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New High . . What’s The Problem ? November 2, 2019

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Nov. 1, 2019 – OK, the markets are at / near all time highs so what is there to worry about?  Maybe nothing, but then again maybe there is at least some concern.  I’m changing the perspective and the time frame of the regular chart of the NASDAQ Composite Index (below).  The daily bars show us one thing but weekly bars can provide us with a different perspective.

I’m taking a liberal view of what a “top” is on this chart so bare with me.  The chart goes back about 17 months and the area over a year ago (mid Sept., 2018) is labeled “1”.  Thereafter we see labels at the swing highs / peaks of 2, 3 and 4.  Each time the market gets near the current level it has pulled back, and sometimes very quickly and significantly.  Presently many of the indicators are positive, thus indicating strength and continued prices moving higher.

Now I’m not saying that the market has to correct and head lower, it’s just that we’re once again at / near an inflection point.  I am currently “long” this market because in the short term it is headed higher as far as we know.  From a historical perspective one could have gone to Cash over a year ago and not missed much, and actually come out ahead.  The question to ask is what makes this top, top #4, different?  Or perhaps we’re in a very broad trading range and need to be quick on our feet to make any type of head way.

In any case we will have a much better idea within a few weeks.  Either the markets will continue to trend high after this current breakout, or it will confirm a “shake out” of the last buyers “holding the bag”.  I’ve read where the big institutions are very reluctant to buy into this market at these levels. The point being that we are closer to the top, than we are to the bottom.  It’s been a while since the trend bottom; an unusually long period.  I feel it’s a good time to be nimble and extra careful because the next minor correction could be more than that.  Let’s watch the bar action and confirm them with volume.  Signs of a rush to the exits are wide range down bars on high volume.

In the mean time here’s a table of short term sector strength –

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

Same Old Up . . . but Caution Here November 28, 2014

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The past (shortened) week was about “the same old”, namely the markets were up.  One item to note in the chart below is how extended this market really is.  Watch the 4650 level for support; a drop below that starts to get my attention.

NASDAQ

I draw your attention to the trend line / price channel in the chart above.  We’re above that dashed red line, which is fine, but also a sign of caution.  We have come rather far, rather quickly and that’s just a little bit “froffy”.  So I would not be surprised to see a small correction / drop in prices after the Thanksgiving holiday.

Other than that, there’s not much to say.  I’ll close with a few charts that paint a pretty good picture of this market.:

The first pie chart is the number of stocks in the broad S&P 1500 index that are in Accumulation (buying pressure) and Distribution (selling pressure) or Neutral.

Accum - Distrib SP 1400

Next the number of those S&P 1500 stocks that are showing “strong prices”, “weak prices” or “neutral”:

Price Strength SP 1500

The next chart shows what Industry Sectors a select group of strong stocks are in.  i.e. “where the movers are”:

Strong Stocks - Industry

These charts should give you a “handle” on what is currently going on in this market.  Hope it helps.  BTW, you can easily enlarge any of these charts by double clicking on them, they blow up nicely for easy viewing.

That’s it for now.  For those in the US, I hope your Thanksgiving holiday was / is good as we move into the Christmas season.  Take Care.

……………  Tom  ………….

price chart by MetaStock; pie charts by http://www.HighGrowStock.com; all used with permission.

Waiting for the SuperBowl ? January 17, 2014

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This market is rather lethargic.  The S&P 500 Index move down 0.2 % this week; so basically it went nowhere.  With Washington and the World in general fairly stable (compared to past years), and earnings rather OK so far, one wonders why?  Well I hate to sound like a broken record but we remain at a crawl along the upper trend channel line, so the market can be considered “ahead of itself” right now.  The chart below shows what I’m referring to :

NASDAQ

This doesn’t mean that we should go down toward the lower channel, but broking above the upper channel line will be difficult.  So either the market is waiting for the SuperBowl (in 2 weeks) or it is waiting for either good or bad news as an excuse to move in one direction or the other.

I’ve thought that 2014 would be a stock pickers market, in that in order to have above average gains you’d have to be in the right sector and the right stock in that sector.  The table below should give you an idea where those sector area right now.  I see a bunch of biotech / pharma / healthcare sectors in there . . . . a common theme ?  I’m thinking Yes.

Top 10 Sectors

That’s about it for this week.  Not a whole lot of activity as far as direction is concerned.  Time to watch the football playoffs I guess.  Not a bad idea.  🙂  Have a good week.    …..  Tom  ……

price chart courtesy of MetaStock; table by www.HighGrowthInvestor.com; used with permission.  Click on graphic to enlarge.

