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

Posted by Tom in Thoughts.
Tags: , ,

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.


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