Thursday, July 28, 2011 at 5:53 PM Posted by Sine Wave Analytics 0 Comments

$NYA - Daily
Chart of the $NYA showing accelerating volume to the down side. Only the nasdaq remains above the 50ma. The 50ma moving averages on the main index's are trending down. The action beneath the surface is ugly to say the least. It is amazing how fast conditions can change. Coming into this week I had a list of longs the length of my arm, however that list quickly dwindled to only a few potential candidates and now that list is fully breaking down. The market leading stocks that lead us higher are also showing signs of weakness.

Bear markets typically have strong opens and weak closes, be careful not to get caught in the short cover rallys. Its time to play defense, there are no new potential longs for now. The set-ups that once looked promising are fully breaking down from their patterns. The stocks that are trying to break out are not holding their gains. I understand that conditions can quickly change due to the headlines, but until a number of good quality stocks start forming sound chart patterns, it is a time to be patient and in cash. 

It is that time again to keep an eye on stocks showing relative strength. Awaiting patiently for a follow through day on the index's coupled with more encouraging action underneath the surface. Until then :)

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