Quick Update Before A Long Weekend

The market closed at noon today and it couldn’t have closed fast enough for those that have been riding this awful market down.  Even though we haven’t been part of that party, I have to admit, my mind needs a rest.  Too many charts, documents, economic reports, and breaking news reports.  I just want to relax and enjoy our independence.  But, before I do, I’ll share what I’m seeing going into the weekend. 

The negatives

  • We still have investors that are waiting for lower prices before they commit new capital.  The supply/demand picture is still deteroriating and not getting any better. 
  • We have oil that almost reached $150 by the 4th of July, which was one prediction we saw a few weeks ago. 
  • We have some fear, but it’s more of a methodical fear where it slowly rising.  There’s no panic just yet.  We’re in this state where many investors are caught like a deer in the headlights wondering if it’s too late to sell.  They’re hopeful it’ll come back but they don’t know. 
  • Floor traders are getting just a little bit more bullish the lower we go and retail investors are just about to toss in the towel.   
  • Our leading economic indicators still show weakness several months out. 

The positives

  • The number of stocks on the NYSE that are above their 40-day moving average stands at 9%.  This oscillator usually bottoms at 25% when we get a rally. 
  • The percentage of stocks above their 200-day moving average is under 20%. 
  • The fear is in scared zone and on its way to panic mode.
  • Leadership stocks such as agribusiness, steel, coal, & energy are selling off which is needed for a real bottom.  Very few places to hide in this market now.
  • Interest rates still low and have fallen in the past two weeks.
  • Stocks are becoming cheaper and cheaper and many are a good deal right now.
  • Our shorts are becoming more and more profitable and we’ll eventually take profits.
  • The doom and gloomers are out in full force.

We know we’re getting closer but I’m not making any major moves at this point.  Remember, an oversold market can stay oversold for a long time. 

Have a nice weekend.

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