The Real Reason

The headline says "US Stocks Pare Losses Amid Signs Of Greek Bailout", which may sound like a plausible explanation, but in fact, it's completely ridiculous. The real reason that stocks are "paring losses" is because there was a major wave of Climax Low signals yesterday. Assuming the signals work, which appears to be happening, we can expect yesterdays lows to mark the lows of the correction, and a rally to ensue from here. It's purely a technical thing, based on volume and price action.

The news is irrelevant, by in large. We find that there's always good news, and bad news. Plenty of news to go around. If the market is going down, they'll attribute it to the bad news, and if it's going up, it will be because of the good news.

The entire financial news industry seems to be set up to fan the flames of investor confusion, perpetuating myths and spreading disinformation, which ultimately just creates more trading volume. No good can come of it. The best policy is to screen it all out, and focus purely on the technical aspects.

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Low Risk Buy

The symbol is IIVI; the chart is shown below. I found it looking through a scan for Climax Low buy signals. This one is attractive because of how the price pattern has "tightened up", and the price has pulled above the 50-day exponential moving average (shown in blue), and it's now corrected just back down to the average, and today there was a Climax Low buy signal (shown below as a blue candlestick), and the Accumulation / Distribution ratio is a healthy 58%.

IIVI was just one of 99 stocks showing Climax Low signals, across our database of approximately 3000 symbols (roughly corresponding to the Russell-3000 index). It's a significant number, tending to confirm a signal on a given stock, but isn't too overwhelming or obvious.

The total daily number of Climax Low buy signals is shown below in the 2nd indicator window, as a blue line. The number of Climax High sell signals (which are the approximate inverse of the CL buy signals) is shown in the top indicator window, in red. Note how, after some internal correction, the waves of sell signals appear to have subsided and the blue buy signals are starting to kick in again.

chart of IVII showing a Climax Low buy signal

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Buy Signals in Utility Stocks

I used the Gigascanner free chart-based stock scanner to find stocks generating Climax Low buy signals, sorted by Market Capitalization, without any other conditions or filters. There were 47 stocks putting out Climax Lows altogether - not exactly a huge wave which would indicate a significant market turning-point, but that's not needed for a given buy signal to work reliably. The top half of the list is of interest, since the big stocks will tend to show less volatility than the smaller ones, and also the buy signals are known to be more accurate, and consistent.

Interestingly, about half of the stocks (in the top half of the list) were Utility stocks, indicating a general trend within the group. These are stocks involved with oil and gas exploration and production, and electrical power generation. Some of them are paying a very high dividend yield. Now might be an excellent time to swing a portion of your portfolio into a basket of Utility stocks. Shown below are charts for some of the best-looking ones, including those killer blue Climax Low buy signals of which we speak.

Dominion Resources - D

annotated stock chart for Dominion Resources

Centerpoint Energy - CNP

annotated stock chart for Centerpoint Energy

Northeast Utilities - NU

annotated stock chart for Northeast Utilities

CMS Energy Corporation - CMS

annotated stock chart for CMS Energy Corporation

QEP Resources - QEP

annotated stock chart for QEP Resources

UGI Corporation - UGI

annotated stock chart for UGI Corporation

CH Energy Group - CHG

annotated stock chart for CH Energy Group

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