Saturday, September 12, 2015

Week in Review 9/8 - 9/11

First we would like to take a moment to remember all those that lost their lives on 9/11.  We at Worch Capital certainly will never forget.  God bless America.

Friday closed the holiday shortened week on a quiet note that saw volatility and the range dry up as the week wore on.  Friday capped a week in which we made successive higher lows and finished in a bullish tone as all the major indexes finished higher.  That said, we would expect a range expansion and volatility to come back next week. 

A great chart, posted below, by one of our favorite technicians Chris Kimble details the current resistance in the S&P 500.  On the upside the 2000 level is an area of significant resistance with 2040 the next level we'll be watching if the 2000 area is breached.  On the downside 1900 is the closest support area we are watching with the August low of 1867 an important psychological level. 

One chart we wanted to show was the long term daily chart of the S&P 500.  We have a simple 200 day moving average.  In what hasn't happened since early 2012, the slope of the 200 day moving average is now down.  Ryan Detrick once again provides some great stats on this and the weakness that follows.  In the bottom panel it shows the % above or below the 200 day average.  In bear markets this will stay extended to the downside.  In bull markets this can be used as a guide to show downside exhaustion.  The current break lower in the market has shown signs of exhaustion from a momentum standpoint.  However if price is to test lower levels this indicator has room to expand to the downside ala 2011.  We are of the belief that lower levels will be tested.  However we still remain in the context of a secular bull market which will ultimately see higher prices which should contain the downside move. 

From a sector standpoint health care and technology lead the way this week.  On the downside the weak get weaker as energy lagged once again.  Financials remain fickle as they were mostly flat as talk about September's Fed meeting dominates the headlines.

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.

Ryan on: Ryan Worch on LinkedIn, Ryan Worch on Twitter | Ryan Worch Bio