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At Pivot Low, Next Week Important August 19, 2017

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Aug. 18, 2017 – A quick look at the price chart below shows how the NASDAQ Composite Index closed on Friday, right near the previous swing low.  We have two lower swing highs and now two lower swing lows.

That 6216 close on Friday is just a little ominous in that IF we’re expecting a turn around, it should happen on Monday.  Otherwise the next target lower is the 6141 level.  That 6141 level is where buyers have previously come into the market (we’ve already ‘blown through” the 6303 support level).  I’ve spotted in a few important Wyckoff turning points; these would indicate further market weakness.

Also in the chart above: Sentiment is bearish, as is Money Flow and Volume Flow.  We’re entering into a period of the year where the stock market is typically weak; late August through early October.  I’m not a big fan of seasonality, preferring to observe and follow the trends as they develop.

Selling also dominates the S&P 1500 index stocks.  The pie chart below shows the number (i.e. %) of them in Distribution (red / selling) and Accumulation (green / buying).  There is far more red than green right now.

A look at the sector strength table below shows a move toward more “defensive” stock sectors.  The previous market leaders of the Technology sectors have moved down in the table.  In the short term, this is a time for either hedging (via “bear funds”) or staying close to an exit plan if necessary.

I’m seeing more strength in Emerging Market countries for the time being, as well as Utilities, Telecom and other defensive sectors.  I’d wait until Monday afternoon (after the weekend investors place their sell orders) before I’d jump to any conclusions, but it sure looks like a market that’s headed lower.  At least another 3 to 5 % next week.

Have a good week.        ………. Tom ………..

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

Expected Decline; Time to Be Careful August 11, 2017

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Aug. 11, 2017 – OK, we’ve had a quick drop but only a minor one so far.  Our first support level of 6303 on the NASDAQ Composite Index was broken on the close on Thursday.  That gets our attention.  But . . . notice how “average” the volume was (lower pane) and then on Friday (8-11-17) volume dropped off even more.  Obviously we’re not seeing panic selling or a mad rush to the doors.  And this was on a Friday (before a weekend); traders were rather comfortable holding on to stocks over the weekend.

Where we’ll get much more concerned is if prices breaking the 641 level on a close and / or volume picking up on a wide spread down bar.  Then it’s time to hedge or sell.  For now I’ve just lightened up a little on holdings, paying more attention to weaker things that I hold.  Not surprising that Market Sentiment (top pane) and Volume Flow are negative.  Money Flow has turned down but remains above zero.  This confirms a lack of buyers, but not significant selling for the time being.

The number of stocks making up the S&P 1500 Index that are in Accumulation and Distribution (below) shows a fairly even split.  Again, not large amounts of selling at this time.

The Price Strength (below) shows a different picture, but confirms the idea that the weakness is caused by the lack of buyers.  If there are more sellers than buyers, prices will drop.  The amount of Red that we see far exceeds the green.  Prices are generally weak.

Looking at sector strength we see more defensive stock sectors moving to the top of the list, while previous leaders (technology based) have moved lower.  Since the general feeling is that stocks are over priced based on good earnings, but not great, this is likely a typical pause for re-accumulation of shares at a lower price.

Let’s hope that the conflict with North Korea is only an excuse to have a minor correction.  Speaking of sector strength, it appears that International stocks are fairing a little better right now.  I have cut back on % amounts to hold, but China, Latin America and Emerging Markets in general are looking to hold up rather well after making significant gains recently.

That’s all for now.  Watch that 6141 level and signs of volume increasing on any down days.  Otherwise, we’ll be patient and wait for a better time to redeploy our Cash.  Have a good week.     ……….  Tom  ……….

Chart by MetaStock; pie charts & table by http://www.HighGrowthStock.com; used with permission.

Market Holding, but Showing Signs August 5, 2017

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Aug. 4, 2017 – A quick look at the chart below shows the NASDAQ Composite Index holding on to the first support level at 6303, but a close look “under the hood” shows a market that is slowing down, if not weakening.  What would concern me more would be a close below the next level at 6141.

Note how Sentiment (top) has turned neutral and both Money Flow & Volume Flow are fairly lethargic.  I my opinion this is likely just a pause, but if either Trump or the North Koreans do something “dumb” it could turn out to be a significant correction quickly.  The momentum has definitely slowed significantly.  The word now is to honor your stops if whatever your holding shows excessive weakness.

One other item that may be of concern is the number of more defensive sectors that are showing leadership in this market.  You can see this in the table below, as the past “darlings” (technology, semiconductors, biotech) are not near the top of this list.  That could be an indication that money is flowing to more conservative sectors to ride out a brewing storm.  Let’s keep an eye on this for a few more days before we jump to any conclusions though.

