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On The Floor October 29, 2016

Posted by Tom in Thoughts.
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Oct. 28, 2016 –  This market remains within a rather tight trading range.  What we’ve seen is accentually indecision.  Not much reason to go up, and it really doesn’t want to go down either.  Both sides are looking for a good reason to move in either direction.  That was shown on Friday afternoon with the FBI news release; that’s all it took for traders to step back.  Folks are nervous.

nasdaq

I’ve spotted in a “utad” (Up Thrust After Distribution) only because of the Lack of Demand on those narrow price bars that poked higher.  Sure, prices went high, but without conviction (volume).  This is a worse case scenario.  We couldn’t hold the 5250 level so the next price support is around 5170, the previous swing low.  Not much sense in drawing trend lines because of the near horizontal price pattern.

I read that nearly 50% of corporations have reported 3rd quarter earnings and that 73% of those were at or above projections.  So far things are OK, though not as exciting as they were a few years ago during the recovery with major growth.  Maybe investors just have to get used to modest earnings growth.

For now I’m cautious.  Small Cap stocks are showing weakness, volume is low, Sentiment is bearish and nearly everyone appears to be waiting for the election to be over.  My strong sectors of Latin America, Japan and Banks are still good, but a market correction will take them down as well.  Small, thoughtful positions are in order right now; keeping some “powder dry”.

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

chart by MetaStock, used with permission

In Limbo October 21, 2016

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Oct. 21, 2016 – This market just seems to be in limbo.  Narrow range bars on decreasing volume with very little price movement (see chart below).  We’re just stuck around the 5250 level on the NASDAQ waiting for something.  Well, next week there is a full schedule of 3rd quarter earnings coming out.  These are big, well known companies and any surprise (good or bad) could be a potential market mover, or at least shake up their respective sectors.

nasdaqMoney & Volume flow is anemic, sentiment is bearish, so there’s not a bunch of things to be bullish about, except the market is holding its own.  I don’t see a LPSY (Last Point of Supply) formation on this chart, so that helps to form my “limbo” idea.  Looking at the individual stock activity in the broad S&P 1500 Index below:

a-dAccumulation (buying) and Distribution (selling) in the pie chart above pretty much confirm the thesis of a market in limbo, waiting for something.

price-strengthPrice Strength (above) appears to confirm the limbo idea as well, though bends a bit toward weaker.

Looking at individual sectors may tell a different story.  Airline & Oil Service stocks and International shares (Latin America & Japan) are doing relatively well.  I have done some select buying in those areas, but I’m keeping them on a tight leash since my Market Model is Neutral to slightly Bearish right now.  Perhaps investors are waiting to the election to be over, but I think earnings are a bigger factor in their decision models.

And so we take small cautious positions and wait for better setups.  Have a good week.  …….. Tom  …….

(Price graph by MetaStock; pie charts by http://www.HighGrowthStock.com.  Used with permission.)

Lack of Demand – Shaky Market October 14, 2016

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Oct. 14, 2016 –  OK, it’s good to be back to normal after the hurricane evacuation.  The news is not much has changed, or has it?  Price wise maybe not much but the internals of this market have grown weaker.

nasdaq

Note on the chart above the Money Flow and Volume Flow have turned lower.  This indicates that although the daily trading volume is average to slightly light, that volume is on down or weakening bars.  Since the volume is rather light, I’d call it a “lack of demand” for stocks.  Market Sentiment continues to be Bearish.

We’ve broken the range low of 5250 (gray line) and the next significant price support level is around 5108 on the NASDAQ.  A move down to that level would not be unusual and I think a lot of the potential revolves around the 3rd quarter earnings reports which kick into high gear next week.  Watch the banks reporting (4 on Monday); they could be a catalyst for a move.

Looking at the broad S&P 1500 stocks we see similar weakness.  Below is the portion of those stocks as far as price strength is concerned.

sp1500-price-strength

Over half are well below their 20 day moving average (red).  Next looking at Accumulation (buying) & Distribution (selling) strength.

sp1500-a-d

Many more stocks in a Distribution phase right now (red).  So this is a time for caution and as the saying goes “dance near the exit”.  Another option is to “hedge out” any long positions with a short and go synthetic “cash neutral” with an off setting bear instrument.  I consider “bear” ETF’s & funds to be basically insurance, insurance against a sudden drop in the market.  (the gains in one offset the loses of the other)  They are easy to put on and take off quickly.

In any case I’ve lighten my longs in here and don’t see very many compelling stocks to buy right now.  Let’s see how the early part of the week plays out.  If we see wide range down bars on high volume that would be very Bearish; otherwise we could be in for just a lack of buyers.

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

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

A Slow & Unsure Market October 8, 2016

Posted by Tom in Thoughts.
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Oct. 7, 2016 – I found out one of the problems with living on the coast of the southeastern US this week . . . . hurricanes.  So, we had to evacuate and stay in Atlanta for a few days.  Sure beats trying to live in a house with no power, A/C and then dodge falling debris.  I’ll take the traffic of Atlanta instead.  🙂

So this will be brief, but that’s OK since this market continues to be waiting for some reason to move, either up or down.  Noting the chart below Market Sentiment is “Bearish”, “money Flow” anemic and “Volume Flow extremely slow.  In short, not much activity in any direction.  Third quarter earnings calls start soon and with that a collective “holding of breath” as to the conditions of corporate profits.

nasdaq

Semiconductors, Technology and select Biotech stocks are doing pretty OK now.  Oil and Energy stocks are all over the place as are Airline shares.  Banks are beginning to show some positive signs after being beaten down for most of this year.  I also see some select Industrial stocks showing potential.

The big question is whether this market is starting to roll over?  I’m seeing a lack of buying (demand) more than selling (distribution).  If earnings are weak of some geo-political issues arise then that’s all it will take for this market to sell off.  Europe and Developing Markets are not in that great a shape, so there may be few places to rotate into.

That’s it for now.  More next week as more information rolls out.  Take Care & have a good week.       ……….  Tom  ……….

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