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Still Climbing In the Channel January 28, 2017

Posted by Tom in Thoughts.
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Jan. 27, 2017 – This (again) will be short because (again) not much has changed.  The chart of the NASDAQ Composite Index below shows prices climbing in a narrow range (blue circle) up the trend channel.

nasdaq

Volume is average to light and the narrow price bars tell me that buying & selling are about equal, but there’s no “rush” to do either one.  Money Flow is positive as is Volume Flow, but clearly buying momentum has slowed down now.  Market Sentiment is positive having bounced off of neutral awhile back.

Looking at the broad S&P 1500 stocks in that index we see the following:

price-strength

Price Strength (above) is fairly “normal” and evenly spread out.

a-d-sp-1500

Accumulation (buying) and Distribution (selling ) in these stocks are pretty “normal” for a market in an up trend.  I still see the Advance / Decline line momentum slowing, showing that the rush to buy that occurred after the elections has slowed significantly.  That maybe OK, but a sign that things are slowing down.

In order for this market to push higher we need some good earnings news.  So far it has generally been OK.  Next week we’ll have a number of “bell weather” stocks reporting; most notably Apple.  That could set the mood one way or the other.  For the time being I have to stay invested but I sure am watchful as this rally could correct sharply on any type of news.

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

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

Market In Wait January 21, 2017

Posted by Tom in Thoughts.
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Jan. 20, 2017 – This will be short because I’ve very busy this weekend and there’s really not much new.  The chart below pretty much calls that out.  I note the two areas circled in blue. (click on chart to enlarge for easy viewing)

nasdaqThis past week has given us narrow price bars indicating buying and selling near equal and with the volume bars (below) falling off, there’s not much activity.  This market is waiting for earnings to come out and for Trump to actually “show his hand”.  Then we will see some significant movement in one direction or the other.

This market is not “cheap”, so news must be positive for the up move to continue.  My attention right now is toward Latin America, Precious Metals, Emerging Markets and Internet sectors.  Steel & Basic Materials and select Financials are doing OK as well.

I’ll leave you with this year end study from Jez Liberty from his website at: http://www.automated-trading-system.com .  (This is something you can subscribe to.)  It shows what a tough time Trend Following hedge type funds have had in 2016, and we had some big moves in oil this year; in both directions.

Have a good week.       ………  Tom  ………

trend-followingChart by MetaStock, used with permission.

Anticipation January 14, 2017

Posted by Tom in Thoughts.
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Jan. 13, 2017 – I’ve been concerned about just how far this market could go for a while now.  My job is to be skeptical about rallys and watchful during declines.  I’m always looking for a potential trend change.  So far the up trend that started immediately after the U.S. elections has held up into the new year.

nasdaq

True to form my indicators shown above would agree that things look positive.  Money Flow and Volume Flow, as well as market Sentiment, are bullish.  Prices are above support levels and trend lines.  Looks pretty good.  So we are long this market.  But let’s look “under the hood”.

midcap-a-d

The chart above is of the Advancing vs. declining stocks in the (small cap) Russell 2000 Index.  Small cap stocks are considered to be more speculative, and therefore typically show signs of weakness before the more widely followed indexes.  Looking at the chart it appears that the A-D line is pretty much in-sync with the (gray) price line.  So far, so good.

mcclellan-sum

The chart above is of the McClellan Summation Index.  I’m going to simplify this and call it the momentum of advancing vs. declining issues.  Note that the momentum (the rate of change) usually changes direction (goes red) before the market turns down (shown by the yellow arrows).  Conversely, it turns up before the market changes direction and rallys higher (shown by the teal arrows).

That brings us to the current status.  The summation index is trending lower.  Does that mean the market must head lower?  Not necessarily.  It shows that the advance – decline line is loosing momentum, so it is either in a flat / stable or potential down trend.  This is a “yellow flag” and tells us now is the time to be careful.

Here are some of the sectors of stocks that are on my “buy watch list”:

top-sectors

Not really any surprises here, as these have been strong for many weeks now.  I also am watching Latin America, Europe and Emerging Market sectors too.  A reminder: double click on any chart or graphic to enlarge them for easier viewing.

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

price chart by MetaStock, other charts by Worden Brothers / Tc2000; pie chart by http://www.HighgrowthStock.co. Used with permission.

Market Sliding Higher, But . . . January 7, 2017

Posted by Tom in Thoughts.
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Jan. 6, 2017 – Monday of this week was a very weak day of the markets.  We got (nearly) down to the 5340 Support level before bouncing back up.  My proprietary trend indicators (not shown) flashed a Caution, Trend Changing signal, but immediately when back to a “stay long” status the next day.

nasdaq

It’s just that kind of an environment.  Stocks (particularly U.S. ones) are “over bought” and valued highly when compared to historic earnings & price levels.  There is much anticipation of a correction of roughly 5-8%, so folks are nervous.  No one wants to miss gains, but sure don’t want to give back anything either.

I’ve changed my pessimistic Wyckoff UTAD label and slid it up the price bars.  Since we’re at market highs what I need to see is a bar that has a new high with a very low close, on light to moderate volume.  In short, the retail investor rushing in and selling coming in late in the day.  The next day would be a solidly wide spread down bar on heavy volume (selling).  Then the Up Thrust bar would be confirmed.  But . . . we have NOT seen that yet.  A break below the 5340 level on the NASDAQ Composite Index and breaking the purple trend line would be another confirmation of a Change In Character.  I note that volume is rather light (red line on the volume bars), as it is headed lower.  There doesn’t appear to be continued buying at these levels.

I’m always looking for a trend change, but until that happens, I have to look for stocks and sectors that show strength in the current market.  Below is a look at the sectors that I’m paying attention to right now.

sectors

That’s about all to conclude at the present.  Be very watchful.  Next week has a host of major U.S. political items coming up with hearings and news conferences on tap.  Investors are nervous; not a stable environment.  Have a good week.   …  Tom  …

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

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