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Status Quo November 25, 2016

Posted by Tom in Thoughts.
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Nov. 25, 2016 – This will be a very short post, because, not much has changed since last week.  Note on the chart below that, other than Monday, the bar ranges/spreads were very tight.  That goes along with the steadily decreasing volume due primarily to the Thanksgiving holiday.

nasdaq

It’s hard to make much out of the price & volume action this week so I won’t.  However next week it’s back to business and we should very quickly get an idea whether we’re headed into a Low Demand / Up Thrust situation (bearish) or a return to a steady grind higher.  This market could use a rest and I’ve drawn in a set of reverse trend line channels to give us an idea where a “normal” pullback would go.  Somewhere near 5250 on the NASDAQ Composite Index (above) should not cause much alarm.

Right now Small & Mid Cap stocks are doing well which typically indicate a “risk on” state.  Also Banks, Financials, Japan and Industrial sectors are doing well.

Thant’s it for now.  Have a great week.         …………..  Tom  …………..

Chart by MetaStock, used with permission.

Trump Rally May Be Slowing November 19, 2016

Posted by Tom in Thoughts.
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Nov. 18, 2016 – The “Trump Rally” continues, though it may be slowing down to digest this bounce back to the previous market highs of late September.  Note on the chart below we’re at the 5342 level of the previous (swing) high.  Market Sentiment and Volume Flow are positive but Money Flow and Volume are slowing.

nasdaq

I’ve moved the UTAD (Up Thrust After Distribution) tag over to the current high.  This assumes a Distribution structure which is worse case right now, but more likely it is a Re-Accumulation formation.  The next swing will confirm the structure.  A swing much below 5170 (blue line) would start to concern me and below 5180 could indicate Distribution in the market.  If this market is to go higher, a trading range between 5342 and 5170 could be healthy for awhile.

The pie chart below shows the sectors that are leading the market higher (in the S&P 1500 index). click to enlarge

industries

The chart below shows the relative breath of buying and selling (fairly even), which is a heathy sign.

a-d-sp1500

That’s it for now.  The trend continues up, but this market needs to catch its breath after an aggressive move higher.  We’ll watch for signs of weakness as the market slows.  Have a good week.     …………  Tom  …………..

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

Some Markets Recover – “Risk On” November 12, 2016

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11-11-2016 – Wow what moves; volatility is back big time.  What this chart doesn’t show was the major down draft to near the June “Brexit” lows during the after market hours in the futures market.  By the time the US markets opened the drop was modest and it just took off higher after that.  One thing we do know is that volatility has returned with all of the geo-political uncertainty.  (What will the Donald do?)

nasdaq

In retrospect, looking at the market action on Monday & Tuesday (note the sudden gap higher) there was buying coming in before the election; obviously regardless of who would win.  I’ve labeled the chart with pessimistic / worse case Wyckoff labels in lower case with a “?”.  I typically do that trying to find contrarian price structures.  You don’t have to agree with them, they are just there to keep me grounded.  Indexes usually don’t have very good volume confirmation (IMHO) because they are averages of a wide range of stocks.  And the Supply / Demand “crispness” of price and volume is muddled via this averaging.

What is very interesting is that both very large cap and small cap stocks rallied (with the exception of tech), while the middle of the market was much more lethargic. in nature.  The Dow, S&P 500 and Russell 2000 (small cap) Indexes did well, but not so much with the NASDAQ Composite Index (above).

The pie chart below shows where the current strength is in the market:  (click to enlarge graphic)

sector-breakouts

Not a surprise that Banks and Financials did well with the anticipation of repealed regulations.  (Editorial: ‘What could possibly go wrong?”)

What is a split in market reaction is how the Emerging Market countries reacted; much lower.  In any case now we observe this market.  Do we continue higher and truly get a breakout, or fail and move lower?  The price bar and volume action will tell us.  Wide range bars with the High near the top are bullish, moderate to high volume will confirm it.  A series of narrow bars with high volume will concern me (selling coming into the market).  It remains at time to pick and choose your battles (stock candidates) and be careful.

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

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

Weakening Market, Will Tuesday Stop It? November 5, 2016

Posted by Tom in Thoughts.
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Nov. 4, 2016 –  U.S. and world markets continue to weaken and we can all hypothecate as to why.  But in reality, “why” does not matter.  The old saying of “Price is truth” has an eerie ring to it.

But, before I forget, I think it’s interesting to see what the “big boys” are doing.  The following link will take you to a brokerage site with the performance figure for some of the top commodity hedge funds: http://www.wisdomtrading.com/managed-futures-september/ .   Now many think that these funds just print money, but the fact that they ALL are having a hard time this year should put things into perspective.  Let’s take a look at the charts . . . .  (click on graphic to enlarge)

nasdaq

This past week we broke 5106, which is important because that level was a key “test” of price support.  Next we have minor support levels at 4970 and 4685.  The next major support level is way down at the Brexit low of 4565.  Could we go there?  Yep, it’s quite possible.  But the next move depends on the emotional make up of traders and investors.  Note that volume has picked up over the week with lower prices (selling), but there is no panic selling.  Sentiment is bearish, both Money & Volume Flows are bearish as well.  No doubt about it, this market is weak and that goes for world markets as well.  The Latin American markets were on fire a week ago . . . not now.

I’m in favor (continue to be) of waiting for the election, but more importantly, how the financial markets behave afterwards.  Let’s look at the stocks in the broad S&P 1500 Index.

sp1500-price-strength

The pie chart above shows the “price strength” of those stocks.  Well over half are well below their 20 day moving average (weak); yellow shows near the 20 day, green well above it (strong).

sp1500-a-d

This pie chart measure the number of S&P 1500 stocks in Accumulation and Distribution phases.  Pretty straight forward as these indicators confirm overall weakness.  Are there any strong sectors?  Well, a few: software, metals, hardware and semiconductors . . . but, these stocks are very selective and in this environment, fairly speculative.  If the market rebounds quickly, these are areas I’d be considering . . . just not right now.

That’s it for now.  Have a good week and for those in the USA . . . Vote !            …………….  Tom  …………….

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

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