Caution Ahead July 22, 2018
Posted by Tom in Thoughts.Tags: active portfolio management, market analysis, stock market commentary, technical analysis
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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.
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