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Steady but Weakening July 25, 2020

Posted by Tom in Thoughts.
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July 24, 2020 – From the chart below we see that the broad NASDAQ Composite Index is in a horizontal trading range (purple channel limes). Not much really happened last week.

click on chart to enlarge it

The trend channel is nearly horizontal, Money Flow is OK / Bullish but Sentiment, Volume Flow and Price Strength are now Neutral. This market is “treading water” waiting for something (likely news of a stimulus package); it may have to wait longer . . . it’s the Senate.

Price Strength of stocks in the S&P 1500 Index (pie chart below) look fairly neutral / healthy with a reasonable amount in all three categories. Looks pretty strong.

But . . . what is not very evident is the underlying sector rotation (at least in the short term). The Technology sectors that have lead the entire market higher are now falling back.

Noting that Precious Metals, Basic Materials & Utilities moving higher in the rank with Tech falling near the bottom is not a sign of overall market strength. I’m finding very few stocks to even consider to purchase; on Fridays close there were none.

This could be a good time to “buy some insurance” just in case the market reacts to some bad news. Coming up next week is the continuing saga of the next stimulus package, a Fed meeting and big cap Tech earnings; watch for guidance going forward. Then there is the virus and China. These continue to put a drag on the economy. “What could go wrong?” I’m getting more and more cautious.

That’s about it for this week. Take Care. ………… Tom ………….

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

Beginning of the Summer Doldrums” ? July 18, 2020

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July 17, 2020 – This will be short because not much has changed over the past week. Markets seem to be stuck at previous highs with little movement in either direction. Small investors are breaking records buying Call options (a ‘bet’ to go higher) and they love ‘penny stocks’ (very low priced stocks). Market breath is meandering back and forth and mixed signals abound.

click on chart to enlarge

So what to do? Right now, not much. Without a clear trend in either direction I just stay put. I do have a “light hedge” on as insurance, but nothing significant just yet. The table below shows that investors are taking a step back from Technology sectors. The NetFlix earnings report was a disappointment, as was Wells Fargo. So it is a mixed bag. It just seems that there is a lack of confidence to drive prices higher, but nothing firm to wave the red flag either.

What concerns me just a little is the defensive nature of some of these sectors. Looks like money is being parked for the summer, but that could sure change quickly with any breaking news item. News sensitive markets are not strong markets and this market just seems to be waiting.

Have a good week and stay safe. ……. Tom …….

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

Market Remains at a Crossroad July 3, 2020

Posted by Tom in Thoughts.
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July 2, 2020 – This will be short since it’s a holiday weekend in the US.

My “Bearish Indicator” (Cumulative Up/Dow Volume) almost went Bearish last week; very, very close, then recovered a bit. In the chart below we see the Money Flow is Bearish but the remaining ones are still positive / Bullish. So be it.

click to enlarge chart

I’ve moved important price support levels up as shown. The low volume this week is not unusual since it was a shortened holiday in the US, so I’m not reading much into that. Thursday (last day) was a weak bar, so Monday and all of next week may be interesting.

I’m seeing the market leadership narrow right now. The indexes are primarily being driven by the large cap technology issues and the rest of the stocks are just in a holding pattern. Shown below is pie charts representing the 1500 stocks in the very broad S&P 1500 Index. (sections are % of total)

Price Strength (20 day) –

Those in Accumulation / Distribution –

Note how the green areas are shrinking compared to the red. Smaller number of stocks are leading; usually a Bearish sign. Caution.

Short Term Sector Strength –

Strength continues in the technology sectors. At this point I remain concerned but invested. Bad news will effect this market and that could happen very quickly.

For those in the US, Happy 4th of July. To all . . . have a good week. … Tom …

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

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