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Lethargic Market October 24, 2020

Posted by Tom in Thoughts.
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Oct. 23, 2020 – This market just seems to be waiting for something to happen; stimulus, election, earnings, pandemic . . . . et al. Volume is down, Money Flow and Volume Flow are lethargic and prices don’t want to really trend in either direction. Indecision. It just seems like there is enough potential good news to maybe (just maybe) outweigh the bad, but maybe not.

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The upward trend channel (purple lines) have been broken, the bars are now colored red so that upward trend is no longer in play. But a downward trend has not really started either; we’re in a broad trading range for the time being. My other master indicators show the Accumulation of shares has slowed, but Distribution has not really taken off either, prices are not strong, but they’re not very weak either. What to do? Maybe nothing. I am about 75% invested but I’m having a hard time finding good places to deploy the other 25% . . . . and I’m get more concerned about the potential for loosing hard fought gains in a blink of an eye with the release of bad news. Thus, this market is not strong and can’t determine which way to go. Earnings continue to be reported and they are mixed at best. As mentioned before this market is “not cheap” earnings wise, which leaves it susceptible to a correction.

Other factors: I run a program which ranks major sub-sectors by strength but also internals (like volume / demand, number of stocks in the subsector advancing, etc.) and usually I filter out about 3 to 10 (out of 48) that have strong stock candidates. This week (again) I found none. Lethargic market.

Here’s a pie chart of major sectors and what they did as a whole last week:

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OK not bad, more green than red but in a number of cases only a few stocks in those sectors were actually strong. Also 5 days does not a trend make.

Here’s another view with a little broad time frame and factors other than price:

I note that the previous market leaders, those technology based, have fallen. The prices of tech has proceeded their value in many cases. There is reluctance to pour more money into those areas without some justification. Keep an eye on earnings.

That does it for now. Take Care, and for those in the USA . . VOTE !

………. Tom ……….

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

Market Hitting “Pause” October 16, 2020

Posted by Tom in Thoughts.
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Oct. 16, 2020 – Well the week started with a bang and a price gap up. This on hopes of a stimulus package and looking forward to corporate earnings . .. . hint: the banks did well & hoping the rest follows. But the last 3 days were less than impressive.

The chart below shows “price strength” back to neutral and the price action seems to bounce back & forth within the price channel. Volume during the last half of the week was low, just not much demand. There could rightfully be a concern about reaching back to early September at the high of 12074, a logical resistance level (green line).

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The first level of price support is 11572 (red line), then 11124 (where things start to get concerning) and the recent swing low of 10519 (if the wheels start coming off).

It appears that the market is comfortable with a Biden win and the stimulus being delayed until after the election. But if a package doesn’t get done in early November it could be a different story. The consumer is not as healthy as many think.

Sector strength (short term) is shown in the table above. Tech continues to show strength but Utilities are a little surprise. And lastly the 5 day % price return for the top sectors is shown below. This provides a view of how broad / narrow price strength is.

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Please feel free to leave a comment. Always interested in what you like, dislike or would hope to see. Have a good week. ………… Tom ………..

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

Waiting for Stimulus October 11, 2020

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Oct. 9, 2020 – No doubt about it, the US markets are waiting for the second round of economic stimulus. Trump’s “no deal” comment sent the markets lower and fast. Now, with hope for something, we’re back up. Since the US economy is driven by consumer spending (roughly 70% of it), it is little wonder than when +25 million are out of work and another ? million are on shaky ground that some help is in order . . . . and needed ASAP.

I’m away from my office this weekend so this report will be brief. The chart below shows the NASDAQ Composite Index getting back on it’s feet. While we’ve broken out of a trading range this market is susceptible to news . . especially bad news.

Click to Enlarge

All of the indicators are now Bullish but this pre-election envirnoment looks pretty shaky. While I’m about 50% invested I’, still cautious. Everything could “turn on a dime”/ Not a robust environment to deploy money.

While Tech and Small Cap stocks are strong, so are Utilities. (defensive). Sector strength table below:

I’ve just got this feeling that things will not stabilize until after the elections in the US. Europe is dealing with a second wave of the virus and things aren’t much better in the US. Some people refuse to take the virus seriously and that bids for a slow economic recover. I note that China is coming up in the sector ranking . . . they are serious.

Have a good wee and be extra careful. This economy is waiting for stimulus but may get something else.

……………… Tom ………………

So Close . . . October 2, 2020

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Oct. 2, 2020 – On Thursday . . . we were Oh So Close to breaking out higher. Then came Friday with news that Trump got the Covid virus. Now I’ll admit that I did start to nibble on a few strong (i.e. tech based) ETF’s, but the volume doesn’t really confirm a strong price action. And so the wise thing to do is to take small positions (i.e. “scale in”) or just wait for confirmation.

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Note that Volume Flow is light (green circle, must be some hesitation here) and Money Flow remains weak. I point to the near break out on Thursday (green arrow). I’d like to see at least two consecutive closes above 1130 and preferable on some increasing volume (buying). The world is not coming to an end so maybe we’ll see some follow through early next week.

The pie chart below shows the % number of stocks in the S&P 1500 Index and how they did last week. Overall pretty good; more green than red at least.

And the table below shows where the near term strength is by sector.

Technology was doing fairly well until Friday, so I’d watch that sector closely for signs of strength & recovery going forward. Not much more to say except we may (just may) be close to a breakout or falling back into a trading zone. There just doesn’t seem to be an appetite for stocks with the uncertainty of the virus and the looming election. We may just have to wait it out.

Oh Yes, one more thing: IF you’d like to see & hear an interview that I did with a web developer & ex-hedge fund manager . . it would be here: https://youtu.be/tuqbhiZXo5s on YouTube. 🙂

Take Care & Have a Good Week! ………….. Tom ……………..

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

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