The recent market volatility the last few weeks has many traders wondering if this is the beginning of a market top, or possibly just a reaction to global news flow.
We've had everything from the Russia/Ukraine issue, to the end of QE3 in the U.S this month, to ISIS terrorists in the Middle East, to a sudden drop in the price of oil, and now EBOLA fears.
There's been a lot for the market to digest, and up until mid September the general market indices had held up reasonably well, aside from the weakness in the smaller cap Russell indexes. And now we're into earnings reporting season.
The energy complex has been destroyed. The sharp drop in the price of oil makes one wonder if it's signalling coming weakness in the global economy. The Eurozone is a mess, with Draghi continuing to try and jawbone that stimulus is coming, all the while Merkel sits back and rejects the idea.
What to make of all this? For me, I care most about the price and volume action in the market leaders. There have been some failed breakouts recently, while other leading sectors like the biotechs and select restaurant stocks are sitting in constructive bases.
So for now, until we see the market volatility settle down some, and see a valid follow through day in the indices, it's time to do less. It's a trader's market. If you're adept at getting in and out of positions quickly, you are probably loving this volatility.
But others should probably wait for a clearer picture to develop.
Here's a chart showing what could be the beginning of a head and shoulder top. Or it could be just another pullback to shake out weak hands. What I'll be watching with close interest is to see how the S&P 500 acts when it gets up to the 1950 to 1990 range of overhead resistance.
Some names of note in the aforementioned groups that are holding up well: RCPT, ENTA, AMAG, LOCO, PLKI, DNKN, SONC, TXRH
Click on chart to enlarge.
We've had everything from the Russia/Ukraine issue, to the end of QE3 in the U.S this month, to ISIS terrorists in the Middle East, to a sudden drop in the price of oil, and now EBOLA fears.
There's been a lot for the market to digest, and up until mid September the general market indices had held up reasonably well, aside from the weakness in the smaller cap Russell indexes. And now we're into earnings reporting season.
The energy complex has been destroyed. The sharp drop in the price of oil makes one wonder if it's signalling coming weakness in the global economy. The Eurozone is a mess, with Draghi continuing to try and jawbone that stimulus is coming, all the while Merkel sits back and rejects the idea.
What to make of all this? For me, I care most about the price and volume action in the market leaders. There have been some failed breakouts recently, while other leading sectors like the biotechs and select restaurant stocks are sitting in constructive bases.
So for now, until we see the market volatility settle down some, and see a valid follow through day in the indices, it's time to do less. It's a trader's market. If you're adept at getting in and out of positions quickly, you are probably loving this volatility.
But others should probably wait for a clearer picture to develop.
Here's a chart showing what could be the beginning of a head and shoulder top. Or it could be just another pullback to shake out weak hands. What I'll be watching with close interest is to see how the S&P 500 acts when it gets up to the 1950 to 1990 range of overhead resistance.
Some names of note in the aforementioned groups that are holding up well: RCPT, ENTA, AMAG, LOCO, PLKI, DNKN, SONC, TXRH
Click on chart to enlarge.
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