S&P 500 looking better technically than Nasdaq.....

IF you look @ chart, following picture emerges.

DOW below 50 & 200 DMA and near lows of its trading range...

Nasdaq above 200 DMA and is 29 points away from 50 DMA

S&P 500 above 200 DMA but only 3 points away from 50 DMA....

S&P 500 being the strongest in terms of above analysis , gives hope that 500 stocks of S&P 500 is behaving much better than 100 Nasdaq stocks.....

Broadening of strength is always a tell tale of underlying strength which may be developing.

Dow is the weakest and does not give confidence to 30 components which remains weak.

NOW...the question is what to do in this "dog days of summer market "

First recommendation is, this TAPE is weak and requires different strategy than when market is strong.

Second, strength is in a very narrow range of stocks....

Third, stocks which are strong, needs to be monitored closely for loss of strength or getting a good entry point.

Fourth, exposure in this type of TAPE has  to be in a "high comfort zone"

This week is Option Expiry, which may bring more volatility.

TAPE remains challenging, but limited exposure in strong stocks may bring some gains. 

It is important to book gains IF you get it quickly. 

Some beaten down stocks require selective buying. Oil may be the place to be as we are flirting with 6 year low.

Good luck with your own analysis and comfort level.

BLOG does NOT give buy or sell.

Saleem

Posted in: Mixed