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A Good Week, but Still Cautious May 27, 2016

Posted by Tom in Thoughts.
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May 27, 2016 – OK now, this was a pretty darn good week for US and (generally) the world stock markets.  We just barely (in the last hour on Friday) crossed the 4905 price area and that’s “a wonderful thing” . . . but . . . looking at the volume this past week, not as many folks agreed with that move.  Volume this week was noticeably below average.  In the US we’re heading into a 3 day holiday and the unofficial kick off of Summer so one could use that as an excuse, but I’m really not on board with that.

NASDAQ

What concerns me is the possible set up for an Up Thrust After Distribution, where prices move above the previous swing high on low volume.  This would be a classical peak to a Distribution Structure.  We’re NOT there yet, but the possibility exists none the less.  Something to watch for next week and perhaps the week after.  What would strengthen this idea is a continued move up to & above the 4970 (previous peak) price level on lethargic volume.  A rally to new highs on low volume = lack of demand = lack of participation.  Prices can not continue to rally without that “fuel”, and hence a strong possibility of falling.

That said, I did remove my hedge this week going back to a light net long status.  I did make a few (and only a few) select buys.  The table below shows the areas in the US market where short term strength is showing itself.

Top 20 Sectors

These are the top 20 out of 46 Industry Sectors ranked in order of short term price strength.  The “A/D Letter” is a ranking of Accumulation (buying) and Distribution (selling) on the familiar A thru E scale coupled with the color code.

In summary, I’m going with the flow (currently Up), but not jumping in with “both feet”.  The reason is not many others are getting on board just yet.  Perhaps it’s the FED concerns about raising interest rates or whatever.  Wyckoff would scale into a position, and that’s a good idea here until we see a good confirmation of a new trend.

Have a good week and Happy Memorial Day to those in the US.  Time to remember those who have served and sacrificed.  ….  Tom  ….

chart by MetaStock; table by http://www.HighGrowthStock.com; used with permission.  Click on any graphic to enlarge for easy viewing.

A Stumble, Then Recovery May 20, 2016

Posted by Tom in Thoughts.
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May 20, 2016 – Really, not much happened this week in the stock market.  We saw a stumble mid-week on fears of an interest rate hike in June by the (US) Federal Reserve; that brought the markets down.  The rest of the week made a recovery, at the end, not much really happened.  My “red line in the sand” at 4684 on the NASDAQ was tested but held.  I just keep going back to my later comment that the market is suffering from “Lack Of Demand” more than anything else.

NASDAQ

This wait and see perspective may just place us in the continuing broad trading range.  The trend and sentiment are showing “bearishness”, though those reading are not a strong as they were a few weeks ago.  The pie chart below shows the overall price strength of all of the stocks in the very broad S&P 1500 Index.

Price Strength

Pretty non committal right now.  Corporate earnings were generally all over the map, but rather disappointing in general.  The consumer is not spending much and there seems to be little reasons to just buy stocks right now.  Is Summer coming early to the stock market?  It seems that way.  The chart below shows the industry sectors of stocks passing my candidate scans.

Candidate sectors

Software, Construction Materials, Oil & Gas and Real Estate are my lead sectors.  Perhaps the Software & Oil & Gas areas are making a bid to come back?  I’ll keep an eye on them, but for now not much is catching my eye.  I remain “hedged out” on the stocks that I hold.  My concern is that a little bad news could send this weak market a bunch lower.  What is need to break out (upwards) is some sustainable good economic news of the world.  Until then no one appears to be wanting to jump in either direction.

Have a good week.    ……….  Tom  ………..

price chart by MetaStock; pie charts by http://www.HighGrowthStock.com; used with permission.

Still Cautious May 13, 2016

Posted by Tom in Thoughts.
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May 13, 2016 –  Friday the 13th was not a good day for stocks.  After a promising Tuesday (up sharply) the rest of the week drifted back down.  Tuesday was a (very) short term breakout but this market could not hold it.  We’re seeing continued signs of weakness but not panic selling.  The Distribution Volume is picking up (red line) and Market Sentiment continues to be weak.  From other indicators (not shown) I feel that the previous swing low of 4684 is an important level to hold.

