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Posted by ZorTrades

Frank Zorrilla is the founder and chief investment officer of Zor Capital LLC.He began his Wall Street career 10 days after his 20th birthday when he became a Series 7 licensed stock broker.

The View; Stalling

by ZorTrades on January 25, 2013

in Stocks, Technical Analysis

The SP500 was up 0.01 yesterday technically making it its 7th up day in a row. Since indices tend to be mean reverting vehicles for the most part, once it gets extended it should be considered somewhat bearish in the short term (1-3 days) but normally bullish in the intermediate term. Immediately after the close those who’s positions were somewhat leaning to the dark side noted that we are up 7 days in a row and we will correct, those leaning long based on their positions were calling it a consolidation day. IBD got it right; flat day, higher volume = STALLING. No one knows what that means right now, but depending what happens over the next couple of days will tell us exactly what it meant. A lot of us are guilty of allowing our positions cloud what is happening at the present. We are all guilty of this from time to time, others are guilty of this all the time. We sometimes (some always) massage data/information that we are receiving so it can align with our view which is pretty much dictated by our positions in the market. Here’s a hint; take it day by day, position by position, look at things for what they are not for what you want them to be, if in doubt get out or reduce.

Top 3 ETF’S yesterday; IYT, XHB, XLY, bottom 3; GDX, SLV, XLK. Stock selection means the world right now while the market grinds higher and rotates from sector to sector. Emerging markets (EEM) were on fire the last couple of months of last year, so far the EEM is down year to date and for the 1st time in a long time if closed below its 10 day and 20 day moving averages.

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