Tuesday, February 3, 2015
Current Observations - Feb 3rd, 2015
One measure that continues to give us pause is the ongoing deterioration in breadth. For this upside move to have staying power we'd like to see more participation. Right now the % of stocks above their 50 day moving average continues to lag. As does the % of stocks above their 200 day MA. More and more stocks have lost momentum as the sideways/volatile action has dominated the market the last few months.
One interesting bullish pattern that has emerged is the potential for a bottom in oil. For the first time since September, Crude Oil has rallied above its 20 day moving average. Last Thursday, Crude hit a new low only to have a massive 8% reversal to the upside on Friday. Crude closed at the high of the day and above the 20 day moving average. The last 2 days have seen momentum carry price higher establishing a short term bottom for now. We'll be watching closely to see if this move higher can be sustained and a real bottom has been made.
Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.
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