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Hovering Near The Highs June 30, 2019

Posted by Tom in Thoughts.
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June 28, 2019 – First a few housekeeping items:  If you want to enlarge any graph or table in this blog, please click (or double click) on it and it should open up for easier viewing.  Second, just a reminder that I update over the weekend; it could be Saturday or Sunday.  Lastly, let me know if you’d like to see or hear about something different.  I’ll try to oblige.


Not a whole lot of movement this past week.  A bunch of narrow bars seem to indicate indecision.  The big volume spike on Friday is nothing more than end of the quarter rebalancing, since it all happened in the last half hour on Friday and there was little price movement (i.e. it was reporting volume, not buying/selling volume).  Indicators are positive with the first level of support at 7812.  Since this is a holiday week there will likely not be a lot of activity.  Reports are that Trump & China have called a truce on tariffs; kind of neutral news.  The market was hoping for something more positive.

Looking at overall market health via stocks in the S&P 1500 Index below:

Price Strength –Accumulation / Distribution –

Overall, fairly positive with many stocks significantly above their 20 day moving average and good Accumulation without too much buying.

Sector Strength –

Again we see Tech sectors and Energy near the top with Precious Metals still showing strength.  I remind folks that this table is short term strength and not an indicator of long term movements or trends.

That’s it for this week.  I’m doing selective buys but not in a hurry to be completely invested.   ……..  Tom  …….

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

Trend Still Up, but Not Robust June 22, 2019

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June 21, 2019 – The trend of the overall market remains up / higher but the movement higher is slow and argusious.  Narrow bars continue and while that’s not absolutely negative it is more indecisive as far as a continued direction driven by new buyers.

I discount the high volume on Friday due to options expiration and note that the NASDAQ Composite Index is near it’s previous high.  Most of the indicators are positive or neutral, but the Money Flow (red line above) remains lethargic at best; it is a combination of price & volume movement.  There has been so much news to whip saw markets around that the good news is that the news really has not had a big effect on prices.

Something to keep an eye out for next week are earnings reports.  FedEx will report on Tuesday after the market close.  It is generally a bell weather for commerce in the US and it’s forward looking guidance estimate will be interesting as an economic indicator.

The chart below shows the 4 major stock market indexes in the US, on a year to date percentage basis.  The Dow Jones Industrials (white) is price weighted large companies, the S&P 500 (green) is capital weighted largest companies, the NASDQ Composite (red) is a very broad index of over 3400 stocks and the Russell 2000 (yellow) a combination of large, medium and small capital stocks.

Of note is the current prices relative to the previous peak (dotted line).  You’re note that the “big guys”, the Dow and S&P 500 are now above their previous high, the NASDAQ is close to, but still below and the small cap Russell is significantly below.

Interesting that the NASDAQ and Russell outperformed the big cap indexes from January through early May but now are falling behind.  The idea is that investors are now more risk averse since smaller companies are generally high growth, but also more risky.  This type of pulling back on risk assets are usually associated with market tops.  No alarm bell, but something to keep in mind going forward.  Perhaps the small caps will catch up; or not.  Investor’s antenna are up for signs of a slow or weakening economy.

The current short term sector strength table is shown below.

High growth sectors are doing well right now.

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

Price charts by MetaStock & Worden Brothers / TC2000; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

No Demand June 15, 2019

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June 14, 2019 – For those that are new to my blog, I update over the weekend (Saturday or Sunday).  I try not to miss a week, but if I’m on the road, postings will be a little briefer than “normal”.

OK, last week was interesting, especially the last 3 days.  Looking at the chart below I note very narrow bars that are in an unusually tight grouping.  This indicates that buyers equaled sellers; i.e. little net price movement.  That coupled with lower volume would indicate “No Demand”, at least in the short term.

It just looks like everyone is waiting for a sign to either go back to buying or to go back to selling.  Since so much of trading now is affected by computer algorithms it is interesting to see what the volume actually is when there is not a clear cut trend (up or down) or a “reversion to the mean” (over bought or over sold) condition.

