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Shifted into Neutral June 30, 2018

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June 29, 2018 – As talked about last week, if the market showed significant weakness on Monday (or a few days later) I’d begin to hedge my positions.  And on Monday the markets gapped down fairly hard; note circled area below on the price chart.

Since then, market participants have been trying to figure out IF this is “the correction” for the summer or just a minor blip driven by trade wars fears.  I find it interesting that the low last week stopped just 2 points from the Wyckoff resistance line (green line) which is at 7421.  “Resistance is now support” as many technicians say.  However the big level is the Wyckoff support level (red line) at 7354.

I think that folks are still trying to determine just how serious this down move is.  Case in point is the Price Strength of all stocks in the S&P 1500 Index.  The pie chart below shows over half of them in a weakened state, then roughly a third Neutral, the remaining Strong.

But . . . . Distribution of shares (Selling) has not picked up.  The pie chart below shows nearly an even balance between Accumulation (buying), Distribution (selling) and Neutral status.  So Far, we’re seeing a lack of buyers instead of significant selling.  But, that could and will change if this market goes much lower.  In that case I’ll increase my hedging to “full” by using a bear fund to offset portfolio losses; i.e. synthetic Cash neutral.  Stock will be sold as stops are hit or if they are weaker than the market (indexes); just like normal.

Last point is to look at sector strength.  I’m generally seeing more defensive sectors moving toward the top of the list in this short term evaluation of strength.

The bottom line is to protect your profits & honor stops as they are hit.  Watch key support levels and be especially careful if volume picks up on down bars.  So far, so “OK” (not “good, just “OK”), but this market is not in the mood for surprises or bad news.  With all of the computer driven algo programs running, there could be a rush for the exits.

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

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

Wait For It ! June 23, 2018

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June 22, 2018 – A quick look at the chart below implies the early stages of weakness.  The circled indicator on Fridays Close are all headed in the same direction.  My master hedge indicator also shows a trend toward heading to Cash IF the markets don’t rally on Monday.  Also I note the big jump in volume with a narrow range down bar; selling into strength perhaps.  The bottom line is that risk has increased and this is no time to be “hanging out to dry”.

IF this market does correct, how much and for how long?  I have no idea, but likely this would not be a major move; just one for the “hot hands” to dump and reload for the next move up.  Hey . .  it’s Summer and time for some selling into the Fall (possibly).

OK, here’s a list of sectors by strength.  Of note we see Technology, Industrials and Finance toward the bottom . . . not showing leadership.  Just a thought.

Since readership is down, I’m going to make things “short and sweet” . . . . perhaps many are on vacation.  🙂  Cheers and have a good week.   ………….  Tom  ………….

Ditto . . . Not Much Change June 18, 2018

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June 15, 2018 – I’m on the road so this will be brief; but then again, not much has changed.  The market continues to shrug off trade tariff and political issues, so the status quo remains in effect.  The steady rise continues (note chart below), and thus we must follow until weakness appears.

The very near term warning level would be around 7669 (a 3 bar low), with the major concern coming in at the 7354 level.  But so far, we see none of that weakness, however a pause would be totally appropriate in here.  I remain looking for opportunities in Consumer Services & Goods as well as Internet and Healthcare.  I’m “short” Latin America.

More details next week, but really not much has changed.  Continue to “ride the wave”.  Have a good week.  …  Tom  …

Market Backs Off at Previous High June 10, 2018

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June 8, 2018 – Not much progress this past week.  The market appears to be pausing at the previous swing high of 7610 that happened on March 12 (dashed blue line below).  That’s not a surprise with all of the potential international news happening after Friday’s close; the G-7 meeting and North Korea next week.  No need to put “new money” into this market just yet.

But the market remains strong and positive.  Sentiment, Money & Volume Flows are all good.  We remain in the upward price channel and the support price line (red) is now at 7354; that’s where “problems” will most likely come to bear.  So, until something out of the blue happens, we monitor which sectors are strongest in this market.  The table below indicates where the strength lies in the short term. (color coded by percentile; green is strongest, etc.)

That’s about it for now.  I’m nearly fully invested but watching (always) for weakness; not much there now.  Have a good week.  ……….  Tom  ………..

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

Market Lift Off June 3, 2018

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June 1, 2018 – OK, we had a break out higher this week.  The 7421 level (resistance) was broken and we also have a new support level at 7354.  “Support” is the low where the “last buying” came into the market (a.k.a. a Wyckoff “Significant Bar”).  IF, the 7354 level gets broken (on a close) it would likely signal a change in character for this market; especially if were to come on higher than normal volume.  But, for the time being Market Sentiment is bullish as are the Money and Volume Flow indicators.

For the time being, we’ve got to continue being invested.  That doesn’t mean we can’t rotate toward stronger stocks in stronger sector though.  What I do find unusual is that small cap and NASDAQ stocks are generally doing better than the large cap stocks (i.e. S&P 500 & Dow Industrials).  The tax changes and regulation changes are now been factored into price.  What is next to drive prices higher?  It got to be corporate profits and positive geo-political news.  Europe (Italy and German banks) are having a tough time and that has spilled over to Latin America.  Something to monitor.  The North Korean, China trade and European tariff issues remain as well.

Looking at the stocks in the broad S&P 1500 index (below) we generally see a fair amount of green and a minimal amount of red.  These longer term indicators are pointing in a positive direction.

S&P 1500 Stocks Price Strength –

S&P 1500 Stocks in Accumulation / Distribution –That’s it for this week.  Take Care.    ………..  Tom  ……….

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

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