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Right at (price) Support Level May 25, 2019

Posted by Tom in Thoughts.
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May 24, 2019 – Once again a up & down week, but of note is that we’re right at the 7645 price support level on the broad NASDAQ Composite Index.  This is a “logical” level to spring upward, but also a level to be concerned about if it closes below that.  That break below doesn’t mean a crash, but just validates market weakness and a likelihood of further decline.

It’s rough to keep up with the quick moves; mostly driven by news & “tweets”.  Looking at a longer term perspective the McClellan (volume) Summation Index shows that over the past months there has been roughly 5.5% more downside volume than upside volume.  Also the chart above shows most indicators are negative or at best, neutral.  It’s looking like the “Sell in May & Go Away” idea has caught on this year.  It could be a long summer of back and forth.

Earnings season is wrapping up and it has been generally “OK”, with a few cautions going forward.  The trade war with China is beginning to weigh on an increasing number of businesses, and that will likely affect the next earnings reports over the summer.  I haven’t shown the SP 1500 Index pie charts for awhile so let’s take a look:

Price Strength – % of Stocks in S&P 1500 Index:

No surprise that most stocks in significantly below their 20 day moving averages (red shades above).

Accumulation / Distribution – % of stocks in S&P 1500 Index –
The 3 sections above are about equal (roughly 1/3 each), so not a whole lot of selling just yet.

As far as sector strength (in the short term), there is strength in defensive issues; Telecom, Wireless, Government Bonds, Utilities, Real Estate.  Weakness in Emerging Markets, especially China.  Semiconductors continue their weakness with Technology not far behind.  I remain modestly invested and modestly “hedged” to protect the portfolio.  Since the economy is fairly strong, a rebound in prices could happen at any time depending on news.  A time for caution and to keep an eye on the exit door, but not to run toward it.  (IMHO)

Have a Good memorial Day (in the U.S.) and a great week.     …………  Tom  ………..

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


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