Off your game?
Read our free, updated as of Mar 3, 2022, Dr K report on how to optimize your mind and body so you can boost your focus when trading the markets.
Meet Dr K !
Chris Kacher
  • Nuclear physicist
  • Stock & crypto market wizard
  • Blockchain builder
  • Bestselling author
  • Top 40 charted musician
  • Biohacker
  • Former computer hacker
Your email will always remain private.

MLR - PMP 7/21/14

Major averages rose on Friday, reversing Thursday's losses, but volume was mixed despite options expiration. In the face of international turmoil in Portugal, Iran, Russia, Ukraine, and Gaza, the major market averages managed to finish the week off less than 1% on the S&P 500 and less than 2% on the NASDAQ Composite. Thus the resilience of the markets in this QE-centric environment continues. The Market Direction Model is likely to switch out of its short-lived cash signal sooner than later as the current sideways choppiness resolves itself.

Based on our studies going back decades, crisis events such as this week's plane crash generally only result in short-lived corrections and thus can present buying opportunities in certain leading stocks. Generally, crisis events only result in a more severe correction if the event itself has a material and broader destabilizing impact on underlying market conditions. As well, the market can correct independently of a crisis event, as it did in March and April of this year following the initial news out of the Ukraine at that time. In that particular case the event provided the market with an alibi for a initial sell-off, after which the market snapped back once the event proved to be less severe than the original market reaction implied. The market then fell into a deeper and longer correction on its own. Whether the market falls into a similar correction going forward is a more a function of how leading stocks act as we move through earnings season. At best we would consider the current action to be inconclusive, and we would avoid becoming locked into a rigid bullish or bearish stance as a QE-centric market does its best to fool the crowd at every turn, as it has done many times since 2009. The most prudent approach is to operate on the basis of what leading stocks are doing, and specifically paying attention to stops and trailing stops in long positions.

Some buy signals were flashed in leading stocks Friday:

Google (GOOGL) had a cup-with-handle breakout after announcing what was perceived as a positive earnings report despite missing by 15 cents. However, the company did beat on revenues.

Rail-related names like Union Pacific (UNP) and Trinity Industries (TRN) had pocket pivots within their bases, most likely in sympathy to Kansas City South (KSU), which had a continuation pocket pivot from a position that was slightly extended from its 10-day moving average after beating on earnings Thursday after the close. These stocks are expected to announce earnings over the next several days leading into the end of July.

Fabless semiconductor name Avago Technologies (AVGO) had a pocket pivot within its base on Friday.

Like what you read?
Let us help you make sense of these markets by signing up for our free Market Lab Reports:
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. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
Copyright ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing.
All Rights Reserved.
privacy policy