Ian Woodward's Investing Blog

Stock Market: Hanging on by a Thread

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:

Thread Picture

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

Thread Indexes

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

Thread Canaries

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

Thread VIX

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

Thread abcde

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:

Thread Pat

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:

Thread Pat2

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

Thread Nasdaq

Thread S&P1500a

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:

Thread RUT

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.

2 Responses to “Stock Market: Hanging on by a Thread”

  1. Paul R Says:

    There you go again Ian with that golf nonsense! I thought we convinced you years ago fishing is the past time one needs for good market insight!

    All kidding aside excellent market analysis and I trust the newbies will follow along. You mention type 3&4 folks, it hasn’t been safe for us type 1&2 folks these past few weeks.

    See you in October!

  2. Charlie Willey Says:

    Ian –

    I hope Great Sunday golf goes on forever because of late it has been the backdrop of your best posts. This post is no exception. Right now I am observing we have recovered right at 50% of the ‘correction’ move on a couple of the indexes. Can we break the 50% mark? I don’t know but I am watching. I do see the slippery edge on which we stand. Thanks for the posts.

    – Charlie

Copyright © 2007-2010 Ian Woodward
Disclaimer: Commentaries on this Blog are not to be construed as recommendations to buy or sell the market and/or specific securites. The consumer of the information is responsible for their own investment decisions.