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Back In (price) Range Again July 8, 2016

Posted by Tom in Thoughts.
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July 8. 2016 – Well my aggressive call for the market structure to be in a Last Point of Supply  (LPSY) status did not pan out; so I’ve removed the label.  Instead I’ve re-labeled the most recent point as a possible Up Thrust After Distribution (UTAD).  Since we’re right up to the near term previous high we’d have to see prices rise next week on low volume to confirm a UTAD.  Continued strength would negate the UTAD possibility.

The recovery after the sharp BREXIT drop was amazing.  Talk about a V shaped chart formation . . . wow.  Right now money is flowing into the US market.  Into stocks and bonds, as well as more defensive sectors such as precious metals, utilities and real estate.  It is very unusual for all of these to be increasing at the same time.  But if you think about it, it does make sense.  If you’re a money manager, where do you put money?  The US Treasury Bond rates are low but at least they are positive, and you can’t say that in many other developed countries right now.  To top it off the US markets are very near all time highs, again, no one else can say that.  Sure looks like money is flowing into the US from nearly everywhere.  My concern is when it slows or even stops.

NASDAQ

The chart shows that we’re back in the near term trading range of 4970 at the top and 4685 at the bottom.  In order to break above that 4970 level and stay there, we’re going to need a sizable amount of buying volume coming in.  With the market “over valued” on a price to earnings basis it will be a tough climb indeed.  Second quarter earnings calls could be a decisive element going forward (or backwards).

Chart above shows “money flow” increasing, Sentiment Bullish and even my new indicator “volume flow” almost showing a bullish signal.  The pie chart below shows what sectors I’m looking in for “buy candidates”.  As you can see it’s a very broad group. (click to enlarge)

Top Sectors

I have been doing selective buying, but still have cash to invest.  It’s tough to buy at the top of a range, so I’m cautious in here.  A move higher next week on light volume could spell trouble.  A minor blip down retracing some of these gains would be a heathy sign.

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

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

 

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