MLR – PMP 3/11/15

By | March 11, 2015

Scalper1 News

​Major averages tanked yesterday on higher volume, with the S&P 500 and DJIA definitively slicing through their respective 50dma’s. Distribution days continue to pile up with 5 of the last 8 days adding at least one distribution day onto a major index. While the put-call ratio spiked, this does not mean the market has found its low. The market often will fall for another few days or more before finding its low after the put-call spikes. Thus trying to use this secondary indicator as an entry point to buy is hazardous at best. Volatility spikes during such periods adding to the overall noise in the market, and added noise means added risk. It is far more reliable to examine the health of leading stocks as a good representation of the market’s internals, thus the screens we run regularly help keep all of us on the right side of the markets when it comes to going long or short individual stocks. As for market timing, the market tends to fall off mini cliffs with very little warning as it has done five times since December. Major averages tend to quickly fall around 4-5% during such periods which last from just a few to several days before sharply bouncing, thus the timing environment remains tricky. With the NASDAQ Composite off 2%. the S&P 500 off 3%, and heightened levels of noise, MDM will most likely move to the sidelines for now. Futures are trading up as of this writing. Short-sale set-ups Workday (WDAY) and Splunk (SPLK) have continued moving lower with the indexes, although their initial downtrends began BEFORE the indexes actually topped. SPLK closed yesterday right at its 50-day moving average, which could set up a technical bounce, and we would view the 20-day moving average at 63.64 as an area of potential upside resistance on any bounce. WDAY has broken 5% below its 50-day moving average, bringing into play a possible downside target at the 76.35 mid-January low while the 50-day moving average at 84.53 can be viewed as an area of potential upside resistance. Weak rallies into the 50-day line could be viewed as potentially shortable. How the short side of the market develops from here depends on how things unfold following this first break off the peak, and for now that remains a fluid situation. Scalper1 News

Scalper1 News