 

Market: “Please Hold for the Next Move” March 23, 2013

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If we could “call the market” (on a telephone that is), we might get a message . . . “Please Hold”.  This last week was full of activity but really not much movement (note below, from the dashed line to current).

After all the hype about new high’s (and sucking in the public) the markets took a cue from the continuing issues in Europe and did a “test of supply”.  By a test I mean bringing the market down to see if there was anyone willing to sell.  It lasted a few days and then appears to have dried up.

NASDAQ Composite Index

The chart above shows the dashed line a week ago Friday.  Heavy volume, likely caused by options expiration (or preview of Cyprus?) on a narrow bar.  That gets my attention.  This week there was a sudden drop with news and the market finished about where it was a week ago.  The down bars did not bring with them increasing volume, hence not much supply.  Market on hold.

Being on hold is a natural thing at this point.  The indexes are at or near multi-year highs (resistance) and also skirting along the upper edges of price channels.  All it takes is some ‘bad news” to get traders nervous.  But what are the longer) term investing institutions doing?  It doesn’t look like they are selling at this time.  Let’s look at Price Strength below:

Price Strength

This pie chart measures where the price is in relation the stock’s  price “envelope”.  Green means the price is toward the top end, Yellow neutral/middle and Red toward the lower edge.  Next we look at Money Flow; that is, is money flowing into or out of stocks.

Accum-Distrib

Again we look at the stocks comprising the S&P 1500 Index.  61.8% (Green shades) are in Accumulation, 20.8% (Yellow) are Neutral and 17.4% (Red shades) are in Distribution.  Now I’ll leave it up to you, but on the basis of this data I don’t see any trend toward selling this market.

Until we get a break of a Trend Line and a break of a Support price level I really can’t get very concerned.  So far this appears to have the structure of Re-Accumulation and not Distribution, though a failed rally that doesn’t break into new high ground would start to change my mind.  We’re approaching the adage: “Sell in May and Go Away” and that may hold true again this year.  The middle of the year may prove to be (nearly) uneventful.  That’s why selecting the right Sector and Stock could very well be important over the next 6 months.  More on Sector Strength next week.

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

Waiting for the Last Buyer to Get In . . . . January 18, 2013

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What could possibly go wrong?  The markets are doing well world-wide . . . but “How long can this go on?  Lord I’m so tired!”  (apologies to a song whose lyrics I partially remember)

The wisdom of old traders: “When the last buyer has bought, then the market will go down.”  Now don’t get me wrong, this “overbought” condition could last for a while, but it will end.  And then it ends, how it ends, will tell us a lot about just how strong the underlying market really is.  Will it be just 3-5% or will it pack a whoop of +20%?  The volume since the first of the year has been very modest, there’s been no buying frenzy . . . do they have to lure a few more in?

Here’s what I’m concerned about:  The VIX (a measure of optimism / pessimism on near term options): very low, very over optimistic; Number of Stock Above their 40 & 200 day moving averages: at / near all time highs, very optimistic; Advance / Decline indicators: very optimistic; and (of course) the indicators below:

Price Strength

Price Strength pie chart above; a lot of green up there . . . very many of the S&P 1500 stocks are extended.

Money Flow

Money Flow pie chart above; same story, with many stocks in Accumulation mode right now.

So this could get ugly in a hurry if the market under pinnings are weak (which could be aggravated by a news item), or it could be mild.  It is very unusual for the trend to continue at this pace for much longer.  I am watching closely, especially market leaders, for signs of a reversal and tightening stops.  As the British would say: “Wait for It !”  Save those hard-won gains because any drop could be a great buying opportunity.

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

pie charts coursey of www.HighGrowthStock.com; used with permission

In The Trading Range As The Market Waits December 28, 2012

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First off, may I wish all of my readers a very Happy New Year.  May 2013 bring you and your family Health and Happiness.

This post will be short since we had a shortened week and I’m involved with a research project and need finalize the overall project outline.  Last Friday I was thinking we could have a Last Point of Support (LPS) with a strong up bar on very high volume.  Supply was definitely coming into the market and the strong Close made me give pause.  Well, it did not happen.  From the chart below we note that the market last week closed below the Low of at bar (circled in red) and continued lower.

NASDAQ Composite

Bad news?  Well not really as we’ve just stayed within the trading range between 3045 at the top and 2965 at the bottom.  The market can’t make up its mind about where to go next so it enters a congestion phase.  The whole “fiscal cliff” political wrangling continues and that causes folks to try to figure out which way the next market move will go.  One hint is the pie chart below showing the number of stocks in the S&P 1500 index that are in stages of Accumulation (money flowing in, Distribution (money flowing out) and just Neutral.  It doesn’t look like very many are expecting “all Hell to break loose”, so I’d say the street is expecting some sort of resolution in a positive direction.

