Market Report - October 6

MARKET REPORT NOTES:

• Today appeared like a consolidation day after the huge advance we had yesterday.
• Although yesterday was a seeming powerful up day, dollar volume accumulation was only slightly above average compared to the rest of September.
• Dollar volume showed major distribution today, extremely large compared to any point in the past 5 weeks.  Of the 21 stocks that met the dollar volume down criteria, 17 came from technology-oriented sectors (computer hardware, computer software, electronics, internet, telecommunications) which have shown strength over the past month.
• New highs have indicated that there is a flight to safety underway.  Sectors like Utilities and Energy have really begun to breakout over the past week with many new 52 week highs.
• Although market momentum is still positive, there are many warning signs.  Keep a close eye on your capital until the market gives a clearer signal of its direction.

The Market Report is updated daily and summarizes the short (1 week), intermediate (1 month), and long-term (6 months) market behavior.  The 6-month relative strength for each industry, top 20 sub-industries, and bottom 20 sub-industries is calculated to help gauge the long term behavior of the market.  The 1-month change in relative strength for each industry, top 20 sub-industries, and bottom 20 sub-industries is calculated to gauge the intermediate behavior of the market.  The top 10 instrustries with the largest percent of stocks making new 52-week highs helps identify weak industries that may be starting new up trends, or to gauge the continuing strength of current up trends.  The bottom 10 instrustries with the largest percent of stocks making new 52-week lows helps identify strong industries that may be starting new down trends, or to gauge the continuing weakness of current down trends.  The dollar volume analysis shows the ten largest stocks (>$100 million DV) that are making daily moves larger than 4% up or down.  This helps to determine if institutions are buying or selling stocks, which can effect market direction in the short term.

This daily routine keeps me connected to the behavior of the market, and I do it for my own uses as a personal exercise.  The calculations are strongly influenced by Pradeep Bonde's market analysis at StockBee and William O'Neil's analysis at Investor's Business Daily.  I highly recommend you check out both sites.