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Steady but Indecisive June 24, 2017

Posted by Tom in Thoughts.
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June 23, 2017 – OK, the trend remains positive / Bullish but if you look at the recent rally, it was pretty tepid at best.  I point out the “Volume Flow” indicator below which rather well points out the lack of enthusisium in this recovery off a minor bottom.

NASDAQ

Yes, the support levels (first at 6164) and trend lines are hanging in there and we may just be seeing the infamous “Summer Doldrums” setting.  My feeling is that we’re going to be in a consolidation phase until the Fall, but that’s just a hunch.

Editorial: I’ve updated to the latest version of MetaStock, so this chart looks a little different, plus I’ve added my bar strength indicator to the color of each daily bar.  This should provide a little more “heads up” information in the future.

From the pie charts below of the stock components of the S&P 1500 Index we note a healthy but yet “OK” market in the longer term.

Price Strength –

SP 1500 Price Strength

Accumulation / Distribution –

SP 1500 A-D

Overall things are looking OK even though the previous mass buying surge that we have seen after the November election has subsided.  What has appeared over the last week to 10 days is a rolling over of key sectors.

Sectors

The Tech, Semiconductor, Software strength remains, though lessened.  It has been supplanted by Biotech and Healthcare (note above table of current sector strength).

Where we are now is a generally supportive market, but leadership may be changing and actually narrowing.  I remain watchful of an Up Thrust bar on heavy volume as a near term warning sign of weakness.  But for now we have to “go with the flow” (i.e. trend).

Have a good week and we rolling into summer at full strength.   ….  Tom  ….

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

At The (lower) Edge June 17, 2017

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June 16, 2017 – An interesting week indeed.  Looking at the chart of the broad NASDAQ Composite Index below, we see that we’re still (barely) within the upward sloping price channel and, also above the first price support of 6164.   (Note: I look for a break of any line or level by the Closing price as opposed to the low of the day.)

The Volume Flow indicator continues to show weakness, though it is traveling in a horizontal position.  Money flow showed an up tick this weak and overall Market Sentiment is neutral.  Volume on Friday was high, but that’s typical for the 3rd Friday of the month due to options expiration and folks “squaring up” their expiring positions.

Holding the 6164 level and going into a trading range for this summer is a likely scenario.  The axiom “Sell in May & go away” could very well hold true this year.  There’s been a bunch of talk about a rotation out of Tech & Semiconductors and into Banks & Finance.  I see some evidence of that, particularly in Banks, but so far it’s been fairly muted.  Not much sense in talking about “strong sectors” since not much is showing domination right now.

I’m thinking we’ll just have to wait for the second quarter earnings to drive the markets anywhere this summer, or maybe a political issue will drive it.  Whatever it is, it will likely be a surprise and this market is on edge right now.  Have a good week.     ……… Tom ……..

chart by MetaStock; used with permission.

Steady As She Goes June 10, 2017

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June 9, 2017 – This will be short because really . . . not much has changed.  Yes, the market did drop quickly and significantly on Friday afternoon, but by the close a good bit of it was recovered.  I think the question is not “is this the top of the market” but more like “are the big guys rotating out of Tech and into something else” (like Financials)?  There are a few reasons why I believe this, but note that while the major indexes did drop, the Russell 2000 (small cap) index hit a high.  The vast majority of the time the small caps will lead the markets down as investors exit the more speculative small cap stocks.

Also, note that price still remain in the upward price channel and still above the most recent support level.  What caused this sudden drop is anyone’s guess, but the quickness and volume point toward computer algorithms and not just humans.  Once the “algos” kick in and start moving prices resting stops (all ready in the market) are taken out, thus the move increases in strength.  We should know early next week if there is real cause for concern.  In the grand scheme, the market was over bought, that is it was at the top end of that price channel.  Correcting back down toward the lower edge is typical.  I’d wait until Monday afternoon though, as the weekend investors may panic and sell out on Monday morning.  That’s how money is made on Wall Street: buy at wholesale and sell at retail.

For the time being (subject to immediate change) I’ll stick with Semiconductors, China Utilities and Consumer Goods.  Have a good week.  … Tom …

 

Continuing Up the Channel June 3, 2017

Posted by Tom in Thoughts.
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June 2, 2017 – After a very brief pause, this market sprang to life on Thursday & Friday.  Up, up and away.  As long as we stay within this channel things continue on the same course.  I’ve moved up the first support test level to  6164 to reflect the low of this strong week.

Money and Volume Flows continue to be “Bullish” and Market Sentiment also is positive.  What did strike me this week was the sudden burst of strength in the small cap index (Russell 2000 index).  That’s a positive as well since these stocks are more “speculative” in nature.  I did find the strength in Utilities to be surprising since they are considered to be more defensive.  My only concern is that volume (at the lower edge of the chart) is rather muted.

How long can this go on?  I’m not sure it has “legs” and it looks to me to be a short term surge as we go into summer and a typical quiet period for the market.  The chart below shows the seasonality that is “typical” for the months of the year.  This has prompted the “Sell in May and Go Away” phrase.  Just remember that the markets don’t “have to” do anything, and seasonality is just an average.  Things (and market) usually oscillate around “average”, and it’s definitely not a predictor.

 

Here are the sector of stocks that I feel are strong and worthy of consideration:

 

Also, don’t ignore international stocks, as select European companies are rallying too.  That’s it for now.  It appears to be “steady as she goes” but this could turn on a dime with any geo-political issue.        ……….. Tom  …………

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