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Market Getting Closer to Thin Ice April 14, 2017

Posted by Tom in Thoughts.
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April 13, 2017 – More and more of my indicators are turning down now.  Volume is low (lack of demand) and prices are dropping because of that; buyers are not stepping in right now.  Are all of the “willing buyers in” right now, and there is no one left to buy ?  Doubtful in the overall picture but there is all sorts of news to make folks concerned about the immediate future.

Earnings have begun to come out and this market has not been inspired by them even thought the bank earnings have been pretty good.  The NASDAQ Composite Index (above) needs to hold above 5769, otherwise we’ll likely see a very low & slow summer.

I’m not looking to add any positions, but let’s look at the very broad S&P 1500 stocks.

Buying / Selling Pressure:

Price Strength:

Have a Happy Easter !         ……. Tom ……

Market Waiting April 8, 2017

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April 7, 2017 – Looking at the chart below we’ve broken the upward trend channel and have settled into a fairly narrow trading range.  I’ve labeled the chart as a possible Distribution structure to be on the cautious side.

Money and Volume flows are muted and rather neutral; there isn’t much buying or selling lately.  I’ve moved my support price level up just a little to 5769 on the NASDAQ Composite Index.  that’s were the last “buying” started on a weekly basis.  Last Wednesday could be labeled as a UTAD (up thrust after distribution), but that case is not very strong.   Market Sentiment is weak, especially when compared to where we’ve come from.  Volume on Thursday & Friday was low, not much activity in either direction.

Earnings reports begin week of 4-24, and that’s what this market is waiting for.  Prices are fairly rich so any significant disappointments or forward guidance surprises could generate a swift reaction lower.  Without any indication as to the trend, I’ve got to stay neutral and raise Cash as support levels are broken.  The stocks in the broad S&P 1500 Index are split down the middle and don’t show much of a bias in either direction:

Price Strength –

Accumulation/Distribution –

This is a rare time when I’m really not seeing any edge or strength in any sector.  Sure Precious Metals lately, but the action has been very erratic; Utilities, very muted trend; Technology, not a clear trend.  Sector wise I’d rather be waiting in Cash.

Have a good week.   …….. Tom  ……..

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

 

Market Neutral April 1, 2017

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March 31, 2017 – I want to see a UTAD (Up Thrust After Distribution) so bad, and it may well happen yet, but for now I’ve got to call it “Market Neutral”.  The market is struggling to climb the lower trend line, narrow bars on modest volume.  But it is holding on right now.

Sentiment has improved to “neutral” and both Money & Volume Flows are holding onto a light Bullish posture.  We’re just going to have to wait and see what pushes this market higher or lower.  Earnings season starts with Alcoa on April 10th and it just keeps rolling for the next 3 weeks for the “big guys” to report and guide.  Political news is a wild card in the whole thing.  I’m keeping an eye for either a rush to the exits or a more positive “all clear”.  Make no mistake, this market is expecting very good things.  A case could be made that it is over price and due for some correction, but the markets run on expectations, and not reality (until it can’t be deigned).

I’ve got to go, a busy weekend, but here’s the market sectors that I’m watch for strength:

In the mean time, I’ll watch for an up thrust bar (to a new high), on light volume, followed by a big down bar (wide range) on heavy volume.  Right now I’ve lighted up on some holdings that are showing weakness, waiting for more proof in either direction.

Have a great week.          ……….  Tom  ……….

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

We’re Not In Kansas Anymore March 24, 2017

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March 24, 2017 – Apologizes to ‘The Wizard of Oz’, but this market trend has broken the lower channel line (note below) and that verifies a “Change in Character” IMHO.  The “Trump Rally” has lost its momentum, but the bigger question is ‘has it lost its direction?’

It’s too early to tell just yet since we’ll need a significant Close below the support level (5748).  Looking at the price and volume action, right now it just looks like the market is weak on a “Lack of Demand” / buying.  Volume is low, so there isn’t a rush to get out of this market, at least not yet.  We could just bounce around in a trading range until earnings come out.  Then, we will likely see some action one way or the other.  The lofty expectations for the Trump admiration are coming back to earth and that’s not really a surprise.  It had to happen, this market can’t continue going at this pace without some pause or correction.

