{"id":3730,"date":"2009-06-16T07:30:25","date_gmt":"2009-06-16T11:30:25","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=3730"},"modified":"2009-06-16T07:30:25","modified_gmt":"2009-06-16T11:30:25","slug":"on-weedwacking-and-crabgrass","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2009\/06\/16\/on-weedwacking-and-crabgrass\/","title":{"rendered":"On Weedwacking and Crabgrass"},"content":{"rendered":"

There are several technical indicators that have flashing some very concerning signs. One in particular is the number\/percent of stocks in the S&P 500 and NASDAQ 100 that are above their mid- and longer-term moving averages.<\/p>\n

Clearly this rally has gone a long way to prove that there is more than just a run of the mill short covering rally underlying the move; but traders still pay close attention when overbought signals appear.<\/p>\n

The question now to ask is how long will the correction last (if it is more than a one day wonder) and is there something lurking that could completely derail the uptrend. Consider the following:<\/p>\n

    \n
  1. Global markets are falling in unison. This could create another cascade as we saw earlier in the year<\/li>\n
  2. Economic news is coming in much weaker than was expected<\/li>\n
  3. Bonds and currency fluctuations are showing extreme volatility, showing that investors are not willing to be patient<\/li>\n
  4. Political tensions are rising – North Korea, Middle East, BRIC Nations<\/li>\n
  5. Investors want evidence of a recovery – hope is no longer good enough to raise markets<\/li>\n
  6. U.S. government intervention and reckless spending is spooking global trading partners<\/li>\n
  7. 9.4% <\/strong>U.S. unemployment – enough said on that<\/li>\n
  8. Talk of exit strategies is causing stimulus addicted nations to fear the “other side”<\/li>\n
  9. Low volume for NYSE\/NASDAQ over past weeks show that investors are no waiting for the next move.<\/li>\n
  10. Uncertainty regarding Obama Health care initiatives<\/li>\n
  11. Inflation fears rising due to massive commodity retracement<\/li>\n
  12. S&P approaching 20-day moving average – SMA \u00a0 923.19 , EMA 924. 49 (closed Monday at 923.72)<\/li>\n
  13. NASDAQ approaching 20-day moving averages – \u00a0 SMA 1793.68 \u00a0 EMA 1802.29 \u00a0 (closed Monday at 1816.38)<\/li>\n
  14. S&P\/NASDAQ Declining 200-day moving averages<\/li>\n
  15. A series of low volume rallies with high volume sell-offs<\/li>\n
  16. Mortgage rate increasing to 5+ month high<\/li>\n
  17. Foreclosures, delinquencies and bankruptcies rising<\/li>\n
  18. Extreme flow of secondary issuance which will cause earnings dilution next quarter<\/li>\n
  19. Highest volatility stocks leading way throughout rally<\/li>\n
  20. Most technical indicators (Stochastics, McClellan Oscillator, MACD etc) showing overbought condition for major indicies<\/li>\n<\/ol>\n

    Now is the time to take a short pause, look at what is occurring before making any substantial commitments. Broad based hedging with inverse ETFs to manage individual long positions may be a an idea worth pursuing as well.<\/p>\n

    While there are signs that a recovery may take hold at the end of 2009, there are others that appear to be providing evidence that 2010 is the earliest that the economy will stabilize.<\/p>\n

    \n<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    There are several technical indicators that have flashing some very concerning signs. One in particular is the number\/percent of stocks in the S&P 500 and NASDAQ 100 that are above their mid- and longer-term moving averages. Clearly this rally has gone a long way to prove that there is more than just a run of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12],"tags":[483,490,497],"class_list":["post-3730","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","tag-markets","tag-stocks","tag-strategy","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/3730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=3730"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/3730\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=3730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=3730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=3730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}