Saturday, June 1, 2013

Week ending May 31st review...

The market closed out the month of May with one if it's worst days of the year. One caution sign I am watching is the NYSE cumulative advance - decline line (chart above). With this week's sell off came two things 1) a weekly close below the low of the previous week's range and 2) as the $NYAD chart above shows, we now see the biggest drop in the AD line since the November 2012 low. This often (but not always) signals the beginning of a larger correction in the short term. It's definitely a caution sign or yellow light if you will, but I will give the benefit of the doubt to this bull market, given it's strength, until the supply and demand pattern changes. I will create an update post on the short term (trader's) time frame during this week. Basically I want to see the 1620-1625 area on the S+P 500 hold or 1550 will end up being the next stop most likely.

Taking a look at the big four major averages below:

As I said I'll give the benefit of the doubt to the bulls since all the major averages still remain in an intact up trend and we have not as of yet seen a correction bigger than any of the previous corrections since November.
Taking a look at the sector performance for both the month of May now that it's in the books, and this last trading week.
The chart above shows sector performance for the Month. With Financials, Tech, and Industrials leading the way. And with Utilities, Consumer Staples and Health Care being the biggest underperformers.

This chart above shows performance for the week. Still Financials, Technology and Industrials lead the week in the positive even with it being a overall negative close. Staples, Health Care and Energy being the laggards.

This last chart above displays the current yield curve. Obviously no real changes there right now and probably for a long time to come. A flattening and especially an inverted yield curve would be very bad for stocks.

In conclusion, although the bullish up trends in all the major averages remain in tact. We are starting to see some signs of internal weakness that should be watched closely over the next couple weeks. I will create an update post during the beginning of this upcoming week to clarify further.