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Ho – Hum Market April 30, 2021

Posted by Tom in Thoughts.
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April 30, 2021 – As April closes and we’re in the midst of earnings season the market last week didn’t really seemed motivated to move much at all. Over the past 3 weeks not much movement. Some Tech stocks (like Amazon) blew the doors off earnings (not surprisingly) and Financials are doing well, but others were just “good” (i.e. expected in any case). I’m thinking cross currents both positive and negative that basically balancing each other out. Thus not much overall movement.

Many companies see strong earnings and a stronger economy, but they also see higher taxes. Covid seems to be a waning problem in the US, but much of the rest of the world is in turmoil. The Yen & Yang of forces are encouraging a pause. But a pause in not necessarily a bad thing right now.

click to enlarge chart

And so the chart above paints a similar picture. Mildly bearish sentiment, mildly negative Money Flow, barely positive Volume Flow, neutral Price Strength and a price structure at the top of an upward sloping channel; good & bad in check. The price range is tightening and so the foundation is set for a breakout in the future. Right now it looks like a re-accumulation scenario.

A little bit different analysis below. I took the stocks in the S&P 1500 Index and plotted out a pie chart with the 5 day percentage return. I note nearly equal greens, yellow and red shades. Generally indicating a balanced market, but this is over only 5 days.

The Short Term Sector Strength table is shown below.

One curious thing to note is the revival of Oil and Energy stocks. Under valued in the short term but perhaps and “iffy” future. Earnings continue over the next 2 weeks for the bigger companies so the watch continues. Have a good week. ……………… Tom ……………

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

Hot and Bothered Market April 24, 2021

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April 23, 2021 -I sound like a “broken record” but this week showed how vulnerable this market is to even the potential of (select) bad news. Case in point was the drop on Tuesday because Biden might (just might) raise the capital gains tax on those making over $400,000 / year. (yeah, I feel bad for them too)

click on chart to enlarge it

The market valuation and expectations are high. Anything less than blow out great news is met with OMG reactions. Add to that margin debt (i.e. borrowed money to buy stock) is very high, flows into leveraged ETF “bullish” funds are at all time highs and corporate insiders are not participating in the buying. Thus volatility, but I’m more concerned about a chain reaction where stocks go into forced liquidation and the snow ball rolls down the hill (and quickly). The larger question is “when” and not necessarily “if”. The ‘when’ point is unknown and again, my concern is we won’t have much time to protect ourselves. In the mean time, the march higher continues.

Of note is an interesting statistic: Roughly 80% of the stocks in the S&P 500 (large cap) are above their 50 day moving average (i.e. appear to be going higher). Only 40% on the stocks in the Russell 2000 (small cap) are above their 50 day average, and 30% of those in the broad NASDAQ Composite index are above. Perhaps signs of narrowing participation; generally not a positive indicator.

Getting back to the chart above. We see Volume and Money Flow are positive, Price Strength is positive, but Market Sentiment is slightly bearish; it just has not recovered from the previous highs in mid-February. The Price Channel (purple line) is sloping up and we have recovered from the recent dip in prices. I note the significant decrease in over all volume (lower chart). Perhaps a lack of fresh demand. Has everyone that wanted to buy . . . have all ready bought? Without new buyers, who will buy and push prices higher? Something to consider.

Here’s the Short Term Sector Strength table:

I note Healthcare, BioTech and Real Estate are at the top. These can be considered to be defensive sectors. Something to keep an eye on going forward. (the 5,10, 15 & 21 day price changes support these ranks)

And so I continue to be invested but watchful for a significant change in character. Have a good week & Take Care. … Tom …

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

Market at Resistance Level=Caution April 17, 2021

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April 16, 2021 – This will be a short and to the point post since the current trend continues (i.e. Bullish). But . . . two items to consider: First, we are now at the previous high and so the 14107 level becomes a point of price resistance. If prices move confidently above that level then we’ll have a better feeling that the trend higher continues. Note chart below.

click on chart to enlarge

Second, we are now beginning to hit the major portion of the first quarter earnings. As mentioned before, this market is “priced for perfection” and any significant disappointments in major companies will have an effect on the overall trend. So in both cases it’s a good idea to watch earnings news carefully over the following 2-3 weeks.

I am also concerned (just a little) that volume is lower and the Sentiment indicator (at the top of the chart) is mildly Bearish.

The Short Term Sector Strength table is shown below –

Of note is the recent strength in Healthcare and Utilities. Both could be considered as defensive sectors for mutual funds that are required to be 100% invested. I am 65 to 80% invested and I’m seeing fewer nice “breakout” candidates to spark new investment. Let’s see how the market react next week. Do they blow through resistance or back off? That will give us an idea about overall strength.

Take Care and have a good week. …………. Tom …………

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

Better, but Still a Volatile Market April 10, 2021

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April 9, 2021 – This was a good week coming off of the Easter holiday, but there remains a few indications that this is (still) a volatile market. Case in point was on Friday; the indexes stayed flat for most of the day before finishing the last 45 minutes with a jump higher. Likely we’ll see more of this . . . in both directions.

click on chart to enlarge

And so the immediate trend is up: channel broken higher, Sentiment moderately Bullish as are the Volume and Money Flow indicators. The next level of resistance is the previous high at 14112 (NASDAQ Composite Index). One point to note is the low volume. The first quarter earnings season begins soon and the stock market is “priced for perfection”, any disappoint(s) could be hard on a Bull run. Let’s not get to euphoric just yet.

What we’re seeing now is strength in Large Cap growth stocks, primarily in Technology, Consumer and Industrial sectors. I’m a big fan of scaling into and out of positions to try and control risk. If next week continues to show strength I’ll add to my current positions but so far, so good.

Short Term Sector Strength –

What is interesting is that while some sectors are stronger than others, the strength in the market is fairly broad based. In order to do better than the Indexes, one has to be a good stock and/or sector picker.

That’s it for now. Have a good week. ………… Tom …………

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

Hopeful Signs April 3, 2021

Posted by Tom in Thoughts.
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April 1, 2021 – First off “Happy Easter” to all that celebrate it. I hope that the bunny is good to you. 🙂

Spring is a season of hope and renewal and that’s what we might (just might) be seeing early signs of in the markets worldwide, but especially in the U.S. Looking at the chart below that are multiple indicators of returning strength of a Bullish trend.

click on chart to enlarge

The Market Sentiment is back to lightly Bullish as is Money and Volume Flow. Price Strength remains neutral but note the price bar color has returned to “green” and is above the near term price channel (purple lines). These are early signs of a return to a positive upward price trend. My only caveat is the low volume (lower bars on the chart), but hey, it was a holiday week so not a a big problem. We do need to see volume next week returning on up bars.

Stocks in the S&P 1500 Index –

The pie chart above shows just how broad the price strength is overall (1500 stocks). Again, early signs of a return to a positive market.

The jobs report was very positive and the vaccine roll out is very positive as well. Hopefully signs of renewal.

The table below shows the short term sector strength. Of note is the “Person Market” column which indicates the momentum of strength relative to the S&P 500 Index. ‘Outperforming’ and ‘Improving’ are early positive signs of strength. Also I note the re-strengthening of Technology sectors. Semiconductors are on fire.

I have started to “nibble” on select stocks and ETF’s and will increase positions next week as strength and volume return. “It” may not be over but “nobody rings a bell at the top” (or the bottom) so we need to be open to changes. My Moto is ‘scale in & scale out’; no need to be a hero. Right now I’m favoring “in”.

Have a good week & Take Care. ………. Tom ……….

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

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