"Water shapes its course according to the nature of the ground over which it flows; the soldier works out his victory in relation to the foe whom he is facing. Therefore, just as water retains no constant shape, so in warfare there are no constant conditions."
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Sun Tzu

Thursday, February 14, 2013

Same Breadth Divergence Like in February 2012

Fewer stocks are participating in the rally: the "S&P 500 Percent of Stocks Above the 50 Day Moving Average" indicator is declining from a very high level. We saw the same pattern last year before the S&P 500 lost 2 percent, which is of course just a minor pullback and no concern to longer term investors. The swing trader, however, should be careful in initiating new long positions at this point:

Short-term breadth divergence could lead to minor pullback soon