Saturday, April 25, 2015

Week in Review (4/20 - 4/24)

This week we continued the slow churn higher with new closing highs for the Nasdaq, S&P 500 and NYSE.  If you look at the long term chart of the Nasdaq you can see how long it has taken to get back to an all time closing high, although we are still slightly short of taking out the all time intraday high from March 2000.  Regardless it's been a remarkable move the last 15 years.

If we look at what moved this week from a sector perspective, technology was the clear leader.  The big moves in AMZN, GOOG, and MSFT on Friday really contributed to the out performance.

One of the themes we touched on earlier in the week was what we'd be looking for in the event that the markets broke out to the upside.  We wanted to see a follow thru in breadth.  So far breadth has not confirmed price highs in the S&P.  There is still time for it to kick in but the markets will need a burst of buying in the next few days to confirm it.  The percentage of stocks above their 10, 20, and 50 day moving averages continues to show a negative divergence.  

Another chart from the site Index Indicators shows more deteriorating breadth.  Below shows the S&P 500 vs the number of stocks at 10 day high minus 10 day lows.  

We continue to operate in a low VIX environment as the volatility gauge closed at a new low for the year. We're seeing lots of complacency among market participants. 

Our favorite reads from the week:

This smart money indicator is flashing incredibly bearish signals

Things people in the finance industry do not want you to know

Albeit a little old by now but still a great interview from Stan Druckenmiller.

We're always interested in understanding how different wealth managers view tactical strategies within their overall portfolios

361 Capital always brings the goods

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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