That’s it for this mid-summer market.  Let me know via a post to this blog if there is anything you’d like to see me cover of review (except specific stocks).  Thanks and have a good week.     ………….  Tom  ……………

Chart by MetaStock; table by http://www.HighGrowthStock.com.  Used with permission.

Fall Back to Previous High July 29, 2017

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July 28, 2017 – About noon on Thursday a couple of stock analysts decided to downgrade a few tech stocks; and that was it.  Caution set in with a broad market dip, then the computers stepped in to sell, followed by “resting” (in the market)  stops being hit.  Friday was a tight range day holding on to price levels.  I found it interesting that the Index stopped falling right near the previous high (red circle), adding to the adage “what is resistance once broken, becomes support”.

And so it goes.  If this market is to remain strong, this current price level is a logical place to stop and hold.  The next level down is 6164, but that would certainly be considered much more serious, and we could see some serious selling hit the markets.

For the time being I’m patiently holding my longs in growth stocks but watching for signs of continued weakness; we’re overdue for a +10% correction IMHO.  In the mean time I note that the other indicators above remain positive so this appears to be a shallow correction . . . more like a blip.

Where I am seeing strength is in China, Emerging Markets, Latin America, Internet & Biotech sectors.  Telecom and Technology are not far behind.

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

Chart by MetaStock, used with permission.

A Break Above July 21, 2017

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July 21, 2017 – Wednesday of this week the NASDAQ Composite Index broke above the previous high and continued on for the rest of the week.  The old favorites were back at it: Technology, Biotechnology, Semiconductors and even some Basic Materials.

One area that has been under the radar of some folks is the International markets.  Latin America, China and Emerging Markets have quietly moved higher as well as most developed markets.  On the chart above it’s easy to see the positive flow of Money (top pane) and Volume (second pane).  Market Sentiment also turned bullish this week.

The bottom line is we don’t have much “choice” but to continue to be  long / bullish in the market.  There are geopolitical risks out there but this market just does not seem to care.  The only “caution” is that average daily volume is moving lower.  The question is whether this is due to summer vacations or the lack of new buyers coming into this market.  The rather tight daily bars (range between the high & low price) is a little concerning as well.  That narrow range indicates that buyers and sellers are about equal.  That’s OK with low volumes, but let’s keep an eye open for the “smart money” trying to slowly leave this market and leave everyone else “holding the bag”.

Let me know (via the comment section) if there is any topic that you’d like me to cover.  Comments are always welcome.  Thanks.

Have a good week.          ……….  Tom  …………

Chart by MetaStock; used with permission.

Still Within (trading) Range; Sans Volume July 15, 2017

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July 14, 2017 – Listening to the financial media one would think that “Happy Days” are here again; and the markets have recovered from a small swoon.  But with all of the talk about “new highs” we should consider that we are really only returning to the top of a trading range.

We bounced off the 6097 support level and we’re now just about near the previous peak (dashed purple line).  One thing I note is the steady lowering of volume over the past week (lower arrow). Also “market Sentiment” is bouncing between neutral and Bearish.  OK, up is up and the previous leaders (tech, semiconductors, biotech, etc.)  are once again doing well.  Maybe the lack of volume / interest is due to the summer vacation schedule, but maybe it could be lack of commitment.  That lack of commitment could be forming an Up Thrust.  We’ll just have to wait and see next week.

For now I’ve removed my hedge (protection) but have not jumped back to a market “long” status.  The market is showing some positives as shown below; the % of stocks in the S&P 1500 Index that are being bought/sold, with price strength strong/weak.

S&P 1500 Accumulation & Distribution –

S&P 1500 Price Strength –

Overall these pie charts are showing a reasonable balance between the three status levels, and that’s usually a healthy sign.  Looking at a sector strength table below:

I also should mention that a few Emerging Market countries are doing well in the recovery.  Since we are in the middle of earnings reporting, the market could easily react to unexpected bad news about key industry companies as well as any geo-political news.  With Russia and Healthcare being major topics, that could be a factor.  I feel that in order to decisively break above the previous high, we’ll need to see volume (buying) increase too.  Without that I’m still cautious.

Have a good week.         ………..  Tom  ……….

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

July 9, 2017

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July 7, 2017 – I’m late posting this because I’m away from my home office and busy with a few things.  This will be a short post because I don’t like typing on a small keyboard, but really, not much has changed.

I’ve gone back to an older posting app so that readers can double click on graphics to enlarge them to view them in more detail; the new version didn’t allow that.

Looking at the NASDAQ Composite chart below we see general weakness.

