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Steady As She Goes, but On Watch January 26, 2019

Posted by Tom in Thoughts.
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Jan. 25, 2019 – It’s sounding “old” but so far there’s no real indication of major market issues and so the phrase “Steady As She Goes” sounds appropriate.  Prices have recovered a lot and very quickly so some pause or minor correction is not out of the question.  Prices on the NASDAQ Composite Index closed Friday very near our 7225 resistance level (green) and this would be a “logical level” for that hesitation to begin, but nothing is a given at this point.

This market seems to shrug off most news events.  The one thing that could trigger a major move (in either direction) would be trade talk results with China.  Domestic politics and Brexit don’t seem to matter much.  Interesting that these have been discounted.  Sentiment, Money & Volume Flows are all positive and Price Strength is strong.  I am selectively long, picking stocks and sectors that appear to provide opportunity and that have not got ahead of themselves.

My new sector strength table is shown below.  Technology and Financial sectors are showing strength in the short term.  Mid-Cap indexes are also doing well.

And so it goes.  We just have to go with this trend and so far this trend continues to be up, though I’m pretty uneasy about it.  Have a good week.  ………..  Tom  ……….

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

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Market Continues Higher January 19, 2019

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Jan. 18, 2019 – My first level of price resistance at 6930 was blown through, but the next level at 7225 is not far away.  Earnings coming out are mixed, some good and others rather poor.  This rally seems to be a “Fear of Missing Out” rally which is typical after the severe oversold condition on Christmas eve.  Money & Volume Flow indicators are positive as is Market Sentiment.  At least a minor pullback is overdue and that will give us an idea if the “smart money” is trying to get whole from the late Fall market correction, or if it is just a pause that refreshes a re-accumulation phase.  The key will be volume.  Light to average volume on a sell off means it will be shallow and short lived.  Heavy volume = heavy selling and the recent lows could be re-tested.

For now we just have to ride this trend and in the immediate term the trend is higher.

The table below is different.  I’ve changed it to condense the sectors but also to add the indexes and some key international market indexes.  I’m thinking that this simplifies things while broadening the scope to international sectors.  The idea is to make this more meaningful and “actionable”.  Comments are Welcome.

That’s it for now.  I’ve got a feeling that the first quarter will be a bumpy ride, since there is so much undecided that could have a major effect on the markets.  Have a good week.       ………….  Tom  …………

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

At The Point (level) . . . . January 12, 2019

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Jan. 10, 2019 – The market (NASDAQ Composite Index) has risen to the level (6930) where we likely will see at least a pause if not a rejection on the move.  This is the level on a weekly time frame where we last saw selling / weakness come into the market.  The short name is price resistance.  It will either break through and go higher after a short pause or selling will enter and the price will retreat.  (OK, no kidding.)  So our attention has increased looking for signs.

One thing I note on the volume bars below the price bars is a steady drop off in volume.  I can make a case for “No Demand” and in that situation, without buyer, prices will fall back towards support.  The yellow Zig-Zag line paints that scenario  of a back and forth structure that stays in a trading range.  I think that’s what will happen.  If I’m wrong an the market takes off the dashed green line shows a break of resistance with prices headed back toward 7500.  We shouldn’t have to wait very long to see which story plays out.  In any case this market is being whipped around by news and fear; not a sign of strength.

The overall market of stocks in the S&P 1500 has improved.  Price Strength (below) shows most stocks moving above their 20 day moving average.  With a lot of green showing and very little red; bullish in the short run.

The pie chart of the same 1500 stocks paints a more cautious picture.  Fewer stocks are in the Accumulation phase (strong price AND volume).

I refer again to the volume coming into this market during the past couple of weeks.  Many investors will be watching for more participation before committing more funds and buying more stock; I think that’s what we’re seeing right now.  Wyckoff price structure would say that we’re in a base building / Re-Accumulation phase before going higher.  That can always change to a re-Distribution phase IF the market breaks below 6130 for any length on time, especially on high volume.  A “Constitutional Crisis” could provide that scenario.  And that is likely why the interest / volume is low right now . . .  wait & see.

I am “lightly long” right now, unwilling to jump back in with both feet.  Have a good week.   ……….  Tom  ……….

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

Uncertain Market Driven by News January 5, 2019

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Jan. 4, 2019 – First off I’d like to wish everyone a very Happy New Year.  By all indications (economic, political & governmental) 2019 will be a “doozie” of a year . . . much to expect in the months ahead.  In the past week we’ve seen a near 10% change in prices of the major indexes in just 2 days from top to bottom.  Amazing since is some years that would have been the price range for the entire year.

We’ve seen a significant rally from the Christmas Eve lows, but there has been so much damage done since late September that a weeks rally on modest volume won’t wipe away the lingering bearish concerns.  Apple dropped the bomb that investors should NOT expect healthy gains in profits and the tariff war continues though news leaks try to paint a more optimistic future.  The US government shut down and Fed concerns  make investors nervous and uncomfortable; a bad recipe for higher prices.  With all of those in mind my feeling is that we’ll trade in a broad range roughly between 6930 at the top and 6130 at the bottom (purple freehand drawing below).
The chart above shows investor Sentiment improving while most other indicators remain Bearish or Neutral.  Next week the full complement is back on Wall Street, so we’ll see if they drive prices much higher or not.  Right now it’s anyone’s guess.  For the time being I’ve removed my hedge (i.e. sold off the bear funds) and only hold modest positions in Bonds and Precious Metals.  I’m considering buying Latin America (index) and Biotech, but that’s about it . . . heavy in Cash.

Here’s a look at the major US sectors as far as short term strength is concerned.

Even “the strong ones” are not that great right now.  Have a good week and buckle up for volatility in the coming months.  Weak markets don’t like surprises.………  Tom  ………..

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

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