NASDAQ Looking Good, SP 500 Maybe
Source: http://feedproxy.google.com/~r/qvmgroup/yrMF/~3/L9oZJR9IdfI/3693Posted on Monday, May 4th, 2009 | In Market Commentary
The NASDAQ (proxy QQQQ) is on the verge of piercing its 200-day average and taking out an import prior peak resistance level. That’s a good sign. The S&P 500 (proxies SPY and IVV) is not looking as strong and has a couple of important hurdles yet.
click image to enlarge
NASDAQ
The NASDAQ November high is nearly exceeded and the 200-day moving average is adjacent to the price. Many investors consider prices above the 200-day moving average to be bullish. The 20-day and 50-day average have more to go before crossing the 200-day average, which might be more reassuring.
The percentage of NASDAQ constituents with bullish point & figure charts is solid and the ratio of new highs to the total of new highs and new lows is bullish. On the other hand, the volume of shares traded has not been elevated which might be expected when the index really turns up.
The S&P 500 index is still more than 10% below its November high, and the 200-day average is farther from the price, its 20-day average, and its 50-day average than is the NASDAQ.
The percentage of constituents with bullish point & figure charts is just below the “overbought” 70% level, and the ratio of new highs to the total of new highs and new lows is declining. The slope of the price curve is leveling off and is lower than the slope of the NASDAQ. The volume of shares traded is also declining slightly. This index looks like its rally is a bit tired — needs to catch its breath before pushing forward or move back some. Roughly, 950 and 1000 are price levels that should be exceeded before too much credence should placed on the permanency of this rally.
If you are waiting for a bull trend to invest, it is still early. However, if you, like Buffet, believe that you should buy what is fundamentally attractive when you find it, without concern for whether it may become more attractive later, then there are solid opportunities here and there if you do your homework, and are willing and able to ignore negative price fluctuations for months, quarters, and perhaps even a few years.
You need to know who you are and what is right for you, and not follow categorical buy or sell ideas from anyone until the ideas have passed through a logic filter tailored to your overall situation.
For some, this is a time to buy. For other, this is a time to wait.
Richard Shaw
QVM Group LLC
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 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
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