jump to navigation

Weak Market Looking for Direction(s) August 26, 2017

Posted by Tom in Thoughts.
Tags: , ,
add a comment

Aug. 25, 2017 – I’m very busy over the next couple of weeks, so this will be short and to the point(s).  This market continues to show signs of weakness in the form of “lack of buyers”.  No major moves to the exits just yet, but any bad news will likely change that quickly.

Looking at the chart below, we see lower swing highs and lower swing lows; plus Money Flow and Volume Flow are headed down or are weak.  Market Sentiment remains Bearish.

Note in the lower pane that volume continues to be below average; just not much reason to buy in here.  Without buyers, the markets will go into consolidation, and IF there are sellers, it will go lower.  Basic “Supply & Demand” stuff.  I am watching the 6216 support level (in red), but have a feeling that we could easily slip towards the 6141 level easily.

Looking at the stocks in the broad S&P 1500 Index (below), we see that nearly half are stuck in the “Neutral” price strength area, with more in the “Weak” area than in the “Strong” area.

Make no mistake.  This market is weak and looking for direction . . . either up or down.  It is very susceptible to news, so we must be extra careful.  I have sold some weaker holdings and have add a small “hedge” (i.e. bear fund) to help control risk.  Hedges can be taken off quickly if needed and I just look at them as “insurance” against “bad stuff” happening.

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

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

At Pivot Low, Next Week Important August 19, 2017

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Aug. 18, 2017 – A quick look at the price chart below shows how the NASDAQ Composite Index closed on Friday, right near the previous swing low.  We have two lower swing highs and now two lower swing lows.

That 6216 close on Friday is just a little ominous in that IF we’re expecting a turn around, it should happen on Monday.  Otherwise the next target lower is the 6141 level.  That 6141 level is where buyers have previously come into the market (we’ve already ‘blown through” the 6303 support level).  I’ve spotted in a few important Wyckoff turning points; these would indicate further market weakness.

Also in the chart above: Sentiment is bearish, as is Money Flow and Volume Flow.  We’re entering into a period of the year where the stock market is typically weak; late August through early October.  I’m not a big fan of seasonality, preferring to observe and follow the trends as they develop.

Selling also dominates the S&P 1500 index stocks.  The pie chart below shows the number (i.e. %) of them in Distribution (red / selling) and Accumulation (green / buying).  There is far more red than green right now.

A look at the sector strength table below shows a move toward more “defensive” stock sectors.  The previous market leaders of the Technology sectors have moved down in the table.  In the short term, this is a time for either hedging (via “bear funds”) or staying close to an exit plan if necessary.

I’m seeing more strength in Emerging Market countries for the time being, as well as Utilities, Telecom and other defensive sectors.  I’d wait until Monday afternoon (after the weekend investors place their sell orders) before I’d jump to any conclusions, but it sure looks like a market that’s headed lower.  At least another 3 to 5 % next week.

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

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

Expected Decline; Time to Be Careful August 11, 2017

Posted by Tom in Thoughts.
Tags: , ,
add a comment

Aug. 11, 2017 – OK, we’ve had a quick drop but only a minor one so far.  Our first support level of 6303 on the NASDAQ Composite Index was broken on the close on Thursday.  That gets our attention.  But . . . notice how “average” the volume was (lower pane) and then on Friday (8-11-17) volume dropped off even more.  Obviously we’re not seeing panic selling or a mad rush to the doors.  And this was on a Friday (before a weekend); traders were rather comfortable holding on to stocks over the weekend.

Where we’ll get much more concerned is if prices breaking the 641 level on a close and / or volume picking up on a wide spread down bar.  Then it’s time to hedge or sell.  For now I’ve just lightened up a little on holdings, paying more attention to weaker things that I hold.  Not surprising that Market Sentiment (top pane) and Volume Flow are negative.  Money Flow has turned down but remains above zero.  This confirms a lack of buyers, but not significant selling for the time being.

The number of stocks making up the S&P 1500 Index that are in Accumulation and Distribution (below) shows a fairly even split.  Again, not large amounts of selling at this time.

The Price Strength (below) shows a different picture, but confirms the idea that the weakness is caused by the lack of buyers.  If there are more sellers than buyers, prices will drop.  The amount of Red that we see far exceeds the green.  Prices are generally weak.

Looking at sector strength we see more defensive stock sectors moving to the top of the list, while previous leaders (technology based) have moved lower.  Since the general feeling is that stocks are over priced based on good earnings, but not great, this is likely a typical pause for re-accumulation of shares at a lower price.

Let’s hope that the conflict with North Korea is only an excuse to have a minor correction.  Speaking of sector strength, it appears that International stocks are fairing a little better right now.  I have cut back on % amounts to hold, but China, Latin America and Emerging Markets in general are looking to hold up rather well after making significant gains recently.

That’s all for now.  Watch that 6141 level and signs of volume increasing on any down days.  Otherwise, we’ll be patient and wait for a better time to redeploy our Cash.  Have a good week.     ……….  Tom  ……….

Chart by MetaStock; pie charts & table by http://www.HighGrowthStock.com; used with permission.

Market Holding, but Showing Signs August 5, 2017

Posted by Tom in Thoughts.
Tags: , ,
add a comment

Aug. 4, 2017 – A quick look at the chart below shows the NASDAQ Composite Index holding on to the first support level at 6303, but a close look “under the hood” shows a market that is slowing down, if not weakening.  What would concern me more would be a close below the next level at 6141.

Note how Sentiment (top) has turned neutral and both Money Flow & Volume Flow are fairly lethargic.  I my opinion this is likely just a pause, but if either Trump or the North Koreans do something “dumb” it could turn out to be a significant correction quickly.  The momentum has definitely slowed significantly.  The word now is to honor your stops if whatever your holding shows excessive weakness.

One other item that may be of concern is the number of more defensive sectors that are showing leadership in this market.  You can see this in the table below, as the past “darlings” (technology, semiconductors, biotech) are not near the top of this list.  That could be an indication that money is flowing to more conservative sectors to ride out a brewing storm.  Let’s keep an eye on this for a few more days before we jump to any conclusions though.

That’s it for this mid-summer market.  Let me know via a post to this blog if there is anything you’d like to see me cover of review (except specific stocks).  Thanks and have a good week.     ………….  Tom  ……………

Chart by MetaStock; table by http://www.HighGrowthStock.com.  Used with permission.

%d bloggers like this: