A few charts to confirm what I have been seeing during the last few weeks in the market.
The NYSI Summation Index above is trading below the moving average. This is an intermediate term indicator. In other words, the market may not necessarily track this on a day to day basis, but what's important is the trend and that it is has moved below the moving average signalling weakness.
The New High / New Low chart above has spent 2013 above the zero line but is trending down toward the zero line now which means the market is getting more balanced out. As this indicator falls, we should see more value in some specific stocks.
The above chart is a ratio of high beta stocks / low volatility stocks. When the black ratio line falls below the moving averages, then risk is subdued, and when the ratio line is above the moving averages then traders are more in the risk taking mood by buying the high beta stocks vs. the low volatility stocks.
Bottom Line: We are staying fairly conservative holding a high cash position to take advantage of any significant pullback we may see. The Friday's Non Farm Payroll will be in the spotlight, and as usual expect plenty of volatility when that report is released. Thank you for reading.
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