Forget the ISM figures and other economic data point the geopolitical issues in the world are causing jitters to increase. The market did take a bit of a dip after the release of the ISM non-manufacturing numbers. However, the market was able to stabilize and inch higher towards breakeven. It simply was not in the cards for the market to end the day with gains with Russia building troops at the Ukraine border. Even with the lift into the close it remains clear this market is going to have a tough time hanging onto to any rally. Volume soared on the day as institutions were active in the markets selling down holdings. Today’s market proves why it is important to stick with a time-tested process. We remain under a sell signal and will operate accordingly.
It is easy to be doom and gloom here. Putin is going to push the limits. Why would he not try? He believes the US and its allies are weak and will not oppose his actions. Time will tell. In the meantime, while we can be doom and gloom there are bright spots. One such bright spot continues to be FB. Keep an eye on the stock and if it can continue to hold up in light of this downtrend it will be a stock to watch. We will continue to keep an eye on stocks meeting our criteria for potential longs when this market does decide to push higher.
A bit of good news came from small caps as the Russell 2000 did not lead the market lower for once. It is not secret the Russell 2000 has been battered quite a bit over the past few weeks. Leading the Russell 2000 was CHGG and QLYS. QLYS is another stock, like FB showing out performance while this market corrects. We’ll keep an eye on it while CHGG needs a bit more work. On the other side of the coin is Europe where the DAX continues to lead the Euro complex lower. This index can’t catch a break and continues to struggle. It pays to pay attention to price no matter what the financial pundits spew. Ignore the noise and keep your eye on price.
Volatility is something to keep an eye on as well. The VIX has stayed above the 15 level a sign this market has the potential to push lower. We thrive on volatility and it creates many opportunities for us to extract gains from this market whether the opportunity is on the short or long side. Trying to play with the volatility ETFs is a very difficult road to travel. We don’t recommend unless you are seasoned and are able to exit intraday. If volatility continues to rise, it will open the doors wide open for us to have huge returns. Are you ready?
Last week when our model issued the sell signal we caught some heat on StockTwits as well as some Facebook groups. What is interesting is the number of people coming out and calling the model’s move foolish. We are opinion agnostic and price is our guide. The market model is not guiding by our opinions or what Jim Cramer has to say about the market direction. It is a simple price orientated system nothing more nothing less. Where we win and where our subscribers win is our ability to follow this model and extract tremendous gains from the market. This is done over a long period of time where you can build your wealth. There is not get rich quick scheme in the stock market, but many will go broke trying. Nevertheless we will continue to follow our process while others gamble their nest eggs away.
We are in extreme short-term oversold territory and if we do manage to close higher tomorrow it will not surprise us. This market needs to prove its worth and we will be on top of it every step of the way.