We see confirmation in a weak Money Flow and Bearish Volume Flow indicators.  My Sentiment indicator has switched to  Bearish, but remember, we need price follow through to the downside (below support) before we can raise the “red flag”.  Time to honor stops and pay particular attention to market action.  Is the market down, or is it down on increasing volume?  A big difference.

We do have strength in the market, as show below:

The overall stocks in the broad S&P 1500 Index are showing weakness with the number of stocks in Distribution, and increasing.

Price Strength (below) also parallels that of Accumulation / Distribution (above).

I opened with: “We’re Not In Kansas Anymore”.   But we’ll have to evaluate price and volume next week to get an idea where this market is headed.  Right now, I’d say laterally until earnings forces a move either way.

Have a good week.  …….  Tom  ………

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

Still Chugging, but Momentum Slows March 18, 2017

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March 17, 2017 – This market continues to chug along even in the face of “not so positive” political news.  We’re less than 4 weeks away from the next earnings reporting cycle and that could be interesting.  I feel that a lot of good news is priced into this market and if earnings or the expectations don’t hold, that could be about it.  Until that point, it’s likely only minor 3-5% pull backs.

On the chart above I’ve tentatively labeled a possible Buying Climax (bc?) along with an Automatic Reaction (ar?).  This is just a “heads up” possibility as volume doesn’t really support it very well.  Sentiment, Money & Volume Flows all support a Bullish position, so we go with that flow.

The important part is to watch what sectors are strongest and leading the averages.  The table below shows my current sector rankings.

Since these are US sectors, I should also note that China and International funds in general are doing fairly well.  That includes Emerging Markets and Europe.  These have climbed up my World Index ranking over the past few weeks.  I think I may “dip my toe”.

That’s it for this week.   ………..  Tom  ……….

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

Pivital Point (?) March 11, 2017

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Mar. 10, 2017 – This market could be at a pivotal point.  On the Bear side, we’ve seen the momentum in market leadership steadily fall for weeks now.  The momentum in the Advance / Decline line has dropped quite a bit.  Now, this does not mean the market “has to” fall or correct, but it is an indicator of slowing and shallow market leadership.  That typically means either a slight correct / pause in the up trend or a more significant correction.  Also, Small Cap stocks (considered to be higher risk) are not nearly as strong as the Large Cap stocks; agressive speculation drying up.

On the Bullish side, the VIX options index remains low (option traders are not concerned) and price support is holding up well.  The chart below shows this price support.  (click on graphic to enlarge it)

The Money Flow index (top window) is hovering around zero / neutral, so there is no significant selling pressure at this time.  Same goes for the Volume Flow.  My Sentiment indicators remain “Bullish”.  Until that purple lower trend gets broken on a Close and (more over) the 5748 support level gets taken out, I have to remain invested and long overall.

Price strength of the stocks in the broad S&P 1500 Index are pretty mixed, but tend to be much less strong compared to 2-3 weeks ago.

Accumulation & Distribution in those S&P 1500 stocks show a slowing down of buying (Accumulation) as well.

Here are the industry sectors that I’m trying to participate in for the time being.  This is where the strength is currently.

That’s it for the time being.  Take Care & Good Trading.      …….. Tom …….

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

In The Groove (channel) March 4, 2017

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Mar. 3, 2017 – So far . .  prices remain “in the groove”, i.e. the price channel.  Yes I’m cautious due to this extended rise in the market with valuations toward the high side.  But until the lower channel is broken (purple line) and then an import support level is taken out, I have to remain bullish / long.  Currently I see no signs of selling, at least not yet.  I’m watching the 5748 level on the NASDAQ Composite for a danger sign.  A close below that would concern me.

nasdaq

There is so much news swirling around that just about anything could trigger a stampede out of the market.  We see the more defensive sectors like Utilities, Healthcare, Insurance and Aerospace – Defense going fairly well.  I appears that the time to be aggressively long and sticking your neck out is long gone.  (note sector chart below)

sectors

That’s about it for this week.  Take Care & Good Trading.      ……..  Tom  …….

Noth’in New February 24, 2017

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Feb. 24, 2017 – This is sounding like a broken record because most markets worldwide continue their upward pace.  I do note a slight change, in that some defensive sector are showing some strength.  Notably, Utilities, Tobacco, Aerospace-Defense and REITs.  (See the table below.)

nasdaq

The NASDAQ Index remains within it’s price channel (purple lines) and I’ve moved my “Wyckoff Support” level up to 5748; which is derived from the Low of a weekly significant bar.  Sentiment, Volume & Money Flow indicators remain “Bullish”.  Volume did drop off late this week, so we’ll be watching for signs of an Up Thrust on low volume . . . a warning sign.

