Week wasn't too weak -- W/E 8/27

This week showed a little promise at the end but I'm not holding my breath. Lately we've had a lot of strong Fridays that ended up being a disappointment the following week. Let's step back and forget about the headlines and pundits on TV and use our 3 yard sticks to rationally evaluate where we stand. We use Barchart as our data source and use 3 yardsticks because no single one works all the time. I learned something from the Supreme Court - if you have an odd number you never have a tie. Let's see where we ended.

Value Line Index -- Contains 1700 stocks so its broader than the S&P 500 or very narrow Dow 30 -- recovering but still weak

• Index down .11% week over week
• Index down 5.70% for the last month
• Barchart short term 20% sell -- overall 1 buy, 4 holds & 8 sells
• Trading below its 20, 50 & 100 day moving averages
• 14 Day Relative Strength Index 45.69% and rising -- a bright spot

Barchart Market Momentum - Contains approximately 6000 stocks -- Percentage of stocks trading above their Daily Moving Averages for various periods -- recovering slightly

• Friday only 38.16% close above their 20 DMA, over 51.15% closed above their 50 DMA, only 44.91% closed above their 100 DM
• Last Week only 32.70% closed above their 20 DMA, only 49.22 closed above their 50 DMA, only 52.52% closed above their 100 DMA
• Last month over 79.21% closed above their 20 DMA, over 72.16% close above their 50 DMA, over 52.33% closed above their 100 DMA

Ratio of stocks hitting new highs/new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- still bearish

• 1 month new highs/new lows -- 216/666 = .32
• 3 month new highs/new lows -- 127/323 = .39
• 6 month new highs/new lows -- 84/255 = .33

Summary and Investment Strategy -- The week looked like we may have found a bottom. I'll continue to trim from my portfolios stocks that have a downward momentum and I might add back new stocks if the Barchart Market Momentum keeps improving and the Value Line Index gets a 14 day Relative Strength Index above 50%.

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions in the stock mentioned at the time of publication

Was Diamond Man & Tech's stock manipulated?

I'm not sure about you but I smell something very fishy about the recent price action in Diamond Management & Technology (DTPI) and its acquisition by PriceWaterhouse at $12.50 on August 24th.

You might remember we carried Diamond in the Barchart Van Meerten Speculative portfolio for some time but sold it from the portfolio on August 8th at 9.73 after some really crazy and unexplained price action. The stock was in a trading range around 11 a share when after a pretty normal earnings call on August 4th the stock took an unexplained nose dive from around 11 all the way down to 8.33 in just an hour.

Although the stock recovered in the next few days it continued to trade in the 9.29 to 10.29 range but kept trending downward settling in around 9.50. The stock normally traded between 100K and 200K shares a day. I never could find any reason for the stock to drop and there was no negative press to cause it to keep trending lower.

All of a sudden out of nowhere PriceWaterhouse offers an all cash deal at $12.50 which was an almost 32% premium of the 9.50 price and in a matter of minutes 19+ million shares are traded.

Normal earnings calls do not cause a stock to drop 25% in an hour and then settle lower each day until acquired with a hefty premium.

A lot of people lost money by selling out between August 4th and the buyout announcement on August 24th. If you were one of them you have every right to file an SEC complaint that you feel the stock was manipulated.

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions in the stock mentioned at the time of publication