Capitalogix Commentary 05/17/09

As expected, the Markets have hit some resistance and are losing momentum.

It will be interesting to see whether people view this as an investment opportunity ... or the beginning of the next leg down.

The "new rally" offensive sectors are now under-performing. In particular, Consumer Discretionary and Technology sectors are showing weakness. In contrast, the defensive sectors are outperforming ... with Healthcare, Utilities, and Consumer Staples showing relative strength. Energy is also outperforming the broader market.

Even though this change is relatively new, it does show a change in risk appetite. Investors and traders are turning more cautious on the market overall.

Here is a chart showing where the NYSE finds itself.

Are Small Investors Paying Attention?

Marty Chenard's StockTiming site often highlights interesting trading ideas and statistics.  The chart below is from his site, and shows how large investors and small investors reacted differently to market conditions earlier this week.

The chart shows the volume of Advancing and/or Declining shares for the New York Stock Exchange, the NASDAQ, the American Stock Exchange, and the Over The Counter Bulletin Board.  (OTC stocks are generally unlisted stocks which trade on the Over the Counter Bulletin Board (OTCBB) or on the pink sheets.)

It is easy to see that larger investors were taking profits ... while smaller investors were still buying.

That would be significant if it continues.

Business Posts Moving the Markets that I Found Interesting This Week:

• Why Economists Failed To Predict The Financial Crisis. (Wharton)
• Insider Selling: Disney Finance Chief's $1.9 Million Sale. (Barrons)
• Green Shoots Or False Hope About Economic Recovery? (FT)
• Stock-Market Sages Say Worst Is To Come. (TheStreet.com)
• How The Govt Made Economic Problems To Justify Its Solutions. (Forbes)
• Banks Pass Stress Test - Regulators Fail Ethics Test. (Hussman)
• Why Did Cash-Rich Microsoft Sell Its First Bonds? (WSJ)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Is Google Insurmountable? (WSJ Blogs)
• The Rebirth Of News: Papers Are Folding as News Flourishes On The Internet. (Economist)
• Asking A Machine To Spot Threats Human Eyes Miss. (Technology Review)
• A New Type Of War Game At West Point; Training For Cyber Foes. (NYT)
• The CIO's Dilemma: How Long Can You Do More With Less? (Forbes)
• Creative Minds - The Links Between Mental Illness And Creativity (Independent Uk)
• Vitamins Found To Curb Exercise Benefits: Are Antioxidants the Problem? (NYT)
• More Posts with Lighter Ideas and Fun Links.