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Low Volume – Dull Market April 29, 2018

Posted by Tom in Thoughts.
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April 27, 2018 – There is an old saying, “Never Short a Dull Market” and that’s what may be happening.  Next week is another round of earnings reports from the first quarter and this market just wants to wait and see what they are.  Granted that the earnings have been very good (generally), but the guidance going forward has been “luke warm”.  The tax benefits have long since been anticipated and reflected in prices.  It’s the future that concerns Wall Street right now.

I’ve placed some Wyckoff labels on the chart above and the notable one is a possible “LPS ?” in red.  That is the “Last Point of Support” where this market would break upwards IF a major Sign of Strength bar develops.  Low volume, so not much Supply; what we would need is increased demand.  That demand (SOS bar) would be a high volume bar with a wide daily range and a Close near the top.  In short, a break out bar.

Interesting to also note was how the NASDAQ Composite Index stopped right at the previous Support level of 7205 on Friday morning then headed down.  A significant break above 7205 on high volume would lend validity to a SOS bar, but for now that’s just a scenario.  Breaking above 7332 would be a big confirmation.

The table below shows what sectors are currently doing well –

Interesting to see Technology and Emerging Markets still in the basement along with Banks and Finance.  We’ll need to see some leadership in major sectors such as these for any sustained rally.  That’s about all for now.  Have a good week.    ………..  Tom  ………

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

At a Make or Break Point April 22, 2018

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April 20, 2018 – This market appears to be at a “Make or Break” point, in that it stopped at a resistance point (near 7332; NASDAQ Composite Index) and my Wyckoff “bar strength” indicator has (finally) given a strong bullish reading.  The resistance point goes back to early February where we had a “significant weekly bar” which is where buying last came into this market (blue line).

While Volume & Money Flow indicators are now looking more bullish but I think we need a confirmation before we get too optimistic.  A close comfortably above 7332, especially on increased volume, would help.  While I’m cautiously invested now, I still have cash to deploy and I’m thinking that we’re close to putting both feet back into the water.

This is a big week for earnings announcements so that will have a large bearing on how the market moves from here.  I am “in” Oil & Oil Services and well as Precious & Basic Metals.  Both Japan and European sectors merit attention.  While the US Technology sectors have improved, there still remains concerns especially in the Semiconductor sector.

So this week should provide us with a sign of breaking out above this resistance or a failure which would usher in concerns and lower prices.  We shall see.  Have a good week.  ………….  Tom  ………….

chart by MetaStock; used with permission

April 14, 2018

Posted by Tom in Thoughts.
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April 13, 2018 – It was Friday the Thirteenth and just about everything was happening.  Political issues, trade issues and international saber rattling.  It will be interesting to see how the markets react on Monday (hint: watch the Asian markets on Sunday night).  But I really don’t think this market cares much about them right now, for next week the focus will be on earnings.  Yes, earnings are expected to be very good (how could they not with a big gift of a tax cut); but the interest will be on “forward guidance”.  The corporate equivalent of predicting what earnings will be next quarter.

So far we’ve hit the “spring” level and bounced off; just as a spring action should show.  We need to have a Show of Strength (SOW) with a nice wide boded bar on high volume closing above 7205, or better yet, above 7332 on the NASDAQ.  Indicators are mixed, but what concerns me is the low volume of last week.  This looks like a cautious wait and see stance.  It shouldn’t last very long though.

While “Price Strength” is modestly bullish, I’m working on a refinement of that indicator.  While not ready for “prime time”, it does indicate a bullish environment, but not that last final trigger.  That trigger is based off of “Volume Spread Analysis” (for those of you who are interested).  I’m kind of excited about it since it appears to be robust and fast reacting to market changes.

Here’s what’s happening on the sector front in the short term:

I’ve taken modest positions in Energy, Precious Metals and European sectors.  I will add to these next week IF the market shows some follow through.  I’ve also taken off my bear fund, which I held as a hedge.  Right now cash looks OK to me as I can go either way as needed.  There’s still a lot of unknown and volatility out there.

That’s it for this week.  Have a good week.      ……….  Tom  ………

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

At the “Spring Level”, due for a Bounce (up) April 7, 2018

Posted by Tom in Thoughts.
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April 6, 2018 –  OK, I’m going way out on a limb and predicting (oh, I hate that word) that this market will react higher next week.  Why? Because we’re at an important price level that Richard Wyckoff would call a “spring”.  And the other reason is that I’m seeing early signs of volume coming back into the market on “up bars”.  Now, that is by no means a guarantee, and a true Wyckoffian would wait for a “Sign of Strength” (SOS).  That SOS would be a wide range bar, with a close near the top of the range, on above average volume.  That SOS bar may take a few days to develop, but that’s what I’m watching for.  It’s kind of my “clear” to start selective buying; but not yet.

The chart above shows Sentiment, Volume & Money Flows negative, but the glimmer of hope is that the Price Strength has moved out of the Bearish range into Neutral.  That’s NOT an “all clear”, just the possible beginning of one.

This market is weak.  Just look how it is reacting to any news item.  It doesn’t take much to push it in any direction.  And as such, my idea of a possible recovery could easily get blown out or only short lived.  Earnings for the first quarter are just around the corner so there is plenty of opportunities for market moving news, let alone what comes out of the White House.  This is not an easy market to trade and make money in unless you’re very short term focused.

The pie chart below shows the current damage with a fair amount of red.

S&P 1500 stocks; Price Strength:

S&P 1500 stocks in Accumulation / Distribution:

Here are the strong sectors (in the short term):

No surprises since most are defensive in nature.  Let’s carefully watch for our SOS confirmation next week before we take any significant positions or take off a hedge.  Have a good week.       ……………  Tom  ………….

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

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