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Not Much New; Maybe Next Week October 19, 2018

Posted by Tom in Thoughts.
Tags: , , ,

Oct. 19, 2018 – As the headline reads, “Not Much New; Maybe Next Week”, pretty much sums up the past week ending just about where it began.  We’ve had a few earnings reports but the big ones start to roll in next week.  Those earnings and the forward guidance could very well likely tip this market one way or the other.  It sure seems like the momentum & feel indicate a move lower and there are many investors waiting for something to propel the market in one direction or the other.

We’re right at the infamous 200 day moving average on many US indexes and recent behavior would say that is a “buy the dips” place to jump in.  But this time things just feel “different”.  Small Cap(ital) stocks and Tech stocks are weak . . . very weak.  So where is the leadership coming to drive this market higher?  Not the Drugs or Financials.  Consumer stocks have already made a big move . . .  so where?

The answer must be some super blow off earnings that is totally unexpected; or a news item.  A China trade deal could do it, but that doesn’t seem to be happening soon.  Hence the “feel” of going lower.
The broad NASDAQ Composite Index chart above shows the weakness and a lack of commitment in any direction in the short term.  We can’t break above the 7700 level and fell back to the 7443 level.  The next target (lower) would be 7205.  All of the indicators on the chart remain bearish for now.

Let’s look at how the stocks in the S&P 1500 Index are holding up.  The pie charts graphically show the percent of those 1500 stocks that are in Accumulation (buying), Distribution (selling) and their Price Strength (over the past 20 days).  There’s a lot of red there, but that’s not surprising.

Accumulation / Distribution –Price Strength –What I found interesting is answering the question “So just what stocks are doing well?”.  “Well” is a matter of perspective, since it’s being compared to all other stocks in the index, “Well” could be just “Better Than” everything else.   But the sectors that are doing “Well” and holding their own are centered around Utilities and Consumer Foods; all defensive sectors.  Another sign perhaps that no one is buying this dip right now.

I have slowly sold off weak stocks and “Hedged Out” (with a bear fund) the rest of my holdings.  The only things looking relatively OK from a sector fund perspective are Rising (interest) Rates and Stronger Dollar.  We need to be patient right now.  The time to buy will come, we just don’t know when just yet.

Have a good week & let me know what you like me to cover (or not to cover).  Always happy to get feedback.  Cheers !  … Tom  …

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


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