The Big Picture: Have you lost all hope yet?
by, 06-26-2011 at 10:00 PM (1008 Views)
Looking at the news over the last few weeks, you'd swear the end of the world was just around the corner. The hyper focus on Greece, a country of insignificance on the world stage is almost laughable if it weren't so devastating to the pocketbooks of I-Fund investors. Today Greece, tomorrow Italy, Ireland, Portugal, Spain, ect... The list goes on, the debt is mounting and the odds on defaults are ever increasing. It's gotten so bad that I don't even look at the I-Fund charts anymore, I left that girl behind a long time ago, and this isn't a relationship I care to renew anytime soon.
Below: Looking at The Big Picture, The Small Caps & Transports are the strongest, with the NASDAQ 100 clearly being the weakest as large heavily weighted caps are lagging. With the last buy signal we produced on 22 June, this has been the second longest buy range, with 11 concurrent buy signals in all. This is a correction, had this been a simple pullback I would have expected 3-4 concurrent buy signals and would have gotten a better entry.
Below: Looking at the simple moving average deviations, we can see the 4/20 & 20/50 columns have taken on significant negative damage indicative of what a correction looks like. The good news is the 4/20 SMAs have stopped gaining negative momentum as outlined within the black circles. In addition, the 4/20 on the Transports & Mid caps have gone green with a positive deviations.
Below: The bad news: Over the course of the last 4 trading days the Transports have failed to capture a close above a 50% bounce from the May peak to the June bottom.
Above: The good news: Off the June bottom to the 22 June peak, the Transports have not closed below a 50% retracement. Combining these two pieces of information tells us there's yet more questions needing to be answered.
I realize June has been a stressful devastating month for many. We went from pullback, to pullback, to pullback, to correction and it happened in 30 days with death by a thousand cuts. As of this writing I still contend the bottom is in until proven otherwise. If the bottom breaks, my stop is at W4500's 643 for a -5% loss, that's what I call absorbing pain. If we go higher, then I'll look for an exit at key retracements of the previous waves. Either ways I'm hunkered down ready to weather the storm be it good or bad.
Take care and trade safe...Jason