Saturday, April 18, 2015

Week in Review (4/13 - 4/17)

With Friday's hefty losses the major index's finished down for the week after testing the upper end of the current range.  The NYSE staged a breakout mid week to new highs from 10 month consolidation joining the Russell 2k and midcaps at new highs.  

However the promising start to the week came crashing down Friday and we could have yet another failed breakout on our hands. We remain in a choppy sideways pattern in the S&P 500, Nasdaq, and Dow.  All three have again tested their 50 day moving averages and 2 out of 3 are below that widely watched line.  Dr. Steenbarger's weekend post sums up this choppy range trading with some interesting stats about the current breadth across all indexes.

Below is a chart showing the attempted breakout in the NYSE.  Wednesday it gapped up and finished in new high territory after trading in a long ten month base.  However, from a short term metric, breadth was lagging.  The bottom panel of the chart shows the % of stocks trading above the 10 day moving average.  For a sustained move higher we'll need to see an expansion of names moving higher along with price highs.  This backs up the data from Dr. Steenbarger's blog.  We haven't seen much selling but at the same time we are not seeing a follow through in buying interest at higher levels.  Until we get more participation on the upside this will still remain a choppy environment. 

Below is the breakdown from sector performance for the week.  Clearly the move up in oil favored the commodity space as material stocks stage a healthy rally.  Interesting to see financials hold up in a weak tape as many big banks moved higher on quarterly earnings. 


Our favorite reads from the week:

Something to think about from one of our favorite blogs.

If you looking for a good read here is a nice round up of books.

Breaking down bubble talk.

One of our favorite topics and some misconceptions about risk management

Have a great weekend.

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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