Ian Woodward's Investing Blog

A very Happy Easter Wishes to all of you in this Shake and Bake Market, as I watch Matt Kucher and Luke Donald battle it out on the Golf Course at Hilton Head, South Carolina in the Heritage Classic.

At least the Stock Market Bounced for what has been the best week of the Year, and I suppose we mustn’t complain that it wasn’t better especially for the NASDAQ and the RUT, but Beggars can’t be choosers!

Sad to say that the Canaries are gasping in the Coalmine and their Index is down a whopping -31%.  Let’s hope that it is time for these to see some support from what is an oversold Index:

…And here is the Index to prove it:

The Russel 2000 (RUT) which has been a leading Index for so long has now turned to being the second poorest from its high at -6.2% and only just ahead of the NASDAQ which is at -6.3%:

With the rebound this week in the Market, the VIX is quiet once again and in the ENJOY area:

…And here is the “Enjoy”, if you dare to play:

Grandma’s Pies show that the S&P 1500 is essentially back to Stalemate:

Here is the Turmoil we have tolerated for the last three months:

Let’s be realistic about where this Market stands despite all the Wibbly-Wobbly we have tolerated;  Except for the NASDAQ, RUT and NDX, most Indexes are only -4% or far less from their Highs.

I am thinking of my buddy the Scotsman, Mike MacDonald, and hoping like him for a Highland Fling in the Market:

Good Luck to you all.  Best Regards.

Ian

My good friend, Phil Deane, from across the pond in Jolly Old England sent me this picture of the action in the QQQs today.  Many of you know him as he has attended our seminars and made valuable contributions.  His comment is at the top.  I added the thought at the bottom as this was certainly some reversal day!  I couldn’t help but share it with all of you, but it might just be wishful thinking after all the turmoil these last few weeks:

Keep your Powder Dry!  Best Regards,

Ian

This is just a quick follow up to the previous notes as things are getting a trifle messy now:

Here is a snapshot taken almost five months ago when we were breaking through round numbers:

Well, I called this one right and now we are into Nail-Biting time:

Best Regards,

Ian

For the past month the Big Guns have yanked our chain with this Wibbly-Wobbly Market, and it is time to at least plan for a sudden Knee Jerk to the Downside to see what are reasonable Targets.

The quality of a Bounce Play after a dip will invariably give us a clue of the shape of things to come, and frankly today’s efforts as I write this before the Market closes has been especially strong in the NASDAQ, the NDX and the RUT which were the weakest of them all.  It pays at times like these to be prepared with some downside Targets so that we are not taken by surprise as it is the Capitulation that invariably does the most damage to our Nest-Eggs:

It always pays to understand the Folklore of the Four-Year Presidential Cycle, where Year #2 is invariably the most vulnerable and susceptible to Big Corrections.  There is no knowing when the big drop will come, but we have now been over five years since the big drop in 2008 and we have not had even a 12% intermediate correction these past 15 months, so we are due for one sooner rather than later.  Meanwhile, this has been dubbed a “Fed Cat Bounce” and you know the slogan of “Don’t Fight the FED”, so play along until things peter out once again:

To show you what I mean about the influence of the Fed, here is a snapshot I captured earlier today when the Indexes all started to bounce after the Fed Meeting Minutes were announced, so we have a Fed Cat Bounce:

…And here are the Canaries Chirping back again two days ago and again today (not shown), so more things to watch:

We are back at Stalemate on the Accumulation vs. Distribution Ratio as of last night:

My job is to stay ahead of the game and at this stage to give you insight of the Targets for the downside, but there is absolutely no panic yet, as with today’s bounce all of the Indexes are back into safe territory from their highs:

Once this Bounce Play is over, watch for the next downward thrust and the two items I list is what you need to watch for.  Ron, my partner, has mentioned 4000 on the NASDAQ as the critical target to watch and here is the picture:

…And here are the rest of the Targets for you to keep a beady eye on, and to act accordingly:

Stay Safe and Keep Your Powder Dry!

Best Regards,

Ian.

I suggested in my last Blog Note that a mediocre Jobs Report would send the Stock Market into a tizzy and head down, and that is what happened with most Market Indexes down 4 Buckets.  Another day like Friday and the Bears will have full control, and you and I will worry about being trampled at the exits, and saying “Coulda, Shoulda, Woulda!

We have had fifteen months of ambling along with the Jobs Report numbers, and unlike last month where the Market felt they were good, we got a trouncing for being essentially at Stalemate.  Here are the numbers for 2013 vs. 2012 and then the first three months of this year compared to last year:

Here is the picture of the Market Indexes over the past month, which shows they have been struggling:

Needless-to-say the Canaries took a beating and are rolling over from their highs of a month ago:

The Accumulation vs. Distribution Ratio bounced up to 2861 vs. 1842 and has slid back to 2661 vs. 2013:

After the 4 Bucket down day on Friday, the path of least resistance is down once again:

…And Grandma’s Pies show the instability with the S&P 1500 back to Stalemate in 2 days:

Here is the chart that summarizes it all and shows you why the Market is currently in Code Red!

Have a Happy!

Ian.