Market still in weak uptrend

The uptrend is still intact, though it is a weak uptrend. The reason we say the uptrend is still intact is because the prices did not cut the prior low. Read July 11, 2012 blog to get an explanation of what is a weak uptrend.

Even though the market went up by 1.7% on July 13th, we did not get good readings for "5 day" and "10 day" ratios. Also the “4% up” column did not get a value above 500. This indicates that growth momentum stocks are not participating and the uptrend is weak.

What does a market in weak uptrend mean?

When the price range of the upper limit and the lower limit, in which the prices move are so wide that the movement from the lower limit to the upper limit shows the characteristics of a trend, we call it a weak uptrend.

Here the prices are still moving within a band/range that is why we cannot call it a strong uptrend.

When the market is exhibiting these characteristics, growth momentum stocks do not participate. For growth momentum stocks to participate we should have a strong uptrend.

The BUY to SELL cycle lasted 7 days in the Market Breadth Ratios Indicator

The BUY to SELL cycle lasted 7 days in the Market Breadth Ratios Indicator. During this time we did not get a reading over 500 in the “4% up” column. This shows there was not much strength in the move.

As noted in the blog of June 30^th. “Since the Growth Momentum Leaders stocks did not participate to the level expected, we should Buy/invest only 20% of the portfolio in these types of stocks. If your portfolio rises by 2%, then BUY another 40% of the portfolio. If it goes up another 2% be fully invested.”

The money management aspect of investing is very important to limit the downside risk.

The market is still in uptrend but needs close watching

The market is having a normal correction after going up since 6/8/2012. The prices should come down till the oscillator reaches its bottom.

When the oscillator reaches its bottom, the prices should not under cut its recent low. If it does then the price uptrend comes into question.

Which areas of the market are doing well

What is working very well in the stock market is:

1. Small Cap stocks. Here the upside “acc of trend” is 1.9. The “thrust of trend” is 18, the highest in all the indexes followed. Anything more than 10 is considered good.

2. Big Cap Dividend paying stocks. Here the upside “acc of trend” is 2.0, the highest in all the indexes followed. The “thrust of trend” is 14, anything more than 10 is considered good.

What is not working that well in the stock market is: Growth Momentum Leaders stocks. Here the downside “acceleration of trend” is -1.2. The “thrust of trend” is barely 5. These readings have improved in the last few days. However we want them to be better before we go fully invested in these types of stocks.