Market Sentiment has improved as well as Volume Flow, but Money Flow remains negative and Price Strength neutral.  My more advanced market model is giving similar signals; lightly net positive but far from being fully committed to the Long side.  A close above 7965 would be a positive and a close below 7292 would be negative.  It just seems like there is to much uncertainty out there + it’s summer time to boot.

Looking at a longer term view of the pie charts of the percent of stocks in the “investable” S&P 1500 Index . . . . . .

% of stocks in Accumulation / Distribution :
% of stocks with Strong / Weak prices (past 20 days):

The A/D is about evenly balanced; a normally healthy sign.  The strong/weak is biased toward Strong to Neutral.  No major warning sign yet.  The sector analysis table shows a little different picture (IMHO).

I note the rise in more defensive sectors of Utilities, Real Estate and Healthcare.  Something to monitor as concerns about growth both in the US and worldwide seem to have investors on edge.  Broadcom (internet & cell phone parts supplier) estimated down their earnings due to the China tariff war and semiconductor companies are doing the same.  If Technology earnings fall flat in the second quarter (reporting in July) that would be a significant blow to the entire US market.

I am modestly long, but will take some “off the table” early next week if markets continue to weaken or cannot show a clear sign.   Have a good week.  ……..  Tom  ……..

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

All Clear? Maybe Not June 8, 2019

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June 7, 2019 – My short term market model, that I use for trading (not shown), went to Cash on Friday after being 50% short.  The chart below shows Market Sentiment & Money Flow negative but improving.  Volume Flow and Price Strength did just kicked into positive Bullish mode.

So is this the ‘V’ bottom and the worst is over?  Not quite so fast.  Friday afternoon the Trump Whitehouse announced that the tariff threat was suspended and I doubt too many traders wanted to be in a short position over the weekend anyway.  This market was waaay oversold and due for a rebound; and that’s what we got.  The break on Friday above 7645 was a sign to remove the hedge (short) but not the “all clear” sign.  Maybe next week.  7965 is the level of Resistance to further upward prices.

The sector table (below) shows a shift from Government Bonds & Utilities back toward equities (Consumer Goods, Industrials, Healthcare.  Volume was modest of Thursday & Friday so it maybe premature to say that we’re back to a “risk on” status just yet.  I’ll be watching the Russell Small Cap Index for clues of strength.  Also seeing money flowing back into Technology would be a big positive sign.

So the word is be cautious in here and this is not showing the level of “Demand” that I’d like to see coming off of a “V” type bottom.  Early next week watch for price strength and the volume behind it, otherwise this may just be a shake out.  Have a good week.      ……….. Tom ………

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

Falling Through the Ice June 1, 2019

Posted by Tom in Thoughts.
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May 31, 2019 – Richard Wyckoff had a saying the when a definite change of character happens it was like “Falling Through the Ice” (a frozen winter time analogy).  Wyckoff never gave a strict definition of the price level of the Ice, and one can argue that it actually happened at the 7965 level way above the current price.  That’s really more my preference.  But retrospect is clearly a more accurate analysis.  🙂

In any case the price weakness continued this week.  Again, driven by news, high stock evaluations and (of course) fear of even lower prices.  Will the FED lower rates because the economy is really not that strong?  Will the trade war with China last for many months?  Will the trade war expand?  The bottom-line is maybe and really . . . no one knows.  Will prices bounce around near this level over the summer, building a base for another run higher?  or  Will prices continue to fall?  Since we have an overall fairly valued market, the likelihood is that the biggest influence will be the news.  And who can predict that?

The NASDQ Composite Index end Friday right near the last “significant bar” low of 7447.  That’s a logical place to move higher after finding support there.  But this market is getting more emotional, so I’m not anticipating anything but going with the flow.  I’ve trimmed back stocks that are behaving weaker than the market, adding to cash.  I’ve also added to my “hedge” by purchasing “bear funds / ETF’s” to lessen the impact of failing prices on what is left.  I don’t mind having cash right now . . . .  keeping your powder dry so to speak.

The table below shows current short term sector strength.  Not much looks good as Treasury Bonds are likely over bought and don’t have much more room upward (IMHO).

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

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