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A Break Above July 21, 2017

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July 21, 2017 – Wednesday of this week the NASDAQ Composite Index broke above the previous high and continued on for the rest of the week.  The old favorites were back at it: Technology, Biotechnology, Semiconductors and even some Basic Materials.

One area that has been under the radar of some folks is the International markets.  Latin America, China and Emerging Markets have quietly moved higher as well as most developed markets.  On the chart above it’s easy to see the positive flow of Money (top pane) and Volume (second pane).  Market Sentiment also turned bullish this week.

The bottom line is we don’t have much “choice” but to continue to be  long / bullish in the market.  There are geopolitical risks out there but this market just does not seem to care.  The only “caution” is that average daily volume is moving lower.  The question is whether this is due to summer vacations or the lack of new buyers coming into this market.  The rather tight daily bars (range between the high & low price) is a little concerning as well.  That narrow range indicates that buyers and sellers are about equal.  That’s OK with low volumes, but let’s keep an eye open for the “smart money” trying to slowly leave this market and leave everyone else “holding the bag”.

Let me know (via the comment section) if there is any topic that you’d like me to cover.  Comments are always welcome.  Thanks.

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

Chart by MetaStock; used with permission.

Still Within (trading) Range; Sans Volume July 15, 2017

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July 14, 2017 – Listening to the financial media one would think that “Happy Days” are here again; and the markets have recovered from a small swoon.  But with all of the talk about “new highs” we should consider that we are really only returning to the top of a trading range.

We bounced off the 6097 support level and we’re now just about near the previous peak (dashed purple line).  One thing I note is the steady lowering of volume over the past week (lower arrow). Also “market Sentiment” is bouncing between neutral and Bearish.  OK, up is up and the previous leaders (tech, semiconductors, biotech, etc.)  are once again doing well.  Maybe the lack of volume / interest is due to the summer vacation schedule, but maybe it could be lack of commitment.  That lack of commitment could be forming an Up Thrust.  We’ll just have to wait and see next week.

For now I’ve removed my hedge (protection) but have not jumped back to a market “long” status.  The market is showing some positives as shown below; the % of stocks in the S&P 1500 Index that are being bought/sold, with price strength strong/weak.

S&P 1500 Accumulation & Distribution –

S&P 1500 Price Strength –

Overall these pie charts are showing a reasonable balance between the three status levels, and that’s usually a healthy sign.  Looking at a sector strength table below:

I also should mention that a few Emerging Market countries are doing well in the recovery.  Since we are in the middle of earnings reporting, the market could easily react to unexpected bad news about key industry companies as well as any geo-political news.  With Russia and Healthcare being major topics, that could be a factor.  I feel that in order to decisively break above the previous high, we’ll need to see volume (buying) increase too.  Without that I’m still cautious.

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

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

July 9, 2017

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July 7, 2017 – I’m late posting this because I’m away from my home office and busy with a few things.  This will be a short post because I don’t like typing on a small keyboard, but really, not much has changed.

I’ve gone back to an older posting app so that readers can double click on graphics to enlarge them to view them in more detail; the new version didn’t allow that.

Looking at the NASDAQ Composite chart below we see general weakness.

Volume Flow is anemic, Money Flow is slowly dropping and Market Sentiment is Neutral.  The 6097 support level is holding for now and there is generally more selling pressure than buying pressure.  It appears that investors are waiting for the second quarter earnings reports to show them the way higher or lower.  There just doesn’t seem to be any good reason to buy or sell, so the markets go sideways in a trading range/

There also doesn’t appear to be very many strong stock candidates to consider buying right now either.  I have a small hedge on to provide some downside protection, but as long as this level holds on a closing basis, I won’t add to the hedge or do much selling.

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

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Market Undecided July 1, 2017

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June 30, 2017 –  Before I get going, I’d like to wish Canada a Happy Birthday (Canada is 150 years old this week).

The U.S. markets were lis-less and undecided this past week, as were the world markets in general.  True that vacations are on the minds of many but it’s really deeper than that.  There was / is a fair amount of expectations for future economic growth and some are coming to the conclusions that it may not be as significant as originally thought.  Some traders are predicting another 5-8% drop on top of the current 5% drop.  That would be a mild correction so no need to “jump out the window” just yet.

NASDAQ

My new chart of the NASDAQ Composite shows the weakness in the background.  The red bars indicate short term weakness and the Volume flow is steady to Bearish. Note that Money Flow remains positive / Bullish.  More important are the support levels.  The 6164 level was violated on a Closing price, indicating possible continued weakness, but the Lows of those bars remain intact.  I would only start to get concerned if the Low of the bar where the Close violated a support level.  So, I’m cautious as this market is only showing signs of being undecided.  The next level down is 6097 (that’s the Low of a weekly “significant bar”.)

The table below shows sector strength / weakness in the short term.  Note how Semiconductors has moved from the top to the bottom.

Sectors

The bottom line is we’ll just have to wait and see if the market “decides” whether to drop any further or just go horizontal next week.  The “Summer Doldrums” are here.

Have a good week.  ……….  Tom  ……….

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

Steady but Indecisive June 24, 2017

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June 23, 2017 – OK, the trend remains positive / Bullish but if you look at the recent rally, it was pretty tepid at best.  I point out the “Volume Flow” indicator below which rather well points out the lack of enthusisium in this recovery off a minor bottom.

NASDAQ

Yes, the support levels (first at 6164) and trend lines are hanging in there and we may just be seeing the infamous “Summer Doldrums” setting.  My feeling is that we’re going to be in a consolidation phase until the Fall, but that’s just a hunch.

Editorial: I’ve updated to the latest version of MetaStock, so this chart looks a little different, plus I’ve added my bar strength indicator to the color of each daily bar.  This should provide a little more “heads up” information in the future.

From the pie charts below of the stock components of the S&P 1500 Index we note a healthy but yet “OK” market in the longer term.

Price Strength –

SP 1500 Price Strength

Accumulation / Distribution –

SP 1500 A-D

Overall things are looking OK even though the previous mass buying surge that we have seen after the November election has subsided.  What has appeared over the last week to 10 days is a rolling over of key sectors.

Sectors

The Tech, Semiconductor, Software strength remains, though lessened.  It has been supplanted by Biotech and Healthcare (note above table of current sector strength).

Where we are now is a generally supportive market, but leadership may be changing and actually narrowing.  I remain watchful of an Up Thrust bar on heavy volume as a near term warning sign of weakness.  But for now we have to “go with the flow” (i.e. trend).

Have a good week and we rolling into summer at full strength.   ….  Tom  ….

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

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.

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