Volume Flow is anemic, Money Flow is slowly dropping and Market Sentiment is Neutral.  The 6097 support level is holding for now and there is generally more selling pressure than buying pressure.  It appears that investors are waiting for the second quarter earnings reports to show them the way higher or lower.  There just doesn’t seem to be any good reason to buy or sell, so the markets go sideways in a trading range/

There also doesn’t appear to be very many strong stock candidates to consider buying right now either.  I have a small hedge on to provide some downside protection, but as long as this level holds on a closing basis, I won’t add to the hedge or do much selling.

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

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Market Undecided July 1, 2017

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June 30, 2017 –  Before I get going, I’d like to wish Canada a Happy Birthday (Canada is 150 years old this week).

The U.S. markets were lis-less and undecided this past week, as were the world markets in general.  True that vacations are on the minds of many but it’s really deeper than that.  There was / is a fair amount of expectations for future economic growth and some are coming to the conclusions that it may not be as significant as originally thought.  Some traders are predicting another 5-8% drop on top of the current 5% drop.  That would be a mild correction so no need to “jump out the window” just yet.

NASDAQ

My new chart of the NASDAQ Composite shows the weakness in the background.  The red bars indicate short term weakness and the Volume flow is steady to Bearish. Note that Money Flow remains positive / Bullish.  More important are the support levels.  The 6164 level was violated on a Closing price, indicating possible continued weakness, but the Lows of those bars remain intact.  I would only start to get concerned if the Low of the bar where the Close violated a support level.  So, I’m cautious as this market is only showing signs of being undecided.  The next level down is 6097 (that’s the Low of a weekly “significant bar”.)

The table below shows sector strength / weakness in the short term.  Note how Semiconductors has moved from the top to the bottom.

Sectors

The bottom line is we’ll just have to wait and see if the market “decides” whether to drop any further or just go horizontal next week.  The “Summer Doldrums” are here.

Have a good week.  ……….  Tom  ……….

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

Steady but Indecisive June 24, 2017

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June 23, 2017 – OK, the trend remains positive / Bullish but if you look at the recent rally, it was pretty tepid at best.  I point out the “Volume Flow” indicator below which rather well points out the lack of enthusisium in this recovery off a minor bottom.

NASDAQ

Yes, the support levels (first at 6164) and trend lines are hanging in there and we may just be seeing the infamous “Summer Doldrums” setting.  My feeling is that we’re going to be in a consolidation phase until the Fall, but that’s just a hunch.

Editorial: I’ve updated to the latest version of MetaStock, so this chart looks a little different, plus I’ve added my bar strength indicator to the color of each daily bar.  This should provide a little more “heads up” information in the future.

From the pie charts below of the stock components of the S&P 1500 Index we note a healthy but yet “OK” market in the longer term.

Price Strength –

SP 1500 Price Strength

Accumulation / Distribution –

SP 1500 A-D

Overall things are looking OK even though the previous mass buying surge that we have seen after the November election has subsided.  What has appeared over the last week to 10 days is a rolling over of key sectors.

Sectors

The Tech, Semiconductor, Software strength remains, though lessened.  It has been supplanted by Biotech and Healthcare (note above table of current sector strength).

Where we are now is a generally supportive market, but leadership may be changing and actually narrowing.  I remain watchful of an Up Thrust bar on heavy volume as a near term warning sign of weakness.  But for now we have to “go with the flow” (i.e. trend).

Have a good week and we rolling into summer at full strength.   ….  Tom  ….

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

At The (lower) Edge June 17, 2017

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June 16, 2017 – An interesting week indeed.  Looking at the chart of the broad NASDAQ Composite Index below, we see that we’re still (barely) within the upward sloping price channel and, also above the first price support of 6164.   (Note: I look for a break of any line or level by the Closing price as opposed to the low of the day.)

The Volume Flow indicator continues to show weakness, though it is traveling in a horizontal position.  Money flow showed an up tick this weak and overall Market Sentiment is neutral.  Volume on Friday was high, but that’s typical for the 3rd Friday of the month due to options expiration and folks “squaring up” their expiring positions.

Holding the 6164 level and going into a trading range for this summer is a likely scenario.  The axiom “Sell in May & go away” could very well hold true this year.  There’s been a bunch of talk about a rotation out of Tech & Semiconductors and into Banks & Finance.  I see some evidence of that, particularly in Banks, but so far it’s been fairly muted.  Not much sense in talking about “strong sectors” since not much is showing domination right now.

I’m thinking we’ll just have to wait for the second quarter earnings to drive the markets anywhere this summer, or maybe a political issue will drive it.  Whatever it is, it will likely be a surprise and this market is on edge right now.  Have a good week.     ……… Tom ……..

chart by MetaStock; used with permission.

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