Type 3 & 4 Investors need to be patient:

We all know that the Small Cap stocks have fared the worst of late, so I have used the Russell 2000 (RUT) as the Guinea Pig for showing what to look for before longer term Type 3 & 4 Investors should engage in this market.  The Index must get above the resistance of the moving averages before there is any hope that there is a longer term move up…we need an Eureka & Kahuna to appear as shown:

Well folks, there you have it.  I couldn’t take my eyes off the TV watching Golf today, but I am sure you will still enjoy this.

Best Regards,

Ian.

With three Major Shots across the bow in the last month and the last big one only a few days ago on Thursday 07/31/20114, we are probably in for some big fights between the Bulls and the Bears as they get ready to rumble!

The Market Indexes sold off this past week and we are now at the Caution level with the NASDAQ & NDX holding up best of all with only 3% down from their highs.  The RUT and S&P600  are worst at ~-8% down:

With Earnings out for the Canaries, they are looking respectable though they have given up some ground:

But now comes the bad news…the Market Indexes are all below -3% from their highs with the RUT and S&P600 as the laggards.

The VIX has run out of cushion and is now on the borders of going into Oscillation, so watch this carefully:

Internals are rotten with Distribution well underway.  Not far from extreme capitulation so look for a bounce:

This last big red day on Thursday killed the Rally for now and it will take time to repair:

…And here is the -6.4 Buckets down in %B to prove the Market is in deep doo-doo!

4350 was key Support for the NASDAQ and it held, which was a good sign.  However the last call is 4300 otherwise we head down with a vengeance:

…And here is the picture for the S&P 1500.  My guess is it will take a while to right itself:

The latest vogue is “Seasonality” so here is the picture from 2009 forward for the S&P 500, which shows that August is the poorest month for these last six years:

We are due for a double digit correction, since we haven’t had one these past 18 months:

We continue to have good news on the Jobs Report scene with yet another month of >200,000 Jobs posted:

…And here is the long term picture which is very encouraging:

Well, there you have it with a long blog note this time while watching Rory McIlroy take the lead in the golf.  Keep your powder dry and next week should give us a clue if we are in for more trouble or get out of being Oversold.

Best Regards,

Ian