NASDAQ

A close below 4684 will likely send the markets substantially lower.  There’s just too much bad news on the earnings front and internationally, folks remain concerned about growth in China.  It’s kind of funny that two years ago people were in fear of a run away Chinese economy swapping the world and wondering how to slow it down; it did all by itself.  Try as I may to find a Distribution structure on the NASDAQ chart, I can’t see one.  So I remain for the time being thinking this is a large trading range inside of a Re-Accumulation pattern.  But in any (and all) cases you don’t get extra “points” for being stubborn or a hero, only for being on the right side of the market.  It’s important to Stay In The Now.

Right now I am light in exposure and I’ve “hedged off” even that amount via inverse index funds.  This market is just too susceptible to any bad news and I don’t want to be exposed in that case.  The NASDAQ Composite Index is right back where it was in early March of this year, it’s just hard to make money on such short tern swings.

S-P 1500 Price Strength

The pie chart above shows the relative price strength of all stocks in the S&P 1500 Index.  A weak trending market but not in a panic.  I can’t help thinking that this could go on for the summer while the “Smart Money” picks up bargains for the Fall run higher, but that remains to be seen.

Strong Sectors

This pie chart shows the industry sectors of stocks that pass my initial “buy screening” process.  Of these, only two pass my final candidate list and I’m not very wild about taking even those positions right now.  But . . . . at least you can see where the strength is and what’s holding this market up right now.  The Gold Miners trade is rather late and very volatile, so I’ve cut way back on that one too.

So . .  that’s it for this week.  Be careful out there.    ……….  Tom  ………

chart by MetaStock; pie charts by http://www.HighGrowthStock.com; used with permission

click on graphics to enlarge for easy viewing

Cautious & Skeptical May 7, 2016

Posted by Tom in Thoughts.
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May 6, 2016 – Well another interesting week, especially Friday.  Just when one would think that continued market weakness was inevitable we get a fairly strong day, and on top of poor jobless figures (back to “bad news is good’).  Surely the FED won’t raise interest rates now.  🙂  With low (government) interest rates all over the developed world it’s hard not to “put money where it’s treated best”.  Looking at the chart below I continue not to see a Distribution structure, but more a kin to a broad trading range that likely will lead to re-accumulation.  The question is how long will that take; and really no one knows.

NASDAQ

My basket of market Sentiment indicators are “bearish”, trend lines have been broken and money flow is at best neutral.  I am cautious but skeptical that we are in for a significant top in this market.  Investors are nervous, so it would not take much for selling to increase and the market to fall substantially.  The major weakness is in the small cap index (Russell 2000) and the NASDAQ Composite (above).  Large cap tends to be hanging on (S&P 500 & Dow).  It looks like the period from April 11 to April 29 was a selling zone, both into and out of the rally.   From April 29 to current it just looks more like lack of demand.  I have a very short term trend line spotted in that will likely have to get redrawn later, but for now this market does have a “Change of Character” that began back in mid-February.  Caution !

The chart below shows the percent of stocks in the S&P 1500 Index that are in Accumulation, Neutral or Distribution.  Roughly half are doing OK (green).

SP 1500 A-D

Next the price strength of the S&P 1500 Index component stocks.

SP 1500 Price Strength

A reasonably even split, though price weakness gets the edge here.  Bottom line is not many indications of overbought or oversold currently.

The table below provides a shot of the short term (6 week) sector strength, and how they have progressed over the past 2 months.

Sector Strength

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

So that’s it for this week.  I’m letting weakness and stops reduce my stock holdings, and very skeptical about adding any right now, but let’s not too carried away by this weakness, at least for now.  Have a good week.           …………  Tom  ……………

price chart by MetaStock; pie chart & table by http://www.HighGrowthInvestor.com; used with permission

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