Again, The Sky Is Not Falling

Random Thoughts

The Ps lost a little more than a 1/3rd of a percent.

Ditto for the Rusty.

The Quack lost ½%.

My recent theme has been to focus on the forest vs. the trees and not get too caught up in the recent somewhat sideways action.

Even though the market was only down modestly, you would think that the end of the world is here-again. Once again, there are a lot of Chicken Littles out there claiming that this is THE top.

Predict early and often I suppose.

Eventually, they will be right. It’s the “eventually” where many of fortunes are lost.

Me? Back the chart way out and look to see the forest for the trees. More importantly, dig internally for clues. Look at thousands of stocks, hundreds of sectors/ETFs, foreign markets, commodities, bonds, and any other charts that you can think of.

Do all this and you’ll see that the big blue arrows remain intact.

Most areas are at or near new highs and/or in uptrends–Drugs, Banks, Leisure, Semis, Hardware, and software to name a few.

Recently mentioned Aluminum and Uranium continue higher.

All isn’t rosy in the world though, Consumer Non-Durables has formed a bearish Bowtie down off of all-time highs. These signals coming off of major recent new highs can be very powerful. Write that down.  You’re welcome!  Email me if you need the pattern (or stop being so cheap and pick up a copy of Layman’s…I’m half kidding) and come to the chart show on Thursday and I’ll walk you through it.

I’m not going to get too excited about Non-Durables since they can be a little defensive anyway—i.e. rally when the market is going down. I don’t think we need them to confirm a bull leg/they could just be a source of funds.

Retail is disappointing and concerning. It is on the cusp of forming a major top and could Bowtie down soon.

So, we do have a couple of questionable sectors. We will have to pay careful attention to make sure more don’t join in the fray.

On a net net basis, the Ps haven’t made any forward progress for 2014. They do still remain just below all-time highs so I wouldn’t get too concerned just yet.

So again, the sky is not falling.

So what do we do? I haven’t been seeing a whole lot of meaningful setups lately. This is normal with the Ps shorter-term sideways and the Quack and many sectors still at/or near new highs. It also might be the database telling me to let things shake out a bit before looking to play my next move. So, I’m listening. Since the overall trend still remains intact, continue to focus mostly on the long side. I think it is okay to fire off a short or two in the aforementioned weaker areas just don’t go crazy bearish while the market overall remains in an uptrend. As usual, wait for entries. As I preach, this can often keep you out of new trouble if the market/stocks fail to follow through.

Best of luck with your trading today!

Dave