jump to navigation

Weak Market – Waiting for Confirmation July 28, 2018

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

July 27, 2018 – Thursday and Friday showed us weak bars.  Does that mean the market will correct, and if so, how much ?  The answer is: Possibly.  My hedging indicator confirmed a possible weak market on mid week, but I will need confirmation of that on Monday.  If the market momentarily (a couple of hours) blimps down then recovers, that will negate the signal.  If it continues to go lower, then I will “buy insurance” and hedge (some) of my positions (i.e. buy a bear fund).

IF I had to predict, I’d say this is a short term weakness, with the NASDAQ going down to around the 7443 level (red line), which is also the lower level of the trend channel.  That would put us back to the late June swing lows.  From there we could ether expect buying coming back in at these lower prices, or a more severe drop.  Volume will confirm the price action.

In the longer term, this market doesn’t look too bad.  That’s one reason I doubt if we’re in for anything major.  Right now here’s how the stocks in the S&P 1500 Index are looking:

Price Strength –
Price Strength is fairly evenly distributed; no major issues of “over bought” which may indicate a major top.

Accumulation/Distribution –Accumulation is dominate; likely no major issues.

My philosophy is to error on the side of safely, so my hedge indicator is very sensitive to weakness and does NOT distinguish the level of weakness.  Thus I’ll watch Monday’s price action and volume closely.  As the saying goes “It’s better to be out wishing you were in, than in wishing that you were out.”

Have a good week, it could be interesting.    ………… Tom  …………

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

Caution Ahead July 22, 2018

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

July 20, 2018 – I’m seeing the early stages of Caution beginning here.  No “Red Flags”, but just a “Heads Up” to pay extra attention to market action this week. The reasons are: lethargic Money Flow and the recent price / volume action.  Looking at the chart below I note narrow range bars (red ellipse; buying=selling demand) and very low volume (red arrow; much below the red 20 day average line).

Is this just a pause where there is equilibrium and hence little movement or is it Lack of Demand?  Either is possible but the classical chart pattern is a “Coil”, where prices go nowhere in a tight range only to breakout suddenly in one direction or another.  Personally, I’m favoring a Lack of Demand, which means a soft / lower market.  But as we’ve seen, any news item could break this equilibrium effect.

The table below shows what sectors are doing in the short term; what to favor and what to avoid right now.  I’m waiting for the market to move and IF it goes lower I won’t wait to lighten up my longs.  A touch below 7746 would concern me, likely back to a light hedge for protection.
That’s it for now.  Perhaps the “Summer Doldrums” have set in; or not.   Just a word of Caution for now.  Have a good week.   …..  Tom  …..

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

Continuation Upward July 15, 2018

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

July 13, 2108 – Last week it appeared that the NASDAQ Index might just but on the brink of tripping down.  This week that did not materialize and the (US) Indexes resumed the trend higher.  Interesting how this market shrugs off bad news.  One interesting point is that while Sentiment and Volume Flow have resumed positive, the Money Flow still is lagging.  Not a big deal, but it sure would be more comforting if all of these indicators were in sync.

Biotech, Healthcare and Technology stock seem to be leading the market upward.   International, especially Emerging Market indexes continue to be weak.  Support levels for the NASDAQ Composite Index are at 7616 (near) and 7443 (major); these are my “lines in the sand” that would trigger concern if the index closes below them.

The broad S&P 1500 stocks are doing well as show below (more green than red):

% of Stocks Price Strength –

% of Stocks in Accumulation or Distribution –

So I’ve backed off my light hedge and back to following this market.  The current direction appears to be up, and so I follow.  Have a good week.      ……..  Tom  …….

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

“On The Cusp” July 7, 2018

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

July 5, 2018 – This was a shortened holiday trading week not to mention a prime vacation period in the US.  Thus market activity / volumes are down.  Low volume markets tend to amplify moves; think of it was “a little goes a long way” in moving prices.  Both the Volume and Money Flow indicators below were slow to move even though price action appeared to be fairly good, especially on Friday.  Main Support level moved up to7421 on the NASDAQ Composite Index.

My sensitive market indicators show that we’re “on the cusp” of changing from short term mildly bearish to mildly bullish.  Technically we’re still in the bearish range though a nice move upward on Monday will change that.  There’s so much in the news that just about anything can pull this market in either direction.  Trade Wars, Atlantic Alliances, North Korea etc. will be the topics next week; there are a bunch.

That said, I find it interesting looking at short term sector strength (table below) that most of the top sector are considered to be defensive in nature.  Telcom, Utilities, Staples, Real Estate, etc. are near the top of the list.

Biotech had a good day on Friday with the announcement by BioGen of a promising drug that slows Alzheimer’s.  That sector was off to the races.  Tech is showing some life, but it is still too early to be sure that it’s a real move.

That’s about it for this short holiday week.  Let’s observe the markets this week on price action and see if volume picks up steadily (spikes concern me; shows that sellers are there too).          ……………  Tom  ……………

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

%d bloggers like this: