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At The (lower) Edge June 17, 2017

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June 16, 2017 – An interesting week indeed.  Looking at the chart of the broad NASDAQ Composite Index below, we see that we’re still (barely) within the upward sloping price channel and, also above the first price support of 6164.   (Note: I look for a break of any line or level by the Closing price as opposed to the low of the day.)

The Volume Flow indicator continues to show weakness, though it is traveling in a horizontal position.  Money flow showed an up tick this weak and overall Market Sentiment is neutral.  Volume on Friday was high, but that’s typical for the 3rd Friday of the month due to options expiration and folks “squaring up” their expiring positions.

Holding the 6164 level and going into a trading range for this summer is a likely scenario.  The axiom “Sell in May & go away” could very well hold true this year.  There’s been a bunch of talk about a rotation out of Tech & Semiconductors and into Banks & Finance.  I see some evidence of that, particularly in Banks, but so far it’s been fairly muted.  Not much sense in talking about “strong sectors” since not much is showing domination right now.

I’m thinking we’ll just have to wait for the second quarter earnings to drive the markets anywhere this summer, or maybe a political issue will drive it.  Whatever it is, it will likely be a surprise and this market is on edge right now.  Have a good week.     ……… Tom ……..

chart by MetaStock; used with permission.

Steady As She Goes June 10, 2017

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June 9, 2017 – This will be short because really . . . not much has changed.  Yes, the market did drop quickly and significantly on Friday afternoon, but by the close a good bit of it was recovered.  I think the question is not “is this the top of the market” but more like “are the big guys rotating out of Tech and into something else” (like Financials)?  There are a few reasons why I believe this, but note that while the major indexes did drop, the Russell 2000 (small cap) index hit a high.  The vast majority of the time the small caps will lead the markets down as investors exit the more speculative small cap stocks.

Also, note that price still remain in the upward price channel and still above the most recent support level.  What caused this sudden drop is anyone’s guess, but the quickness and volume point toward computer algorithms and not just humans.  Once the “algos” kick in and start moving prices resting stops (all ready in the market) are taken out, thus the move increases in strength.  We should know early next week if there is real cause for concern.  In the grand scheme, the market was over bought, that is it was at the top end of that price channel.  Correcting back down toward the lower edge is typical.  I’d wait until Monday afternoon though, as the weekend investors may panic and sell out on Monday morning.  That’s how money is made on Wall Street: buy at wholesale and sell at retail.

For the time being (subject to immediate change) I’ll stick with Semiconductors, China Utilities and Consumer Goods.  Have a good week.  … Tom …

 

Continuing Up the Channel June 3, 2017

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June 2, 2017 – After a very brief pause, this market sprang to life on Thursday & Friday.  Up, up and away.  As long as we stay within this channel things continue on the same course.  I’ve moved up the first support test level to  6164 to reflect the low of this strong week.

Money and Volume Flows continue to be “Bullish” and Market Sentiment also is positive.  What did strike me this week was the sudden burst of strength in the small cap index (Russell 2000 index).  That’s a positive as well since these stocks are more “speculative” in nature.  I did find the strength in Utilities to be surprising since they are considered to be more defensive.  My only concern is that volume (at the lower edge of the chart) is rather muted.

How long can this go on?  I’m not sure it has “legs” and it looks to me to be a short term surge as we go into summer and a typical quiet period for the market.  The chart below shows the seasonality that is “typical” for the months of the year.  This has prompted the “Sell in May and Go Away” phrase.  Just remember that the markets don’t “have to” do anything, and seasonality is just an average.  Things (and market) usually oscillate around “average”, and it’s definitely not a predictor.

 

Here are the sector of stocks that I feel are strong and worthy of consideration:

 

Also, don’t ignore international stocks, as select European companies are rallying too.  That’s it for now.  It appears to be “steady as she goes” but this could turn on a dime with any geo-political issue.        ……….. Tom  …………

Market In Wait Mode May 27, 2017

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May 26, 2017 –   This will be short because there’s not much enthusiasm out there either to buy or sell.  Corporate profits were reasonable good as a whole, but the “hope” that was generated after the Trump election has subsided.  True the NASDAQ & S&P 500 have been inching up, but small and mid cap stock have not kept up.  This is a “yellow flag” over the long run, because strong markets typically show strength from small through large cap stocks.  And . . . most speculation happens in the small & mid cap areas.

We note in the chart above volume (i.e. activity) falling off.  Part of this is going into the first summer holiday (in the U.S.), but likely also a “wait & see” stance by traders.  I’ve moved the support level up to 6096 (and 5970) on the chart.  These levels are the weekly lows where we have seen buyers coming into the market; thus a price support level.

China, Semiconductors, Utilities and International stocks are showing the most strength right now.  The coming week will be interesting.  Since there is so much news coming out of Washington DC now, traders have an excuse to sell.  The question is whether they are that uncomfortable or not.  We could be in for a very uneventful summer, unless folks choose “Sell in May and Go Away”.  I’m not expecting much of a move in either direction.

Have a good week.     ………….  Tom  ………….

chart by MetaStock, used with permission

Not Out of the Woods May 21, 2017

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May 19, 2017 – Despite the rally (attempt) from the recent sell off, the market internals remain “iffy” and not broadly strong.  As shown below, we did just touch the lower channel / trend line as a Secondary Test before a recovery, but participation in that rally has been modest at best.  Sentiment is neutral and Money Flow is lower; volume is lethargic.

