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Uneasy Market September 14, 2019

Posted by Tom in Thoughts.
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Sept. 13, 2019 – OK, the NASDAQ Composite Index (i.e. “market”) made it above the 8048 resistance level, but the price action remains poor. This type of condition is very unusual so I’m calling it an “Uneasy Market” for now. Thus I’m not taking an aggressive / fully invested position right now. What would change my mind is a close above 8243, the “3 bar reversal” level.

I’m going to be brief; on a short term cell phone wi-fi network. Let’s look at sector strength:

An unusual combo of strong sectors: Banks, Energy, Small Cap stocks.

That’s it for now. Be cautious and have a good week. …… Tom ………

Better, But Not “Out of the Woods” September 7, 2019

Posted by Tom in Thoughts.
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Sept. 6, 2019 – OK, the general U.S. market has recovered and is above my short term resistance level of 8048 (green line, chart below), but other indicators are not confirming this breakout.  This is unusual.  The “price action” is just poor.  Normally I’d remove all hedges and be in Cash ready for the next (likely) “Buy” signal.

I have reduced my short / hedge positions but still am keeping a light position open for some protection.  Note that “Money Flow” has turned back down.  This market is just too dependent on news to suit me; one news comment and off the market goes on a 2-3% move based on hope.  Not the sign of a strong market.

My “fall back” level is 7847.  That’s where I’d re-enter a significant hedge for increased portfolio protection.  My focus tends to be shorter term since I’m managing retirement funds without any tax consequences.  I remain is a strong Cash position now with only a few “longs”.

The chart below from Bloomberg is interesting on two fronts.  First, it shows that generally the estimates of EPS (red line, Earnings Per Share) for stocks are lower than what the actually are (blue line).  I guess you can call it “worse case” estimating.  Secondly, and important now, is that we see EPS falling in 2019 (green circled).  Regardless of what is said, earnings growth is slowing.

And that slowing is what I believe is behind the stalling in the market.  After all in the long run what effects the price of a share of stock is it’s earnings per share.  Short term is another story.

Lastly the table below shows what sectors in the US markets are doing in the short run.

Many of the defensive names have dropped off the top; Technology, China and Telcom are in the immediate lead now.

That’s it for now.  It will be an interesting week to see if this market can hold onto the breakout of it trading range that it was in.  Have a good week.        ……………..  Tom  …………….

 

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