By Investor’s Yak

All stock market indices and sector charts remain below their August 31st closing prices with only a few exceptions. Even after the modest Labor Day rally and the FEDs stimulating decision to keep interest rates near zero, there is no substantial market progress. And there is still direction uncertainty with respect to end of September window dressing as well as the passing of a 2016 fiscal year budget.

Many times, an end of year rally can start as early as October. Investors should consider watching Action Zones and price lows for activity in October, November, or worst case as late as December. If a rally does occur, the best hope would be for stocks (and indices) to regain a strong position above their 50 and 200 day moving average (DMA). And if you find an opportunistic buy, be careful to take profits if January 2016 results in a reversal back down below moving averages.

Event calendar affecting markets in September
7 September – Labor Day
16-17 September – Fed meeting
28-30 September – End of month and quarter window dressing; could extend into October.
30 September – end of Fiscal year 2015 (2016 budget must be passed)

By Investor’s Yak

This is the BIG week of the FED meetings (16-17 September). Additionally, if congress does not pass the 2016 fiscal year budget by September 30, right, wrong, or indifferent, the market usually responds negatively. This could be why markets are not yet ready to rally. Although a strong post Labor Day rally occurred on Tuesday, the week ended last Friday within a range bound envelope. Major Market indices are hugging the bottom Bollinger band on weekly charts, and last week’s prices still ended below the major moving averages (50 and 200).

Event calendar affecting markets in September
7 September – Labor Day
16-17 September – Fed meeting
28-30 September – End of month and quarter window dressing; could extend into October.
30 September – end of Fiscal year 2015 (2016 budget must be passed)

By Investor’s Yak

There’s little to say positively other than, be patient, and eventually the market will offer some opportunities. Sometimes the day after Labor Day closes up, but there are no guarantees. And there is still uncertainty regarding the mid-September FED meeting outcome.

Little has changed since last week, and with the exception on Home Builders, just about every sector is below its 200 Day Moving Average (DMA).

By Investor’s Yak

Definitions and Acronyms:

• DMA – Day Moving Average
• Death Cross – is a bearish signal depicted by the 50 DMA moving below the 200 DMA

Monday began with a deeper drop than the prior week but rallied through to Friday (28 August) with an impressive comeback. Presently, this appears as a bounce that will have to penetrate some heavy Resistance to transition back to a bullish scenario.

The bearish “Death Cross” has engulfed most major indices (DJIA, S&P500, Small Caps, etc.) as well as sectors such as Utilities, Semiconductor, Technology, Retail, Metals, Energy, etc. Daily Action Zones for some of these reflect an extended bounce with some potential for more short term gains. But caution should be exercised with any purchases in this challenging market.

A silver lining of hope exists in a few areas:

• Homebuilders are showing the best strength with prices above the 200 DMA even after Monday’s deep pullback.
• Healthcare, Pharmaceuticals, and Biotechnologies have 50 DMAs that remain above the 200 DMA and their prices are holding near the 200 DMA.
• Materials and Transportation, while priced below the Death Cross for months, may be establishing a price bottom.
• NASDAQ, Financials, and Consumer Goods – their 50 DMA, while starting to slope down, has not crossed below the 200 DMA. But remain vigilant because their prices are presently established below both the 50/200 DMAs.

Many of the best rallies occur following a good correction. These corrections can last weeks, months, and sometimes a few years. Most corrections frequently begin with a pullback similar to what we have experienced this week. Even if a correction ensues, an end of year rally could provide a short term entry sometime this fall (September, October, November, or even December). Watch for good price construction and Action Zone set up to reduce risk on your purchase entry.

Event calendar affecting markets in September
7 September – Labor Day
16-17 September – Fed meeting
28-30 September – End of month and quarter window dressing; could extend into October.

By Investor’s Yak

All major indices (i.e. NASDAQ, S&P500, and Dow Jones) and most sectors have been busted down below both their 50 and 200 day moving averages (DMA). Sectors below the 200 DMA include; Semiconductors, Technologies, Transportation, Retail, Consumer, Financials, Energy, and Metals. Even Healthcare and Biotechnologies have failed. The only sectors above are Home Builders and the weaker Utilities.

The long waited for correction appears to have begun. How long the markets will remain down is unknown. If the FED does not interfere, a correction frequently results in major indices having short lived rallies followed by further price drops. This could be a good time to stay in cash.

Be ready and prepare for the next rally, start your own review list of stocks. Watch them weekly and eliminate the stocks that fail to remain strong. Sometimes the market will have an end of year rally which could start late September, October, or November.

