Follow your dreams, so long as it's not your dream to time a market top

July 05, 2015

Post Recap

After taking some 'me' time and a month of toned down blogging, I came back spitting fire last week.  Thanks for all the support of late!  You learn who really enjoys you're work and has your back when you have an inconsistent posting schedule!  Here's all the posts from the week in case you missed them.

The Rotation Report: Waiting



The Grexit Contagion scenario - (yeah, i'm adding to noise, but I tried to lay out what Greece news matters to me as an investor.)

Also, I'm pleased to announce the Public Chart list of some great growth stories and interesting businesses is now available on stockcharts,com.  Check it out here

Top Trading Links

It’s Volatility season. All of a sudden the Dow Jones Industrials are below the 200 day moving average. Instability and uncertainty is emerging across the globe. More and more charts are breaking down and this seems like early stage correction stuff.
On the flip side, hopefully you’re having a wonderful long weekend! Happy Birthday America!
Here’s this week’s Top Trading Links.vix july returns past 10 years

MARKET INSIGHTS
@RyanDetrick shows us that for whatever reason, volatility tends to spike in July.
@michaelbatnick notes volatility spikes tend to occur when the Dow Industrials are below the 200 day moving average.
As you can see, we currently have a ‘perfect storm’ for increased market volatility that extends beyond Greece or other news events.
@Snyder_Karl notes S&P 500 support levels.
sp 500 technical support levels july 2015
The high yield bond market has shown relative weakness for about a year now. Does it finally matter? @KimbleCharting takes a look.
“Fueled by a continued wave of biotechs, the health care sector has accounted for over one in three IPOs for four quarters in a row”
corporate buybacks chart
@TMFHousel on innovation:
“Some of the most meaningful inventions took decades for people to notice”  

MARKET OPERATOR INSIGHTS
@harmongreg on support and resistance:
The key distinction between how the professional uses support and resistance is this concept of a brick wall. Pro’s see support and resistance more like a state border. It is a line demarcating a border, but it does not stop you from walking right through it.”
Warren Buffet’s greatest advice compliments of @SirMarket:



NEWS & HAPPENINGS
  • “with less than 5% of the world’s population, the United States holds roughly a quarter of its prisoners” – The Economist

Thanks for reading!  Be sure to check out our Top Trading Links archives for a goldmine of investing research and trading education.

The Energy group is not acting well

The energy sector is struggling and it’s pretty clear the whole industry needs more time to recover from and (more importantly?) adjust to last year’s massive price shock. And this shows up on the chart for the Energy Sector ETF (XLE)
Looking at the chart below, there are a few takeaways that are important to note.
  • Underlying breadth leads price to new lows.
  • Momentum divergences failed to lead to a rally.
  • The Energy Sector ETF (XLE) has consistently traded lower while the market remains range bound.
  • 73 looks to be a major support area for XLE.
energy sector weakness xle chart divergences
Now let’s look at a major component of the Energy Sector – Crude Oil itself. Since rallying into May, Crude has gone sideways.
Here are a few important things to note about Crude Oil right now:
  • The falling 200 Day Moving Average has caught up to price.
  • Price may be forming a two month rounding top between 56-62.
  • Price has now fallen below the 50 day moving average.
  • The 50 day moving average is flattening out.
crude oil price chart energy sector weakness
In my view, there is not much to be positive about in the Oil and the Energy Sector right now. What would change the look? Some massive upside thrust. That said, it seems like the space still needs time to recover and digest last year’s massive price shock.
Thanks for reading.
Note: I originally published this post over at See It Market

Reminder:

All ideas shown on this blog represent the authors opinion based on the data available.