Confirmation of a Breakout ? November 26, 2022
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Nov. 25, 2022 – This was a short week with very light holiday volume, so I’ll get to the point. Note the chart below of the NASDAQ Composite Index. I’ve drawn in a linear regression line with a +/- 2 standard deviation channel. The linear regression line is basically the graphical average between the last peak in mid-August and the last low in early October; half of the “area” (time & price) is above and half is below. Think of +/- 2 standard deviation channel as an “expected move” within that time frame of “typical”.
The blue ellipse shows a breakout from that “expected move” and thus a possible change in character / trend. But . . .we haven’t seen that follow through yet.
All eyes will be on economic news in the coming 2 weeks:
12-1: the PCE report (Personal Consumption & Expenditures)
12-13: the CPI report (Consumer Price Index)
12-14: the FOMC / Fed meeting
For those trying to front run the economy, interest rates and inflation, these are the ones to possibly show a change in behavior. Until then the strength / weakness in the US Dollar and Treasury Bonds will provide some indications of where the money is wagered. Nuff said.
Have a good week. ………… Tom …………..
Price chart by MetaStock. Used with permission.
Breakout or Shakeout ? November 12, 2022
Posted by Tom in Thoughts.Tags: market analysis, market commentary, stock market commentary, technical analysis
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Nov. 11, 2022 – I’m a little under the weather, so this will be brief:
With the release of the CPI data (Consumer Price Indicator) premarket on Thursday, the market shot up big time. Instead of coming in at 7.9% annual, it came in at 7.7% and that’s all it took. The markets are having a hard time dealing with expectations. Is that the bottom?
Well no one knows if the buying will continue . . . I doubt it. Disney had lower revenues, Meta & Twitter are laying off and we’re experiencing “Crypto Collapse”. Economically, things are slowing down and everyone would like to see the FED slowdown interest rate hikes. The market anticipates economic events and what we saw could very well be short covering. I expect a buying surge Monday morning then a modest pullback. What happens after that will give us a clue at to how strong the market really is.
Short Term Sector table –
Have a good week and be just a little skeptical. ………. Tom ………..
Price chart by MetaStock; table by http://www.HighGrowthStock.com. Used with permission.
The FED Strikes (back) November 5, 2022
Posted by Tom in Thoughts.Tags: market analysis, market commentary, Stock market analysis, stock market commentary, technical analysis
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November 4, 2022 – In the week leading up to the Fed announcement last Wednesday the markets we’re thinking (i.e. hoping) for some indications of a slowing interest rate increase. Maybe ½% or at least some indication that the rates were approaching a peak. That really didn’t happen. Just a few “maybe in the future we’ll consider slowing the rate of increases”, then another ¾% increase. This has been a steepest / fastest increase in FED funds rates ever in our history and it has the markets spooked. We’ll have to wait until December to see IF there is some moderation. In the meantime the markets remain concerned about interest rates and their effect on a possible recession. It’s looking more likely.
Not much is going to happen until after the midterm elections have been called and that may take weeks, if not longer. I see us in a range bound market between 11230 (top) and 10093 (bottom) on the NASDAQ Composite Index. Right now it seems that there is more potential to go down than up. We’re going to need to see some light at the end of the tunnel before prices can break (and stay) higher.
Folks wonder why I nearly always show the Sector Strength table (below). It’s important in performing a ‘Top Down Market Analysis’. These are the sectors / industries that are performing best and that’s where we need to consider taking or holding positions. The idea is to “fish where the fish are” and not to cast a broad net everywhere. The bottom line is to minimize risk and try to put the “wind to our back”. It’s a focused part of trend following in an attempt to follow the bigger, long term investors.
The Short Term Sector Strength table is shown below –
The week coming up will be interesting to see just how strong or weak the markets are as the election results and the fallout is relieved to us. It’s a good time to be heavy in Cash IMHO. Have a good week (and VOTE !). … Tom …
Price chart by MetaStock; table by http://www.HighGrowthStock.com. Used with permission.
Special Risk Capital Management LLC 
Watching & Waiting November 20, 2022
Posted by Tom in Thoughts.Tags: market analysis, market commentary, Stock market analysis, stock market commentary, technical analysis
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Nov. 18,2022 – A lot of volatility back and forth this past week but not much commitment in either direction. The number of Put hedges has dropped off significantly and it just “looks” like the markets “want” to go higher but need a good reason to do so.
We remain in a broad trading range that speaks of base building and thus a possible . . . change in trend. As the 3rd quarter earnings wrap up the stage is set for the holiday season and that may (just may) be a spark. The next FED meeting is December 14 and there is MUCH anticipation as to the next interest rate announcement (the bet is on ½%).
The Short Term Sector Strength table –
Semiconductors want to be loved along with Biotech but there is more smoke than fire in those sectors. Next week will be a short trading week, so I’m not anticipating much will be happening. For those in the US, Happy Thanksgiving. ………….. Tom …………..
Price chart by MetaStock; table by http://www.HighGrowthStock.com. Used with permission.
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