Event calendar affecting markets this month
28-31 August – End of month window dressing will most likely fail to produce satisfactory new highs.

By Investor’s Yak

Little changed from last week, and more purchase conviction will be necessary for this market to take off. (Read last weeks “Troublesome Index Patterns”).

Here are the three things you need to know:

1. Major Market Indices are the same as last week with these additions:

• S&P500 broke below the 200 day moving average (DMA) but bounced back to rest on it.
• NASDAQ broke below its $5000 price support then returned to rest on that support.

2. Major Markets bouncing back (as stated above) indicates some institutional conviction; But for how long?

3. Other Sectors

• Utilities moved higher as expected and actually closed above the 50 and 200 DMA
• Homebuilders broke above their trading range
• Gold, Silver, Platinum, are still below their 50 and 200 DMA, but have succeeded in a small up move. The longer term weekly Action Zones notionally imply a bottom. And if possible, a bottom could be reinforced with an end of year seasonal rally from commodity purchases by jewelry companies supporting different holidays around the world.
• Healthcare and Pharmaceuticals appear to be topping out and the Biotechnologies have already busted below the 50 DMA.

Event calendar affecting markets this month
20 August – Greece ECB bond payment due
28-31 August – Window Dressing

By Investor’s Yak

When the market sets up for failure during a late summer slowdown, it could be a hint to stay away.
See the charts for yourself.

Here are the three things you need to know:

1. Major Market Indices are setting up troublesome looking patterns:

• DJIA is priced below its 50 and 200 day moving average (DMA), with the 50 crossing below the 200 (a big Danger sign).
• IWM (Small Cap) is also priced below its 50 and 200 DMA.
• S&P500 is below the 50 DMA and resting on the 200 DMA.
• NASDAQ is below the 50 DMA and at price support. It is the strongest of the indices.

2. Action Zones for above Major Markets

• Daily charts show a near term setup for a bounce to higher prices.
• Week charts indicate a longer term push in the negative price direction.

3. Other Sectors

• Healthcare and Pharmaceuticals appear to be topping out and the Biotechnologies have already busted below the 50 DMA.
• Financials, while in a trading range, the weekly Action Zones show the possibility of topping.
• Homebuilders are in a trading range
• Utilities may bounce but will most likely find resistance at the 200 DMA.
• Almost every other Sector is showing signs of trouble (Semiconductors, Technology, Materials, Retail, and Transportation).
• Energy and Metals (gold, silver, platinum, etc.) have been beaten down for months.

Event calendar affecting markets this month
20 August – Greece ECB bond payment due
28-31 August – Window Dressing

By Investor’s Yak

Here are the three things you need to know:

1. The Medical related industries bounced off their 50 day moving averages (DMA) for Biotechnologies, Pharmaceuticals, and Healthcare. Action Zones reflect the possibility of a continued move toward the upper trading range (TR) ceiling.
2. TR’s also continued in the Major Market Indexes, Financials, Home Builders, and Consumers Sectors. It would be great to see new high price breakouts this week, but institutions may be holding off until the summer concludes.
3. Down sectors with 50 DMA’s below the 200 DMA are Energy, Utilities, Transportations, and Metals. And worse, the 50 DMA for some Technology and Semiconductor companies are starting to slope down towards their 200 DMA.

Event calendar affecting markets this month
20 August – Greece ECB bond payment due
28-31 August – Window Dressing

By Investor’s Yak

Here are the three things you need to know:

1. Strong uptrends in the Medical area are getting tested at the 50 day moving average (DMA) for Biotechnologies, Pharmaceuticals, and Healthcare. Action Zones warn of pull backs for a few more days.
2. Trading ranges are being challenged in Major Market Indexes, Financials, Technology, Home Builders, and Consumers Sectors. Many are priced below their 50 DMA.
3. Down sectors with 50 DMA’s dangerously below the 200 DMA are Energy, Utilities, Transportations, and Metals.

Event calendar affecting markets this week
28-29 July – Fed meeting
29-31 July – Window Dressing

By Investor’s Yak

The two things you need to know:

1. Last week’s market finished by returning to the prior nine week trading range (TR).
2. Actions Zones are mostly extended, but potential Action Zone 3 price move set for some stocks.

Investor’s Yak Stock List has fewer choices when Actions Zones are extended. And when the market is extended, even Action Zone stocks struggle to advance. Watch for more newcomers in next week’s list if a TR pull back occurs.