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An Indecisive Market February 5, 2022

Posted by Tom in Thoughts.
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February 4, 2022 –  This past week started out good, but fell back.  Again, there is no consensus on direction or market leadership.  Sentiment is neutral, Money Flow is neutral, Volume Flow is negative and Price Strength is positive; net result is fairly neutral right now.

click on chart to enlarge

A close above 14532 would be a bullish sign, but there is also a case to be made for a retest of the lows at 13097 and a ‘W’ type bottom.  Volume is light and that confirms the “No Commitment” side of this market.  We’ve had good economic news, earnings are mixed and it looks like the markets are factoring in multiple interest rate increases over the coming year.  So what gives?

Well markets don’t like not knowing what’s ahead.  Color that Ukraine, but mostly it’s about profits this year.  Inflation is up, commodities are up and wages are trending up . . .  this puts the squeeze on profits and that’s the concern.  The coming week will have two big impacts on the market.  First Wednesday is a Treasury bond auction.  Are investors (worldwide) concerned and bid prices higher (lower bond prices) or will they demand higher interest rates?  Then on Thursday we’ll get another inflation report and that could spook the market. 

I haven’t shown the health of the stocks in the broad S&P 1500 Index for a while.  The pie chart shows the number of stocks in relation to their 20 day moving average and where they are in relation to the standard deviation (a.k.a. volatility) from the mean.

Not surprising that most are either Weak or Neutral, but there is more ‘Strong’ than I would have expected.  Next is the Short-Term Sector Strength table:

Not a lot of strength there either, though Oil / Energy was done very well over the past month.  With oil around $90 / barrel it could be at the top of its range and maybe ‘running out of gas’ (pun intended).  Right now I’ve raised a lot of Cash and waiting for some indication of the next trend.  And in the short term it could go either way, though longer term things looks fairly bright economy wise.  This could be short term pain for long term gain.

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

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

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