January has given its verdict about 2014 market. It has been ugly in major indices.....
January worst month since October 2012 for Nasdaq.
January worst month since May 2012 for S&P 500
January worst month since January 2009 for Dow.
Nasdaq is above 50 DMA by about 9 points, Dow & S&P 500 are well below 50 DMA.
S&P 500 low so far is 1770.45, i do not believe it has a chance to defend this low.IF we break 1770 then we are heading towards 200 DMA which currently sits @ 1706.44....
Weakness which is bad may persist because of :
-Collapsing emerging market currencies
-Chinese slowdown
-India slowing down
-Brazil, Argentina in currency freefall.
-Turkey & South Africa raising interest rates alongwith India.
-Jobs report may be weak again in US, too many layoffs happening in Retail sector.
Most of the selling in January has been on high volume.......
What is good about this TAPE that few stocks have bucked the trend based on good earnings, FB, GOOG ,CMG, NFLX to name a few.......
How to deal with this ugly TAPE is to take a very conservative approach to ride this storm. It may get more ugly before it gets better.
Keep some exposure in "high comfort stocks"
Fed curtailment of buying by $20 billion is playing havoc in Emerging market, tight US liquidity means downward pressure in all currencies.Even Canadian $ is down almost 12%.
Resource sector is in trouble because of lower demand from China , India & other emerging economies.
It will take a while before "all clear" is given.
Stock Market is facing many uncertainties & less support from Fed...not a good cocktail mix. It will bring more volatility thus VIX may break towards 24 area.
Do not celebrate "oversold bounce" because that is exactly what it will be, then back to lower lows.
Patience & Time is what is needed to repair technical damage to this TAPE.
BLOG does NOT give buy or sell.
Saleem
12 comments:
Hey Saleem,
We both agree that downside risks are numerous right now, but I do like that many growth companies are reporting well and support is still holding, although for how long is uncertain.
That said, reduced exposure and/or hedging is a great idea until we have better clarity on many factors. The jobs report should be interesting this week.
My weekly recap/outlook on your Friday PM post as usual:
http://stocks100.blogspot.com/2014/01/indices-closed-down-47-to-94.html
Also, check out AAL estimates after their report this week. Given that most analysts still aren't factoring in all the potential synergy upside, and coupled with the P/E expansion necessary to bring it inline with other airlines like DAL and UAL, it should really outperform in coming months, even if only to limit downside if the market falls apart. I might add even more if an opportunity arises despite the #1 position weight already.
Stocktrader
Hi Stocktrader,
This week may be the-most painful in terms of indices...we may slump lower than so called support.
Earnings this week may provide better entry point.....
Saleem
Hey Saleem,
Sold MJN @ 76.45.
Sold MS @ 29.71.
This was part of the plan to reduce exposure. I was going to buy some PFPT this morning, but it's already up $1.
Stocktrader
Hey Saleem,
Did pick up that PFPT @ 41.31.
Stocktrader
Hi Stocktrader,
Your timing for sell was better, they are all lower now.
Good luck with PFPT.
Saleem
Hey Saleem,
I considering selling FDX also due to the cyclical exposure, but I was too enamored with the paradigm shift to online sales that is driving growth.
Stocktrader
Hi Stocktrader,
FDX is still holding its support @ $131.08......
Saleem
Hi Stocktrader,
Did a swap..Sold AUY @ $9.40 & bought EXTR @ $7.06....
Saleem
Hey Saleem,
Good luck on EXTR with earnings ahead. I've had horrible luck, maybe yours will be much better! :)
Stocktrader
Hi Stocktrader,
Wed before open is EXTR earning report...i am hoping it goes my way.
Saleem
Hey Saleem,
Bought NOW @ 61.99 after that great earnings report last week.
I'm going cuckoo for cloud right now--it's one of the few areas showing accelerating revenue growth.
Stocktrader
Hi Stocktrader,
Good luck with NOW....
Saleem
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