On Tuesday our operational models switched to a SELL signal and as we close out another trading week we are leaving the week still under that operational SELL signal. Stocks staged a very bearish intraday reversal today basically shutting the door on the bulls who thought that the weakness was through following JPM’s earnings on Friday morning. Instead we saw another intraday reversal in the market, the Nasdaq fail to retake its 50 day moving average, and JPM reverse its early morning gains on large volume. The one good news for the bulls was that volume was lower than the session before.

Still, outside of the lower volume, it is darn near impossible to say anything positive about Friday’s session. My individual stock scans have been weakening lately and today the weakness was very evident as I only flagged a few stocks and didn’t even consider any of them as potential new long positions. On top of that, I do not see too many names setting up in what I would consider perfect consolidation patterns. There are some solid consolidation patterns forming in some stocks but the price/volume characteristics and breadth is not inspiring as of yet.

When you then combine that with every single major market index having its RSI and MACD oscillators confirming the price move on top of us still having one week to go in the seasonally/historically worst period for stock returns you can be sure being bullish here is not a wise decision. At the same time, there is definitely not enough evidence to suggest all hell is about to break loose on the downside either. I simply do not have enough deterioration in my individual holdings and the leading stocks to believe a crash is definitely coming. Instead I would expect more chop.

Why do I say that? Because my hedges are working and the vast majority of my long positions are working. Until one side of the trade starts to clearly fail, I would expect more of the same that we have seen lately. A lot of short to intermediate term volatility with not a lot of overall price appreciation or depreciation on a longer term time frame. If this continues I also expect all of those long signals that we have been receiving leading up to this recent volatility to stop materializing as we have already seen this past week.

Have a wonderful rest of your weekend everyone. There is still one more historically seasonally weak week left before the seasonal trends change. I recommend that everyone respect this and realize that fighting seasonality with a market that is confirming that seasonal weakness with its RSI and MACD oscillators in confirmation is not a wise decision. When the RSI retakes the 50 line and the MACD line starts to hook up again, then we can start to think about turning “bullish” once again. Until then, I recommend caution. Trade smart and monitor those stops! Aloha.

TOP CURRENT HOLDINGS – RETURN SINCE SIGNAL DATE – SIGNAL DATE

CLR long – +176% – 2/11/16
AERI long – +101% – 8/9/16
GRAM long – +100% – 4/1/16
MIME long – +84% – 7/8/16
JDST long – +64% – 8/11/16
EBIO long – +58% – 5/26/16
DUST long – +53% – 9/8/16
AOSL long – +48% – 6/14/16
HBP long – +45% – 3/28/16
EBIX long – +42% – 3/17/16
QLYS long – +42% – 5/12/16
SIMO long – +40% – 3/11/16
GGB long – +39% – 7/13/16
ABMD long – +36% – 3/29/16
CYBE long – +33% – 8/3/16