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Between a Rock and a Hard Place May 18, 2019

Posted by Tom in Thoughts.
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May 17, 2019 – I was temped to title this “Between Iraq and China”, but decided to drop the idea of a pun.  This market continues to be majorly influenced by news.  To be bouncing between a trade war and a fighting war is not a recipe for a stable investing environment.  Nuff said.  But the real “Rock” is the 7645 level (green dashed line; price support) and the “Hard Place” is 7965 (red dashed line; price resistance); note chart below (NASDAQ Composite Index).

The indicators are mixed: Money & Volume Flow are negative, Price Strength positive and Sentiment negative.  I find it interesting that prices did stop near the 7645 area, that’s where the last “buying” occurred, and that was drawn in quite awhile ago.  The same for the 7965 level, where selling came into the market.  These are “weekly significant bars”; not true Wyckoff, but inspired by his work.  This is a fairly narrow range in between these levels so we won’t have to wait very long for something to happen.  I should point out that on an intraday basis, we should be on the lookout for a “shake out” if market makers try to do a “head fake” at either level and then head the other way.

The table below shows where the market is strongest in the short term.  Namely Telecom, Wireless, US Treasurer Bonds, Real Estate Utilities, etc.  The trend I see here is that these are generally speaking, defensive sectors.  Sure, Tech and Internet stocks have recovered, but so far they are not registering.  Note how low the Semiconductor sector ranks.  Major weakness continues in Latin America, China and Emerging Markets.

Currently I have a light hedge on portfolios as a defensive tactic, but that will come off if I see a strong close above 7965 & then go to Cash while I wait for an “all clear” signal.  Time to get ready for a possible break, the question is which way, but it seems most are thinking defensive right now.

Have a good week.   ………………  Tom  ……………….

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

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