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Within Range March 31, 2019

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March 29, 2019 –  I’m pretty busy this weekend with family activities, so this will be short and to the point.  The chart below shows how this market is steadily strengthening and has broken above the 7643 level (NASDAQ Composite Index).  That’s where selling took place on a weekly basis the last time.  This is a good sign, but many under estimate the damage that was done in December of last year.  There was a ton of selling volume.  So while breaking above 7442 is bullish, it only is in the near term.

For this (and other) reasons, my thinking is that we’re in a longer term trading range between 7850 (past top) and 7442 (previous swing low); these are marked with blue dashed lines in the chart above.  Note Market Sentiment remains bearish and Money & Volume Flow indicators are fairly anemic.   Hence my gut feel that we’re likely in a trading range scenario right now.  We’ll just have to see if the only way traders can make money is to “sell the rips & buy the dips” in the coming days / weeks.  The strength in the Bond market (higher prices & lower rates) is another concerning factor.  The old saying that the bond market is wiser than the stock market has some validity.  What does the bond market know that the stock market doesn’t?

The table below shows what sectors are strong to weak in the short term.

Currently I’m modestly long this market, but have Cash to deploy if & when we get a solid turn in either direction.  Have a good week.  ….  Tom  …..

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

Inversion, Slow Down or “The Report”? March 23, 2019

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March 22, 2019 – Was the sudden sell off Friday due to the interest rate inversion, the FED’s report of a slowing economy or advance notice of the Muller Report ?  Likely (IMHO) a combination of all three.  Thursday was a big up day, so these news items did cause a sudden down day.  The 2 year yield is now slightly above the 10 year yield and prophecies hold that a recession is due in 19 to 24 months . . . . OK, but that’s a ways away.  The FED came out with an estimate of 2% growth this year and 1.9% next year . . . . the “sugar high” of tax cuts are now behind us (so much for long lasting growth of +3%).  And the long awaited Muller Report was sent to the AG on Friday at about 5pm.  Funny, because the markets sold off hard in the last 15 minutes of trading on Friday . . . . did someone know something ahead of time?

But to put things in perspective, the close on Friday just put us back to around the close of the week before.  What I call attention to is the volume on Friday (red arrow).  It was about average, nothing big.  Some might call Friday a “key reversal day”, but I think not; not with just average volume, there was no big move to the exits.

This market was getting toppy with Sentiment bearish, Money Flow bearish and Price Strength weakening.  And so we’re back to the 7643 level, the last significant bar break out of resistance.  Let’s see how the stocks in the broad S&P 1500 Index are doing:

Price Strength –

Stocks in Accumulation / Distribution –

Price Strength shows significant weakness as does stocks in Distribution; more red.  My thoughts are that we’ll be in a congestion phase for the next couple of weeks as the markets digest the news on the economy and the Muller Report.  There is always the “Sell in May and Go Away” idea that could arrive early this year.  I have a feeling that we’ll see a continued sell off Monday morning as fear overrides logic, then some buying of “the dips”.  The key will be watching the volume on Up & Down bars for an indication of how strong the selling and buying are.

Just about every sector got hammered except precious metals, so I won’t belabor that topic.  This market is jittery and it’s reaction to any news items shows that.  If weakness continues into Monday afternoon it may be prudent to hedge by buying a bear fund.  Honor stops and monitor weakness is the call of the week, but don’t overreact.

Take Care and have a good week, it should be interesting and perhaps historic as well.      …………..  Tom  ……………

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

Market Back but Lathargic March 16, 2019

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March 15, 2019 – The market has recovered from its latest “March Swoon”, but the underlying data is not that impressive.  We did break above the 7643 level which is positive, but you’ll note in the chart below, Market Sentiment and Dollar Flow remain behind in the recent move.

What that means is that certain areas, notably Technology based, are leading while other areas are just “so – so”.  Let’s jump into the sector strength tables and see where the leadership lies.

