Wednesday, July 16, 2014

7/16/14 General Observation-Market Rotation

I'm writing this at 3:32 pm Wednesday afternoon on 7/16.  I see some significant rotation occurring at the present time -- none of the "Greenfield leaders", with the exception of YPF, are attracting any significant money, relative to the past 10 days.  I view this as defensive:

Right-click on the image to open in a new tab or window.

The column I have the arrow on is a projected volume column.  It uses a polynomial to estimate volume for the day -- obviously, early in the day it's less accurate, but at this time of day it's very accurate.  The "strength" column is relative to the volume over the last 10 down periods -- and this is because I believe that up days need to be stronger than down days to maintain a trend.

Something to think about.

The lack of stocks that are 1) positive in price change for the day and 2) have a volume "strength" greater than their previous down days tells me that folks are letting their baskets ride.

A bit more disconcerting is the list at the bottom of the table -- RMBS, BFR, STZ, and EMES are all being sold today at volume levels higher than any of the previous 10 down days.  Obviously, avoid these names for now.

For those of you who receive stock and ETF updates via the Dropbox folder, you probably have seen this:

In a nut shell, the small-cap Russell 2000 is being sold while the DJIA, NAS, and S&P500 continue about their merry path upwards.

This isn't to state that I think we're headed down -- it simply is an observation that the market is becoming more defensive and is rotating out of small cap stocks into the larger ones.

If you have money in the market, start paying attention to whether it is small-cap focused or blue-chip.  It will make a difference.