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Some Improvement, But Caution Remains September 15, 2018

Posted by Tom in Thoughts.
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Sept. 14, 2018 – Late last week overall conditions improved, but just a bit.  You can see on the chart below that Money Flow & Price Strength got “better”, but the other indicators remain “Bearish” overall.

What I do find interesting is the volume bars at the very bottom, especially on Friday (the last day).  “OK” but certainly no one was rushing in to buy bargains off of this dip.  The spread between my Support (red) level at 7976 and my Resistance level (green) at 8105 is very tight.  That pretty much echoes the tightness of the daily bars and the sideways consolidation as well.  It just looks like there is too much indecision out there for anyone to be excessively Bullish or Bearish right now.

Looking at where industry sectors within this economy stand (in the short term) I note in the table below are generally defensive or stable (boring?) sectors.  There is not much leadership coming from Financials, Technology or other (typical) leaders in a bull market.  Now, that could change, but for now it goes back to indecision.

The boring stalwart of Industrials and Rising Rates seem to be the strongest areas for the time being.  I’m keeping some powder dry for the time being. That’s about all for now.  Have a great week.    ………  Tom  ………

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

Off The Top Channel September 8, 2018

Posted by Tom in Thoughts.
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Sept. 7, 2018 – As pretty much expected from last week, price did soften and headed lower bouncing off the upper long term channel (dashed gray line).  An approximate estimated low price would be in the neighborhood of the lower channel line, which I’ve highlighted as the 7700 level.

Of worthy note is that the Sentiment, Volume and Money Flow indicators have turned down.  Price Strength is down & red as well.  Time to be extra watchful to see how your holdings are reacting to the lower general market.  A quick look at the chart above does not indicate “panic selling” as the volume is modest to lower.  It appears that what we see is just a lack of buyers for the time being.  Hence (if things don’t deteriorate) this should be a shallow correction; thus the lower channel as a likely target.

I’ve pulled in my Index long positions to Cash and cut back on my sector holdings.  My market model suggests hedging my stock positions IF further weakness develops.  Buying a “bear fund” to hedge is like buying insurance; one holding helps to counteract the other.

The pie chart below show a mild weakening, but so far nothing major.  (These show the % of the total stocks in the broad S&P 1500 index that are in this status.)

Price Strength –Accumulation / Distribution –I really don’t see any sectors, whether they be long or short, that merit much consideration to buy currently.  IF the market continues to soften then sector bear funds may be in order, but let’s not jump to any conclusion just yet.  Of course, news is always a “wild card”.  This market is weak, and piling on bad news would push it even further lower.

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

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

At the Top of the Channel September 2, 2018

Posted by Tom in Thoughts.
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Aug. 31, 2018 – We’re at the top of the “Long Term Channel” (dashed gray lines) again and this is where this market typically pulls back.  Think of it as 2 steps forward and one back.  So far the pull backs have not been significant and the net progress continues.  Things looks fairly positive on the chart below.

Market Sentiment is Bullish, Money and Volume Flows are positive / Bullish and we’ve broken above the “Short Term Channel” (purple lines).  Of note is the upward move for price support to 7976 for the NASDAQ Composite Index.  Not much else to say except a pull back here would not be a surprise.

What is leading the market higher (in the US) are: Healthcare, Small Cap. Growth stocks (in general), Consumer Services, Technology, Biotech and Internet sectors.  What will be interesting is if we see leadership broaden beyond technology based sectors as we head into September.  Also, when a down blip occurs, how will these sectors react?  Will the sell off be shallow & brief or severe on high volume?  That will give us a key to the overall heath.

Right now I’ve got to “go with the flow” and the flow remains positive in the near term.  Have a good week.    ………….  Tom  …………

Price chart by MetaStock; pie chart. Used with permission.

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