Weekend Review: 04.04.2014

By: Ken Darby | Sun, Apr 6, 2014
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Risk-Reward Market Report

Smart Money Index
Liquidity Index:
A) Short-term Liquidity:
Bullish Zone with an expanding money flow... Bullish Half Gauge Short-Term Price Support (daily price support of ~100 day EMA ... 20/50 EMA... ~5-10% pullbacks)

B) Intermediate-term Liquidity: Bullish Zone with expanding money flows... Bullish Half Gauge Intermediate-Term Price Support (21/144 EMA... ~10-19% corrections) As a long-term investor, this the more dominant trend that we want to focus on.

A uptrend in prices with a downtrend in the Liquidity Flow suggests underlying selling pressure (distribution) that could foreshadow a bearish reversal on the price chart. In bull markets when Flow is in a Bullish Zone but the trend is bearish, often may indicate consolidation of prices within a range bound area (trendless). In a bull market the bulls will have the advantage. (but not a given) A downtrend in prices with a uptrend in the Liquidity Flow indicate underlying buying pressure (accumulation) that could foreshadow a bullish reversal in prices. This data series shows an often overlooked aspect of the market and a useful tool in our perspective of the longer-term market progression.

Short-term Directional Trend: Neutral Gauge ... (supports ~ daily price above the 50day ema or~ 5/21 EMA) This is an important 1st defensive support area. The 100 day is usually the 2nd important support area. Funny that these 2 correlate fairly close to Fibonacci support.

  1. The Internal Momentum trended up from the warning zone then move lower again on Fridays pullback
  2. Internal Flow has again turned south
  3. H-L short-term momentum: short-term bullish zone

H-L Index: Intermediate to Long-term Indicator: Bullish Half Gauge

Breadth Momentum: Bullish Half Gauge

  1. Sector Momentum: went from 4 to 5 bullish of the 10 sectors. Small caps & tech are bearish
  2. 10 & 20 day ema trend-lines are bullish

Breadth Trend: Intermediate trend is in the bull zone Bullish Half Gauge...

Fear Indicator: Bullish Half Gauge... Dropped down below 0.

S&P 500 Short-Term Price Action: Short-term trend indicator is still bullish. Internal negative flow was quite high for Friday. Overall still short-term bullish we advise neutral/caution. The short-term flows being bearish. Bears have had the upper hand lately so beware. Better to wait till Tech has bottomed. Hourly chart shows oversold do we could get a bounce. Bullish action and limited follow through & throw-back down to previous zone. Tech led lower again. More of the market topping chatter. Profit taking & reversion back into selling tech & small caps into strength at end of week. Should see 1920 but very hard resistance levels, may not be easy. Price stuck in the 1840 to the 1883 area.... Breakout target from this area of around the 1920 or 1795 zones.

Market Outlook: Liquidity flows and trends support a intermediate to long-term continuation of this bull market. We see the market for the next few months struggling more than it has before in reaching new highs. StockCharts list

 


 

Ken Darby

Author: Ken Darby

Ken Darby
The Risk-Reward Market Report

Perhaps the most important part in any decision, is asking the right questions.

No one method is necessarily right for everybody. Personally we don't like to put all of our eggs into one basket and don't rely on others for advice. Most money advisers don't actively manage your portfolio to protect you from downturns in the market. Individuals must be pro-active in managing their own retirement savings. We employ 2 different portfolio strategies, with about 1/2 divided into each portfolio strategy.

1.) Dividend Investing -- Any stock we purchase for dividends or asset allocation should be value driven. Our dividend stocks are also classified to an asset allocation strategy, along with others like energy, small cap, BRIC, gold, mlps etc.........diversification improves risk/return profile.

2.) Investing in the leading strength ETF sectors-- Buy low with the market trend -- sell higher with the trend. Then we buy a bear ETF for protection on the way down. Another option is to stay in cash on market down turns. (if you know how to do options, then go for it.)

IMHO using these strategies will help hedge against a downturn.

Our #1 priority is to preserve capital!

Per Warren Buffet

1. "Rule No.1: Never lose money. Rule No.2: Never forget rule No1.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/