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At the Top November 26, 2020

Posted by Tom in Thoughts.
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Nov. 25, 2020 – I’m writing this with very low speed internet and it’s painful, so it will be short; just like this week. In the US Thursday is a holiday and Friday is a half day so not much the rest of this week.

On the chart below you will note that on Friday we just barely crested over the previous top / trading range on very light volume. Thus next week will either confirm the breakout or reject it. Careful now.

click to enlarge

All indicators are positive and the general feeling is cautious optimism so higher seems to be the direction though likely not in a straight line.

Here’s what is doing well in the short term –

Interesting that Energy, Small Cap and Banks / Finance are in the lead. Small Cap looks like a “risk on” indicator so that is a plus. Banks . . . it’s about time; Energy, I’d be cautious.

That’s it for a short week. Happy Holidays to all but please Take Care out there.

…………….. Tom …………..

A Wait & See Market November 21, 2020

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Nov 19, 2020 – Kind of a Ho-Hum / Wait & See Market this week. Actually, earnings were pretty good considering and some companies are actually starting to give forward earnings guidance. The chart below shows the increase in volume but prices really didn’t change much. The wait and see now focuses on stimulus relieve and political drama.

click to enlarge chart

We’re trading within the ranges of 12074 on the high side (previous high) and 11425 on the low side (previous swing low). Money & Flow Flow indicators are positive as is the Sentiment indicator; price strength is neutral. The US heads into the Thanksgiving holiday so market volume will tend to be light next week.

As far as sector strength goes there doesn’t appear to be a strong dominate group of sectors, though “clean energy” is showing some strength. Technology has improved but we need to see some follow though.

Short Term Sector Strength –

I didn’t do much last week and likely will only observe next week as well. I’m about 50% invested, so I’m looking for a reason and candidate to buy (or sell) as we head into the end of the year. I’d rather see “Ho-Ho-Ho” than “Ho-Hum”; the “jury is still out”.

Have a good week. ………… Tom ………….

Still Within (trading) Range November 14, 2020

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Nov. 13, 2020 – Monday sure started off as a break away rally day with the election out of the way and a COVID vaccine announcement, but it quickly turned into a Distribution Day (red down arrow on the chart).

click to enlarge

The opening kissed the previous high at 12074 and then quickly headed “south”. This on high volume. It’s like many investors just wanted to get back even. The rest of the week was basically a drift higher but on low volume, with support at 11425. Thus prices remain in a broad trading range bound by the purple channel lines.

Money Flow is negative, not recovering from the previous sell off, but Volume flow is slightly positive. Price Strength is Neutral. I’m seeing a mixed bag from my other technical indicators. Market breath is neutral while overall price momentum is positive. I’d like to see these two areas in sync before getting completely back in. Thus I’m still holding a fair amount of Cash right now.

One reason for being hesitant is that we’re still in earnings season and next week major retailers report 3rd quarter earnings & maybe projections too. This will be an indicator of consumer confidence and a sign (perhaps) of what to expect for holiday sales that are right around the corner. Sure, political drama does continue but few doubt the results, though Georgia could swing the Senate and provide a smoother time for the Biden administration. That will bear out January 5 so we’ve got some time on that.

One bright spot is the strength in small and mid cap sectors. Aslo banks and Finance areas picked up after lagging behind for so long. Also select countries are showing some early strength. Something to watch.

Short Term Sector Strength –

That’s about it for now . . . a mixed bag with prices in a trading range. This could be a stock pickers market with only a few sectors really performing well. (note: I’ve added a market performance indicator to the sector chart above; this is strength relative to the S&P 500 Index.)

Have a good week. ……….. Tom ………

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

Improving but . . . . November 6, 2020

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Nov. 6, 2020 – The (US) markets hit a swing low on Tuesday, Election Day, then promptly rocketed higher on Wednesday & Thursday. Friday was a near “wash” with not much movement higher.

OK, what next? As we approach the previous high (12074 on the NASDAQ Composite) we can expect hesitation. After all, is everything now back to the highs in early September? Virus cases are up at new highs and earnings going forward are “if-y” at best. Are retail sales this holiday going to be strong with unemployment so high? Perhaps the post election move was a relief rally and Friday was a time to “ring the cash register”.

click to enlarge chart

One of my market models turned Bullish on Wednesday, the other on Thursday (both not shown), but they tend to be aggressive on calls. I did do some minor purchasing late last week, but I prefer to wait until Monday afternoon to see what & if there is follow through. So this will be short.

Sector Strength – Short Term:

Select Commercial Services, Semiconductors, Metals & Mining and Healthcare seem to be the best areas to be in now. Tech in general is improving though Friday looked very “if-y” (there’s that word again). If we are truly back on track we should know early next week. And a good practice is to scale into a position(s). No need to jump in with both feet, there will be time. I didn’t close out everything during the market drop so rebuilding positions should be a matter of filling out the portfolio with stock leaders within sector leaders.

Time to digest the past and look toward the future. Have a good week. ……… Tom ……..

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

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