Trucharts.com - Blog update Markets ending week of 10/03
What an exciting week this has been – we are going to give some insight into the state of the markets. Well this past week we had employment news and 248K jobs were created last month. Labor participation is at its lowest in the last 20 years. Markets moved up Friday from a shellacking earlier in the week. We have been stating that we have been observing many divergences in the markets and this is very indicative of top forming markets – exaggerated moves in the indices, narrow stock leadership, declining breadth, declining new highs, and many other technical indicators. Additionally, we are seeing weakness in the commodity markets – gold is down, oil is down and so are other metals. The weakness in the oil markets and stocks and oil drillers is very disturbing. We are also reading about price wars starting the oil markets for market share – that tells us that the OIL industry and regions associated with the oil industry are going to be deeply affected by these price wars. Just check out the charts we have published here this week and we will exit our position in USO this week. Check out the chart for XLE – breaking down. We have also shown the critical trendlines for SPY and DIA.
We have also published a chart here which shows the correlation between high yield junk bond ETF (JNK) and SPY and DIA. We believe there is liquidation going on in the high yield junk bond markets and there is a very strong correlation between the high yield junk bonds and the markets as you can see from the charts below. Our position is to lighten up on positions especially related to the commodity complex – OIL, gold etc., and take profits now. Biotech we have been stating is volatile and we would take profits in that sector. The NASDAQ move up is driven by the biotech stocks and some participation from the tech stocks. Biotech stocks are in a bubble and this will end badly.
We have also provided charts below which show how our trade strategies work on our site with automated buy and sell signals. As you can see from the charts below for DIA, TXN and HAL. You can use these automated buy/sell strategies on our stockcharts page to see if your stock is on a buy/sell signal. We have defined four trading strategies and these are very effective. Check these out on our page at: www.trucharts.com/stockview.aspx
We will be looking to short HPQ and GM this week and closing several of our long positions.
For the DIA and SPY note the RSI and MACD weakness as the markets have been moving up. Clear divergences. Also check the JNK vs the SPY chart – you can see how the markets are tracking along with the JNK.
Here are the charts we have discussed above with our buy/sell signals. (Green arrow is buy and red arrow is SELL).
We welcome comments and feedback on our posts – so please feel free to leave comments or questions.
One of our portfolio strategies had performed as follows: (If you are interested in discussing this strategy, please contact us at bbhatia@trucharts.com)
Portfolio Performance as of close on Friday September 26th :
| TOTAL P/L | $19,343.86 | |
| ACCT CAPITAL | $50,000.00 | |
| TOTAL P/L % | 38.69% | |
| HIT RATIO | 95.60% | |
| DURATION (weeks) | 29 |
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