Wednesday, August 06, 2008

Tough Swing Trading Market and Some Wednesday Resources

* No Trend, No Friend - Since 2006, the correlation between the current day's price change in the S&P 500 Index (SPY) and the next day's change has been -.095. Since June of this year, however, it has been -.214. Buying after an up day or selling after a down day has been a losing strategy. The trend has not been a friend for swing traders of late.

* Impressive Rally, Less Impressive Indicator - The market rose sharply on Tuesday, but we only had 1027 stocks making fresh 20-day highs against 868 new 20-day lows across the NYSE, NASDAQ, and ASE. That is fewer new highs than we saw during the prior market bounces in July. I will be watching closely to see if the rally is gaining or losing traction, particularly among the small cap stocks, which have shown less relative strength of late.

* Signs of the Times - The only two sector groups within the S&P 500 universe that are currently showing a majority of their highly weighted stocks in downtrends (my Technical Strength measure) are Materials and Energy, the two commodity-related groups. Consumer Staples and Health Care, two sectors usually thought to be more recession-resistant, are the strongest sectors. Note how Utilities have been following the commodity/energy stocks lower. We've seen a 2008 low for gold and silver mining stocks ($XAU), which have been hammered of late.

* What's Hot? Instant Bull displays the stocks that have gotten the most searches over the last four days, as well as calendar links to get economic and earnings news. See also the news search engine at NewsFlashr, with regularly updated headlines, including a page of financial headlines with search.

* Staying Current - FinViz stays on top of financial news and blog updates. Check out their screener as well, as well as their sector-based heat maps.