Tech based Electronics, Software, Semiconductors, Wireless and (to some extent) Biotech & Telecom companies are moving this market forward.  What did show up in the table is Emerging Markets (i.e. BRIC: Brazil, Russia, India, China).  China & Brazil are key factors right now and perhaps the weaker U.S. Dollar.  But . .  we still see Utilities Holding strong.

Not much more to comment on right now.  I’m about 80% invested Long and will phase more into this market over the coming week IF it continues to strengthen, hopefully broadening leadership.  Have a good week.   …….. Tom  ………

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

A Pause That Refreshes March 9, 2019

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March 8, 2019 – It appears that we’re in the midst of the long anticipated “pause” in the market recovery from the Fall correction.  I’m thinking that this is a “pause” because, so far, we haven’t seen a significant Distribution structure.  I’m thinking that a 7 to 10% drop from the recent highs could be likely.  Looking at the chart below the called out resistance level of 7643 held as a “rejection of price” point with 6931 being the next support level below.  That 6931 level would be approximately a 9% drop.

Now, IF volume picks up on down bars next week this “pause” could develop into something more, so let’s not get ahead of the price action here.  Also noted are the confirmation of price weakness in Market Sentiment, Money and Volume Flow indicators.  The Price Strength indicators have gone to mildly bearish as well.  Looking toward the stocks in the broad S&P 1500 Index gives us an idea just how weak the overall market is.

Price Strength –The last 3 days have hit a large number of stocks moving to the weak side (red); the strong (green) section has diminished quite a bit lately.  This indicates a fairly wide spread decline.

Accumulation / Distribution –The number of stocks in a Distribution (selling) phase is not as great and is generally about equal to those in Accumulation (buying) and Neutral.  Fairly even on all three areas.  (Note: accumulation & distribution are a combination of both price and volume; two dimensional so to speak.)

Sector Strength –The table above shows the sector strength on a relative short term basis.  Not as much “green” up there but so far the Tech areas are holding up the best.

Over the past week my (more) involved market model went from Bullish, to Cash and as of Thursday is lightly Bearish.  The purpose of this model is to indicate when it is appropriate to “hedge” and protect the overall portfolio.  Protection is in the form of buying “bear funds / ETF’s” which are inversely correlated to the market.  Since Small Cap stocks are the weakest, that’s the index I purchased (bearish wise).  IF weakness continues I will buy more protection and go to a theoretical neutral / synthetic cash position overall.  The idea is to “win by not loosing”.  🙂

Also the number of stocks that I hold has gradually been reduced; selling the weakest ones.  OK, that’s a bout it for this week.  I’m expecting more weakness, but so far, not a rout . . . . that could change especially via a news item.  Time to be careful.  Have a good week.       ………… Tom ……….

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

Market Treading Water March 2, 2019

Posted by Tom in Thoughts.
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Mar. 1, 2019 – Before I begin, I’d like to note that the date at the beginning of all of my posts refers to the last data date when the text was complied and the data shown in all charts and tables.  This blog is typically updated over the weekend and the date is usually the Friday before (unless there is a holiday).

A quick look at the chart below shows that the market (NASDAQ Composite Index) basically did very little over the past week.  The Money Flow indicator has turned down but all of the other indicators remain positive / bullish.  This 7486 price area was the last time significant “buying” came into the market on a weekly basis; thus a possible resistance point.

Overall the market needs a rest so a pause is not unexpected and actually overdue.  Looking at the stocks in the broad S&P 1500 Index below we see a fair amount of green in both the Price Strength and Accumulation / Distribution pie charts.  (These charts tend to be more intermediate term as far as the time span is concerned.)  All positive for the time being.

Price Strength: % of stocks-

Accumulation/Distribution: % of stocks-
Sector Strength in the short term –

Note that there appears to be some sector rotation into Pharma and Biotech sectors; Tech, Industrials and Semiconductor stocks continue to do well.

That about it for this lack luster week.  I remain mostly invested and trying to go with the prevailing strengths that I see.  Have a good week.  …  Tom  …

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

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