Market Wrap – week ending 1/31/2014

This week was another tough one for the market, which closed a tough month as well.  For the week, the major indexes closed with a loss between 0.5% (S&P500) and 1.15% (Dow and Russell 2000), and for the month of January, the indexes closed with a loss of between 1.75% (Nasdaq) and over 5% (the Dow). 

Volatility has risen to scary levels, with wild intraday swings.  Today as an example, the market opened with a over a 1% loss, then spent half the day rising to get all the way to break even, then dropped a little over 0.5% at the close.  These wild swings usually portend major trend changes, as fear starts to set in and day traders get extreme with their behavior.

The next week will be critical for the bulls to see if they can get control again, otherwise it looks like we have further to fall.  The market has been so resilient over the past year that I wouldn’t count on a drop, but certainly with each passing day things are looking more ominous. 

Looking at the charts of the major indexes, the Dow looks broken, NYSE looks broken, S&P500 looks broken, Russell 2000 looks broken … get my point?  Only the Nasdaq looks a bit better although it also is struggling.

It looks as though the market is giving a final “kiss goodbye” for those of you that want to learn technical analysis, Google that … it’s an interesting phenomena.  We should know by the end of next week whether this was indeed a kiss or just another fakeout.

As you know, “The One” moved to cash on Monday, and interestingly our medium term strategy went fully to cash on Wednesday.  Only our longer term strategy is still invested.  The fact that 2 of our 3 strats have left the market is probably a warning sign in itself that the character of the market has changed.

Short term things are definitely broken, Medium term things are broken or breaking (in the Nasdaq’s case), but long term we are still ok, not great, but ok.

Regardless of the outcome, we will continue to monitor and act accordingly protecting your hard earned investing dollars …

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC