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No “Santa Clause Rally” December 30, 2017

Posted by Tom in Thoughts.
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Dec. 29, 2017 – Well it’s been an interesting year.  Sure this market has been very “kind & understanding”, but what drives prices higher is earnings (or at least the hope for future earnings).  The U.S. tax plan has past and it remains to be seen exactly what companies will do with that extra money.  With unemployment in the U.S. are near all time lows, I doubt if much added hiring will occur.  The last time this type of tax abatement happened corporations bought back their own stock or issued special one time dividends.  Either of those should drive prices higher.  We’ll see.

In the mean time prices continue to remain within the upward sloping price channel.  But as I note in the headline, index prices have really not done much in December.  While Sentiment and Volume Flow remain Bullish, the Money Flow indicator has dropped to a negative reading.  Now volume is typically light during the holiday period, but this is something to be aware of.  Also, I show you the chart below (the last 6 days; 10 minute bars) of the significant selling that came in during the last 20 minutes of 2017 on Friday.

Look at that volume spike.  I’m considering this to be an Up Thrust in the immediate term.  We’ll see if that selling continues after Jan.1, 2018.  This market is due for a correction from an historical perspective.  In the mean time I’ll show the pie charts of the stocks in the S&P 1500 Index.

# of Stocks in Accumulation / Distribution –

# of Stocks with Strong / Weak Price Strength –

So far, a fairly even split in healthy to unhealthy stocks, and that supports a continuation of the current trend (higher).  But let’s watch to see if tax selling comes in during January.

Oil & Oil Equipment, Latin America, Precious Metals and Basic Material sectors are in the lead for short term performance  The entire Tech sector is struggling right now.

That’s it for this year.  I wish you & your family a very Happy & Prosperous New Year !   ………  Tom  ……..

Charts by MetaStock & Worden bros. / TC200, pie charts by http://www.HighGrowthStock.com. All used with permission.

Holiday Continuation – Ho Humm December 25, 2017

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Dec. 22, 2017 – Not much to say because most folks were not doing much in the markets; though I do note Asian market are getting stronger.  We remain in both the short term channel and longer term price channel, both of which are pointing up.  Not much to determine in the volume figures as they have steadily dropped off.  (Which explains the drop in “Money Flow” in this market.)

What will be of interest is IF we see selling AFTER the first of the year when tax rates in the US are lower for the high income folks.  No need to lock in profits now . . . save a few percent and wait a few days.  That level of activity will give us a feeling for the first half of next year I’m thinking.  Until then, the moving sectors are Oil & Oil Services, Telecom, Consumer Services, Banks and Consumer Goods.

Enjoy the holidays !      ………  Tom  ………..

A Taxing Situation December 16, 2017

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12-15-2017 –  No doubt about it . . . the stock market likes money and when they’re pretty sure that more is coming their way . . they get happy and drive prices higher.  Volume was dropping off (until Friday’s options expiration), so we’ll have to wait until next week to see the tax approval drama prove out and see if the market reacts with higher prices on higher volume.

I do want to see volume confirm price (ease of movement= price and effort = volume) in order not to get concerned about a possible Up Thrust After Distribution structure.  Likely, that won’t happen, at least not yet anyway.

The 6668 level remains my support level.  One thing concerns me is the Money Flow indicator; it’s falling.  Other than that, all “systems” remain bullish and I remain (nearly) fully invested.  Volume will typically drop off between Christmas and New Years and attentions divert to the holidays.  We may have to wait until the new year (and new tax basis ?) to see just how strong the underlying market really is.  But for the time being . . . “no worries”.

Here’s a table of short term sector strength –

Wishing you & your family a very Merry Christmas.    ………… Tom  ……….

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

A Cautious Bounce December 8, 2017

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Dec. 12, 2017 – This week we saw the market revert back to the lower short term price channel (purple line) but remain well within the long term channel (dashed gray line).  OK, a bit of a pull back, and that’s to be expected after a very steady run higher.  But I do note a drop off in Money Flow and Volume Flow indicators.

Two possibilities: 1) volume dropping due to a lack of buyers, and also sellers, or 2) lack of demand to buy.  We’ll have to wait until next week to see if prices recover and exactly what volume does.  I’ve VERY cautiously labeled the peak as a Buying Climax and the swing lower an Automatic Reaction.  Are they really?  We’ll have to wait a few days to see IF there is the follow through necessary to confirm a Distribution price structure.  My feeling is likely not a significant top in the market just yet, but I’m always looking for a trend change.

The 6668 price level (blue line) would also help confirm any weakness, so I’ll watch that as well.  Until then, I remain invested and monitoring sector rotation.  Right now Financials, Telecom, Industrials, Banks and Consumer Goods & Services are strong.  Sure, some of this is seasonal, but “money goes where it’s treated best.”  Real Estate, Gold and Semiconductors are now some of the weakest sectors.  (That happened quickly!)

So the market is strong right now and the pie charts show the percent of stocks in the broad S&P 1500 Index confirm that.

Price Strength:

Accumulation (buying) / Distribution (selling):That’s about it for now.  Time to watch the reaction / bounce strength and be just a shade on the cautious side.  Have a good week.    ….. Tom ….

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

Maintaining the Up Channel December 3, 2017

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Dec. 1, 2017 – The (US) markets continued to stay in the “Short Term Channel” (purple lines) which is pointed up.  On Friday prices briefly touched to bottom channel line on the Flynn guilty news, but responded to the tax bill passage news.  

The year end period is typically bullish, but we do see signs that negative news will trigger selling.  Now that the tax cuts are passed and the “big rollers” can look forward to lower taxes next year, it will be interesting to see the reaction in January, 2018.  For now I’m watching the 6668 level on the NASDAQ Composite Index as a first line of price support (blue line).

Not much to say except it looks like money is flowing out of Tech (especially Semiconductors) and into Banks and Finance.  Emerging Markets are erratic and Europe “ho-hum”.  My sector strength table is below (short term strength).

That’s about it.  Have a good week.        …………  Tom  …………

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

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