MONEY MANAGEMENT UPDATE -- SOME IMPROVEMENT SEEN, BUT THE TREND IS STILL DOWN
CURRENT MARKET POSTURE... The following is an update of our current market posture at MurphyMorris Money Management -- which is based on a technically-based Decision Model. When the investment climate is right, we invest in equity mutual funds that show superior relative strength. At the moment, the only funds that are rated as being in "uptrends" are bear funds and a few market neutral funds. That means that even if we were to start investing now, our choices would be very slim. Chart 1 is an example of a bear fund that we currently hold positions in. The chart shows this bear fund exceeding its 50-day line in mid-January, right around the same time the major market averages fell under their 50-day lines. The 50-day average is one of the price indicators that we use to help us to determine when trends are changing. [If you haven't already done so, we recommend that you read the portion of our February 10 Market Message entitled "Why We Use a 50-Day Moving Average"].
Chart 1
DECISION MODEL UPDATE IS NOW AVAILABLE FOR VIEWING... The February 28th Decision Model update can be be found by clicking in the yellow box on the upper right of the MurphyMorris.com home page. All of our price and breadth indicators have "smoothing" measures to filter out daily noise in an effort to capture "intermediate" uptrends and avoid downtrends. We see improvement in almost all of our market meaures, BUT still within the context of a long term downtrend. Fortunately, our market measures do not know about the impending war, nuclear threats, etc. They're geared simply to determine when the market is going "up" and when it's going "down". That intent is to capture most "intermediate" market uptrends -- and avoid most downtrends. Our track record reflects the success of that disciplined approach.
STOCK RALLY FADES... Earlier today, we showed the S&P 500 testing chart resistance along the February highs at 852. The S&P 500 actually touched that level today -- but then sold off. The hourly bar chart shows today's failed attempt to turn the short-term higher. The same is true for most of the other stock market averages. The Nasdaq 100 failed another type of test.
Chart 2
NASDAQ 100 CAN'T BREAK AVERAGES... On Friday evening, we showed the Nasdaq 100 retesting its 50- and 200- day moving averages. It broke though those barriers earlier today, but couldn't hold the gains. The negative result is a potential downside reversal day at that crucial chart point. The Nasdaq 100 has been leading the market bounce. That's why today's failure was so discouraging. The Semiconductor (SOX) Index lost 4% today -- and ended back under its 50-day average. That hurt the tech rally as well.
Chart 3
Chart 4
THANKS FOR DROPPING BY... I'd like to personally thank all of our members and friends who attended the New York Online Expo this weekend -- and took the time to come by the Stockcharts.com booth to say hello. Many of our members attended workshops given by myself and Chip Anderson. We especially enjoyed the opportunity to demonstrate how to best use the Stockcharts.com charting service -- both to new and existing members. We hope everyone who attended found it informative and useful.
