July 27, 2010

Market went nowhere within narrow pivots on low volume.

Short-term: 2 yellow, 2 red – tending yellow
Intermediate-term: 2 green, 2 yellow – tending yellow/green
Stock targets: 24% swimming, 34% neutral, 42% sinking

Wow. What a difference a day makes. Short-term, the market is overbought and deteriorating underneath. Intermediate and longer term, stocks really are highly correlated and you can see it. The number of individual stocks all crossing 50/200 and other technical factors (like the length of the May/June correction affecting a lot of different technical factors for a lot of different stocks) simultaneously is really surprising to me. I knew most stocks just move along with the market (with different betas and such) but it is interesting to see this all happen. The indexes are still chewing through resistance and didn’t make any progress today.

Gotta admit I am just confused. If I were to bet, I’d bet that the indexes pull back and then make one more attempt to charge thru resistance. But frankly, it’s probably better just to leave for the summer. No push through resistance or failure to do so is gonna be meaningful/predictive with this anemic volume. No humans here – just high-frequency computers trading with each other.

Gold is now oversold as valued in pounds – and is close as valued in euro, A$, and francs. Not oversold valued against dollars, C$, or yen. I may be early but since I much prefer gold over any currency long-term, I am going to scale into gold (first bit bought at $1162) before it bottoms and turns. A bit of a test of my “currency” strategy. Silver is still a bit too expensive here.

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