Weekend Review 09/05/2013

Volatility remains high as noise of the continued politicking about Syria and the Middle East plays out among the string pullers whose slightest twitch or twist of phrase seems to have the knack of dragging the market down a percent in moments. This creates some trickiness from my perspective due to the fact I keep tight stops and these intraday gyrations often result in whiplash, so for this reason I'm still somewhat cautious about the market here in lieu of a death by a thousand cuts scenario, but in general there are some positives of note suggesting the pullback may have found the bottom.

The first positive I saw this weekend was that the % Stocks above their 40 period moving average has risen above 30. In previous discussions on this I've mentioned how I prefer that this dip below 20 which tends to lead to longer duration moves, but I'm not going to nitpick that it only dipped to 22.

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The McClellan Oscillator closed the week at 19, neither overbought nor oversold.

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A quick glance at the daily charts shows the SPX and Russel below their 50 period moving average and exhibiting a pattern of lower highs and lower lows, but the NASDAQ has been holding firm and is only .89% below its 52-Week high and has held above its 50 MA during the entire pullback. From my perspective it isn't so much that the Russell must lead above all else, the NASDAQ will suffice as well which it has been as of late when compared to the others.

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What I found noteworthy is that while the NASDAQ dipped a modest 3%, the percentage of stocks above the 50 period moving average dipped to below 40 which indicates that there was a heavier rotation occurring under the surface that was masked by a sideways consolidation.

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While I expect this to continue to be a hiccup to hyperventilating type market where a cross word uttered will spook traders, the underlying breadth and strength of the NASDAQ coupled with set-ups has me positive on the overall market.  It's important to keep in mind that regardless of what the breadth signals suggest as probable or the media and talking heads suggest is inevitable, ultimately it comes down to the set-ups.  If they are there, tune out the noise because the story that individual stocks tell is the only thing that matters. 

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