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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.

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