Tuesday, January 15, 2008

Building Strength and More Market Insights

* Building a Bit of Strength in Stocks - My recent indicator review noted increasing glimmers of strength. Monday followed through with some further strength. Demand finished the day at 67; Supply was 31. That means that over twice as many stocks closed above their volatility envelopes surrounding their moving averages as closed below their envelopes. Fresh 20-day highs rose to 808; 20-day lows fell to 839. We also saw further strengthening in the Technical Strength measure, with 10 stocks from the basket now in uptrends, 7 neutral, and 23 in downtrends. Of the SPX stocks, 26% closed above their 50-day moving averages, up from 21% on Friday. None of these measures have shown vigorous strength, however, as Demand has stayed below 100; new lows have outnumbered new highs; and Technical Strength remains skewed toward stocks in downtrends.

* Going Long Education - Wang's Happy Trading makes the case for going long education stocks in China. Demand is likely to be there even in the event of economic slowdown.

* Worthwhile Site - This one's worth spending some time and visiting, with posts in both Spanish and English and quite a broad market coverage. Here's a fine post tracking new lows specific to the S&P 500 stocks, which showed considerable weakness last week.

* Wisdom From Jesse Livermore - Chris Perruna passes along some timely gems. See also his bear/no-bear market links.

* Consolidating - Sideways action in the major stock indexes has Trader Mike looking at another possible leg down.

* More Treats - Kirk finds more treats among his links, including a Great Companies ETF that focuses on large cap growth at a reasonable price. Sounds like a promising theme for those sovereign wealth funds that need to put capital to work beyond low-yielding Treasuries.

* Do Follow Through Days Follow Through? - Quantifiable Edges takes a hard look at an IBD pattern; excellent blog.

* What Shipping is Telling Us - Barry Ritholtz tracks falling shipping worldwide and possible spread of economic weakness. I think he's right on in his analysis of possible effects on commodity prices.