Market in slight recovery mode

Each weekend on Financial Tides I take stock of the market by ignoring the headlines and using Barchart to find the data for my 3 stock market yard sticks. I use 3 because no single yardstick seems to be accurate all the time. Looking at all 3 gives me more complete feeling of the true direction the market took in the last week. Let's see what the results were.

Value Line Index -- Contain 1700 stocks so its much broader than the S&P 500 or much narrower Dow 30 -- Index not strong but in recovery

• Index actually rose by 1.57% last week -- That's up 3 out of the last 5 weeks and up 3 of the last 5 months
• 40% Barchart technical sell -- 2 buys, 4 holds and 7 sells
• Index closed Friday below its 20, 50 & 100 day moving average

Barchart Market Momentum -- Percentage of stocks closing above their moving averages for various time frames -- Above 50% is always good -- This week was better than last week but not as good as a month ago

• 20 day moving average -- only 27.74% closed above -- 9.88% last week -- 48.96% last month
• 50 day moving average -- only 24.80% closed above -- 17.98% last week -- 72.22% last month
• 100 day moving average -- only 43.17% closed above -- 36.43% last week -- 80.10% last month
  

Ratio of stocks hitting new highs to new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- This week almost neutral

• 1 month ratio of new highs/new lows -- 191/195 = .98
• 3 month ratio of new highs/new lows -- 118/132 = .89
• 6 month ratio of new highs/new lows -- 107/89 = 1.20
  

Investment Strategy -- The market recovered but we still can't say that the market is in an upward trend. We are not attempting to call every little twist and turn in the market but if we miss just the top 10% and the bottom 10% of the major bear and bull markets there is plenty of money to be made in the remaining 80% of the middle. In sports and the stock market it's not always who hits the most home runs or the most 30 yard passes that wins, it's usually the team that made the fewest mistakes that gets the prize.

We want our portfolio to make money but we also want to be conservative and cut losses to a minimum. Next week, I'll trim some losers but I'll wait to replace until I see the market trading above it's 20 day moving averages again.

Jim Van Meerten is an investor who writes about investing on Financial Tides, Barchart and Seeking Alpha. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions mentioned