Assessing The Recent Stock Market Damage

Stocks endured another round of eventful trading this week. After reaching new all-time highs to start off the new quarter, stocks entered into a suddenly sharp descent last Friday, and have been moving lower in fits and starts over the several days since. And by the close of trading this Friday, stocks, as measured by the S&P 500 Index, were once again in negative territory for the year. This latest bout of pressure raises the natural questions. Are stocks finally entering a sustained corrective phase? Or is this just another pullback in the ongoing bull market rise?

Please click on the link to read more of my article on Seeking Alpha.

Strategies For Earnings Season And Beyond

The second quarter is underway and earnings season will soon be upon us starting next week. And following Friday’s U.S. employment report that provided a solid headline but is still not all that great in the grand scheme of things, it is worthwhile to consider what we might expect from capital markets in the coming weeks and beyond. The good news is that attractive opportunities are likely to present themselves for those at the ready. But they are likely to be accompanied by more bouts of increased volatility.

Please click on the link to read more of my article on Seeking Alpha.

Stocks: Hold Until Death Do Us Cross?

The Death Cross is an investment market event that simply by its name might send chills through the spine of the average stock investor. It takes place when the average closing price of the U.S. stock market over the last 50 days falls below the average closing price over the last 200 days. Such a crossover between these two readings is widely considered a bearish signal that stocks are poised to plunge much lower. As a result, many investors are inclined to use the Death Cross as a signal that the time has come to lighten up on stock positions and move to the sidelines to protect against portfolio losses. But despite its ominous sounding name, a closer examination is worthwhile to determine whether waiting for a Death Cross is truly an effective strategy from a risk protection standpoint.

Please click on the link to read more of my article on Seeking Alpha.

Why The Fed Won’t Save You From The Next Bear Market

One of the most comical U.S. stock market events so far in 2014 was the correction that took place not long after the start of the New Year. It wasn’t the fact that stocks dropped by -6% over eight trading days in late January and early February. There’s really nothing funny or even notable about that. Instead, it was the severe investor reaction to what was a generally short and shallow decline in stocks. It spoke volumes about how ill prepared the market is to endure any type of pain. And given the fact that the Fed is unlikely to ride to the rescue with another heaping of stimulus the next time the market falls into a sustained correction, it is worthwhile for investors to begin putting into perspective now what a real stock market correction might actually look like once it arrives.

Please click on the link to read more of my article on Seeking Alpha.

Stocks In The Heat Of Battle

Stocks have managed an impressive bounce from their early Wednesday lows at 1737 on the S&P 500.  But after a strong 60 point surge to 1797 to close out the week, it is reasonable to wonder whether stocks have further to run higher in the coming days or if a fresh move lower lies ahead.  How stocks behave in the early part of this week will go a long way in answering this question, as stocks are currently trading in a thicket marked both by various support and resistance levels.

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Friday was a particularly notable trading day, as stocks smashed back through potential resistance at both the 100-day moving average and the 1775 level on the S&P 500.  As a result, the 1775 range represents the first line of defense for any reversal lower in stocks in the coming days, with the next stop at the upward sloping 150-day moving average currently at 1741 and rising.

Stocks also now have some meaningful challenges in continuing their move to the upside.  The first line of resistance is at the downward sloping 20-day moving average currently at 1802 and falling.  The next is at the 50-day moving average that just recently turned lower and is currently at 1809.  And the third is at 1813 on the S&P 500, which represented the previous all-time high for the index first reached back in late November and has served as both resistance and support on several different occasions since.

In short, stocks currently find themselves in a fairly tight range where a number of support and resistance levels have converged.  How stocks respond to these various levels over the next few trading days will go a long way in determining how the market is likely to move in the coming weeks.

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