Major averages finished lower on mixed volume. So far no bounce has materialized. The NASDAQ Composite and NASDAQ-100 attempted an undercut and rally on Friday closing just above where they attempted a bounce. This is a sign of weakness. Further, the small caps Russell 2000 is below its 200-day moving average having reversed its gains since the start of the year. With the majors trading below critical moving averages, this downtrend could continue despite the pronounced effects of QE which had helped to create shallow floors in the market.
President Trump has made little progress on his pro-economic reforms. Tax reform and infrastructure spending have both been delayed so probably won't come until 2018. A growing lack of confidence in his administration, in the Federal Reserve, and in any recovering economy is a major market headwind.
Further, our Focus List has materially shrank and is a good barometer of the health of the market. You can also let your stocks tell you what to do. In general, if you see a growing number breaking down and/or hitting your sell stops, that's a red flag. Given the recent market weakness, many if not most of your stocks have probably pushed you into a high cash position in your portfolio. Be on the lookout for possible undercut & rally formations which have been discussed, but also keep stops very tight should you initiate any long positions since markets may continue to slide.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2022 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.