Here’s my sector strength watch list:

sectors

The overall strength also shows itself in the broad S&P 1500 stocks:

% of stocks, Price Strength –

price-strength

% stocks in Accumulation & Distribution –

a-d

There’s a fair amount of green up there and expectations are high for tax cuts, government spending (infrastructure & defense) and lower regulation.  If the markets get concerned that they are not going to happen, that could mean trouble; but not yet.

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

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

Ditto (not much has changed) February 18, 2017

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Feb. 17, 2017This IS getting to be redundant, because really not much has changed over the past 3-4 weeks.  We remain in that upward sloping price channel (see chart below), with most indicators showing a positive reading.  True, the momentum of Advancing to Declining issues has slowed, but that don’t necessarily mean anything but a slowing in rapid market advance.

I believe that there are a bunch of positive things being anticipated by this market from tax cuts, to de-regulation to infrastructure appending to defense spending, but until something doesn’t pan out, we’ll be where we are.  Perhaps (just perhaps) the “Smart Money” is waiting for the last buyer to jump back in.  After that . . . .well, it could be a quick trip back down.  The only question is how far and when.  No one knows.  Let’s not get complacent here, as it is always calmest before the storm.  (so much for clichés)

nasdaq

I’ve spotted in a few support levels and added (my interpretation of) “Wyckoff Significant Bar” levels (red & green dashed lines).  As long as we hold within this channel and remain above support, we have to consider this rally to be intact.

I’ve been researching methods of measuring sector strength and that algorithm is still in development, but far enough along to be of potential value.  It basically measures / ranks price returns over 5, 10, 15 & 20 days, along with the number of stocks Advancing or Declining (A/D), as well as the A/D volume (activity) in those stocks within sectors.  The table is shown below as a “raw score” , % price change and relative A/D ranking (A-F).

sectors

This is a version of classical “Top Down Analysis”.  Market Direction, Sector Strength, then Stock Selection within those sectors.  (sorry, I can’t provide specific stock ideas . . . regulation, etc.)  These sectors have been strong for well over a month now; many since mid-November.  But, as always, we should be on the lookout for rotation OUT of these sectors as they mature.  The bottom line is it is likely better to look for strong stocks toward the top of the list as opposed to the bottom; more likely to put the odds in your favor.

Hope this helps.  Have a good week.   ……..  Tom  ……..

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

 

Climbing the Upper Channel February 10, 2017

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Feb. 10, 2017 – As the 60’s Rock-n-Roll saying goes: “And the hits just keep on coming !”, and so does this market rally.  Prices continue to hug that upper trend channel line (purple).  The latest rally was (supposedly) sparked by Trump commenting that he’d have a tax reform plan out in the next 2-3 weeks.  This market has high expectations for the new administration.  How it delivers remains to be seen, though past execution of plans leaves room for concern.

nasdaq

In any case “it is what it is” and the markets continue higher.  I’ve spotted in new support price levels to watch for.  The 5575 level is the last price pivot level and the 5522 is the low for the last weekly “significant bar”.  The significant bar idea is based off of Wyckoff’s idea that the low of a major weekly up bar is significant since it showed where significant buying had come into the market.  I may start plotting that level here in the future.

One area I’ve been working on is evaluating industry sectors based on the performance of the stocks in those sectors.  Sure price is important, but so are the number of stocks advancing and the volume of those, compared to the declines.  Strong & broad participation are very positive for continued strength.  The idea of market analysis, then sector / industry analysis, before stock analysis, is very Wyckoff based as well.  Today we call it “top down analysis”, but it goes way back to the 1920’s.

So here’s my latest ranking (it could evolve, nothing is 100% set) of major industries, using the behavior of all stocks in those sectors.

sectors

The colored bar is a percentile ranking and the raw score is next to it.  My goal is to (quickly) provide good information on where to look for opportunities.  That said, I continue to like Metals & Mining, China, Technology and Emerging Markets (especially Latin America).

Always looking for comments & feedback from readers.  Take Care and have a good week.   ………  Tom  ……..

Price chart by MetaStock; table by http://www.HighGrowthStock.com; used with permission.

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