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2 Steps Forward and One Back November 10, 2018

Posted by Tom in Thoughts.
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Nov. 9, 2018 – This market took “two steps forward and one back” this week.  I’ve got “that feeling” that we’re not out of the woods just yet.  While many are assuming a “V” shaped bottom and the only direction now is straight up I’m not nearly that confident.  The chart below shows Market Sentiment back to Bearish (top) and the Volume Flow is very anemic at best.  Sure Money Flow is Bullish and the green “strong price” bars are back coloring in the chart.

So what could be a problem?  Well for one thing, this sudden correction did a lot of damage as witnessed by the heavy volume on those nasty red bars.  Logic would tell us that after such heavy selling the markets need to consolidate / build a base before any resumption of an up trend.  Though the Short Term Trend Channel has been broken that’s only valid in the short term anyway, and we got that bounce higher.  Prices met resistance near the 7520 level (green dashed line) and that was a reflection of a “significant bar”; that is where buyers last came into this market.  We need to see closes above this level to validate buyers coming back.  Otherwise, we could be headed back to the 7443 level (dashed red line) and set up for that trading range / consolidation.

Consumer Goods, Healthcare and Wireless sectors continue to show strength; Financials and Banks are beginning to looks better too.  Tech had a short burst higher, but now looks tired.  The table below shows what the near term sector strength is:

Overall the stocks in the very broad S&P 1500 Index are improving with a improved split between Strong & Weak and those in Accumulation / Distribution.

Price Strength –   

Accumulation / Distribution –

I’m slowly and selectively re-entering this market with the aid of a cautious eye.  The price structure just does not provide me with enough confidence to jump in with both feet.  My main market model is slightly positive, but only slightly.  Maybe the coming week will shed some light on the next significant move . . . in either direction.

Note that this blog gets updated over the weekend with the data and perspective of Fridays close, so looking at it late in the week is just a little “stale”.  Don’t hesitate to make any comments, always happy to hear back.  Have a good week.        ………….. Tom ……….

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

Better but, “Wait For It !” November 2, 2018

Posted by Tom in Thoughts.
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Nov. 1, 2108 – The British have a phrase “Wait for It!”, which is “English” for ‘Be Patient’.  And that’s about how I read this market.  Yes, improving but not enough to start phasing back in just yet.  The chart below shows prices breaking above the “short term channel” (purple line) and Money Flow improving.

Market Sentiment remains Bearish as does Volume Flow (above).  Another reason that I’ve observed on Thursday & Friday (both daily up bars) on an hourly chart, is that the intraday volume is rather low.  The only thing I can surmise is that prices are going up because of a lack of sellers and opposed to buyers rushing in.  The NASDAQ Composite Index hit my 7443 resistance level (dashed red line) on Friday.  Just above it is the 7520 level which is via a “Wyckoff Significant Bar” (weekly); that’s the level where buyers previous came into this market.

IF this market is to continue higher I’d like to see a close above 7443, but better yet, a close above 7520.  And to round out confirmation I’d like to see volume increasing on up bars; i.e. buyers coming into the market.  Could it be that the last two days were just a short covering rally?  Yes, it could be.  With all of the damage that was done in October it makes sense that we need some time to consolidate and build some type of a base before a spring back higher.  So, for the time being, I’m skeptical about this two rally.  Hence: “Wait for It!”.

Even with all of that, I did close out my market shorts on Thursday and went to a very heavy Cash position.  My model rules “required” the short close out, so it’s not good to second guess it.  Besides, Cash now give me the ability to go in any direction.  Nuff said.

The table below shows that sectors are doing in relation to the others.  In a nut shell . . . consumer products are the safe havens for the time being.

That’s it for now.  Have a good week and those of you in the US . . . Vote !     …………  Tom  ………….

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

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