This does not mean ‘sell’ because we’re still in the upward channel and above support levels (5970), but being extra watchful would be recommended.  What are doing well are the previous strong sectors.  Generally, Technology and Specialty / Niche companies.  Here’s the areas that I’m watching for strength:

Back to the market in general: the pie charts below shows the overall status of the S&P 1500 stocks (a very broad sampling).

Price Strength –Stocks under Accumulation & Distribution –These charts support my idea that “We’re Not Out of the Woods”, at least not just yet.  Perhaps we have a “Sell in May & Go Away” situation and the “Summer Doldrums” have arrived, but more likely the euphoria of the Trump election has succumb to reality that all of the wonderful things promised won’t happen.  Welcome to politics Mr. Trump.  I have taken positions in select International sectors.  Europe & certain Asian countries have been performing well (avoiding Latin America for now).

So we’re back to this market looking for direction and good (or bad) news.  There just doesn’t seem a need to jump all the way in, but there really isn’t a need to sell either.  Have a good week.        ………….  Tom  ………….

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

A Time for Caution Perhaps May 13, 2017

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May 12, 2017 –  A pretty uneventful week but market breath is deteriatiing (the number of stocks participating in this rally).  Note the “Market Sentiment” indicator below has gone from Bullish to Neutral.  I also note that volume is falling off, which means that both buying and selling interests are low.  If there is nothing to propel this market higher I would expect a minor fall back

But all of this is just a little premature, just keep an eye open for weakness.  Trend lines and support levels remain the same as last week.  And here are the areas that are showing the most strength:

The stocks in the S&P 1500 Index have backed off of their rally run (price strength), with the “neutral” category increasing.

No red flags yet . . . just caution and a time to be extra selective..  Got to go, but have a good week.    ……………  Tom  …………..

Market Looking for Guideance May 6, 2017

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May 5, 2017 – Looking at the chart below a few things stick out to me.  The last correction was minor because volume during the small blip down was very light.  Volume did increase (back to about average) on the price recovery.  But . . the last two days has volume falling off, plus the bars this week have had a narrow spread.

It just appears that buying is rather light, but there is also little selling.  Earnings have been OK, a few surprises, but generally good.  This market has priced in good earnings plus a number of things promised too.  I’m still looking for an Up Thrust bar, closing near the Low, on high volume.  So far that’s NOT the case and this market just grinds higher.

I did see a comment by a trader that breath is narrow, that is, few stocks are leading market average / indexes higher.  I would agree.  That bears watching and the longer it continues, the more concerned we should get.  Small and Mid cap stocks have been lagging behind Large cap stocks.  I’ll watch the price bars and volume along with the lower trend line and support levels for clues on further action.  For the time being, I have to stay invested.

Here’s what areas are doing best right now:

That’s it for now.  Have a good week.  …………..  Tom  ………….

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

Break Out or Fake Out ? April 29, 2017

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April 28, 2017 – No doubt that this past week the market broke out of the trading range that has persisted for over a month.  Higher bars on increased volume, market sentiment back to Bullish and money flowing into the markets.  All generally good news, which likely is being fueled by good earnings reports.

So far a little over half of the S&P 500 companies have reported, and of those, 77% have beat earnings estimates and 70% showed increasing sales revenues that were above forecast.  Pretty good news corporate wise all around.

This is looking more like a “stepping stone” pattern inside of an overall bullish price structure.  I’ve moved price support levels up and trend lines to reflect that.  I think it’s still a wise thing to look out for a distribution bar on heavy volume, just in case.  Geo-politically, there’s a bunch of things that could cause it.

The pie chart below shows sectors that I’m prospecting for stocks.  In addition to Wireless and Internet stocks, there is strength in Internationals (especially European), Consumer Services and Technology.

So I’m “cautiously Long” right now, building a few more positions and still a little concerned about the investing environment in general.  Have a good week.     …… Tom …..

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

Well Within (trading) Range April 22, 2017

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April 21, 2017 – This week we saw the markets clip the lower edge of the trading range then bounce back up.  The chart below of the NASDAQ Index shows the directional indecision in this market.  There is just too much going on, or potential to happen, to have investors feeling very confident.

And so we wait for the outcomes of the French elections (1st round), Congress on tax cuts / healthcare (round 2), North Korea nuclear testing, big Tech companies report earnings next week etc.  I’m still looking at the 5769 level as a major support for this market.  If we are to go higher, we’ve got to see conviction; higher prices on high volume , over multiple days.  But, beware of the Up Thrust bar on low volume, closing near the low.

Price have improved overall.  The stocks in the S&P 1500 Index are showing more “green” / up movement.

Here are the sectors that I’m monitoring for a break higher:

(click on any graphic to enlarge it for easy viewing)

Right now I’m rather neutral, part invested, part in Cash.  It’s good to be able to go in either direction, especially now.   Have a good week.  ….. Tom  …..

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

Market Getting Closer to Thin Ice April 14, 2017

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April 13, 2017 – More and more of my indicators are turning down now.  Volume is low (lack of demand) and prices are dropping because of that; buyers are not stepping in right now.  Are all of the “willing buyers in” right now, and there is no one left to buy ?  Doubtful in the overall picture but there is all sorts of news to make folks concerned about the immediate future.

Earnings have begun to come out and this market has not been inspired by them even thought the bank earnings have been pretty good.  The NASDAQ Composite Index (above) needs to hold above 5769, otherwise we’ll likely see a very low & slow summer.

I’m not looking to add any positions, but let’s look at the very broad S&P 1500 stocks.

Buying / Selling Pressure:

Price Strength:

Have a Happy Easter !         ……. Tom ……

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