Accum-Distrib

We’ve seen a fair amount of tax selling because people holding profitable stocks can (likely) pay lower taxes this year than next.  They eccentually “reset” their Capital Gains clock by selling now and buying back after the first of the year.  Also we may see some tax selling early next year to take advantage of stock loses against those (likely) higher taxes next year.  But . . . at this point no one really knows what (or if) any deal will happen.  And so it goes.

I should note that International stocks have been behaving well as of late, especially Japan and select Latin and European country ETF’s.  Something to investigate.  Have a good week.    …… Tom ……

charts courtesy of MetaStock and www.HighGrowthStock.com ; used with permission; click on chart to enlarge it.

A Terrible Market ? No . . . Not So Fast ! December 21, 2012

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The holidays and all of the requirements are placing a demand on my time (and all of us), so this will be short.  But please don’t mistake a short posting for lack of importance.  Why ?  Well the short answer is what happened on Friday (see chart below).

NASDAQ composite

Yes, Friday began with a downward gap in price at the very open but then recovered into a mild trading range until the last half hour of the day.  And then . . . buying happened.  Yes, volume surged in many popular stocks and prices along with it.  Take a look at the bars circled in red at the far right edge of the chart.  A gap down (selling) then a wide range bar closing at its High on very high volume (buying).

This market is holding up remarkably well in front the news.  And what confirms this is the strength of Small Cap(-italization) stocks, they’re doing pretty well Thank You.  This last bar on Friday could be considered a “Last Point of Supply” in Wyckoff Analysis terms.  Which would mean a dip back into the trading range (3040 to 2965) before price head higher.  Is that guaranteed?  No, but it sure has the marks of it, hence why this posting could be important for those not exposed to the market.  IF the LPS bar is confirmed by higher price next week this would be a “point of no return” for prices in this cycle (obviously price WILL return here some day).

The bottom line is watch what happens next week, the Christmas break will distort things a bit, but don’t let that get in the way.  The Low price on Friday would make a reasonable stop price level IF a position is taken and does not get proven out with higher prices.  Since this is a news sensitive market I need not mention that things can turn on a dime.  But the market did speak on Friday, and (IMHO) it was Bullish.  Time will tell.

Merry Christmas (for those who celebrate) and Happy Holidays to All.  Take Care.   …..  Tom  …..

(chart courtesy of MetaStock, used with permission; click on chart to enlarge it)

Range Bound Market . . . The Wait Continues December 15, 2012

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The S&P 500 Index was down very slightly for the week by -0.32%, likewise for the NASDAQ Composite down -0.23%.  In between the Friday to Friday close where was a fair amount of movement but the net result was pretty much going no where.  As one can see in the chart below the NASDAQ remains in a range between 3040 and 2965 with volume remaining rather constant.

NASDAQ Index

My take is that there is not much buying or selling going on right now, likely most of the year-end selling has already taken place with folks putting their long-term capital gains into 2012, instead of 2013 with the likely higher tax rates.  And so it goes.  This market looks like it continues to wait for the debt and deficit talks to tip their hand in some manner or another.

The US markets don’t look weak, on the contrary stocks appear to be under continued Accumulation (money flowing into them) as shown in the pie chart below (in green).

Accum-Distrib

Also of note is that the International markets have been doing either well (Emerging Markets) or OK (Europe).  The Relative Strength chart below shows the per cent changes in price since June 1, 2012 (a relative market low point).

International ETF's

The Pacific countries (China, Japan, Thialand, etc.) seem to be the strongest, while Latin American countries seem to be more in line with the US.  I didn’t plot a European Index on this chart because its strength has been relatively recent but the performance of select EU countries is fairly strong, and may bear an investigation.

That’s about it for this week.   Expect market volumes to drop as we get closer to the Christmas – New Years “break week” and we continue to look toward Washington for signs of agreement.  Take Care and have a good week.  ……  Tom  …….

charts by MetaStock & www.HighGrowthStock.com used with permission; click on graphics to enlarge

A Dull, Waiting Market . . . December 7, 2012

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This past week was actually pretty dull.  As the chart below shows we saw “supply coming in” (volume increasing) on a strong move up the week before.  That’s usually a sign of weakness and selling is around the corner.  Sure enough this week opened high then sold off on Monday.    (click on chart to enlarge)

NASDAQ Index

This market appears to be bouncing between the 3040 and the 2965 levels.  Of note is the modest, average volume.  Hence it looks like this market is waiting for news; yes . . . Congress and that darn “Fiscal Cliff”.  IMHO the Fiscal Cliff issue will be resolved since no party wants to be labeled as the cause.  So the real question is not “if” but what the solution will look like.  And that’s what I think the market is waiting on.  The holidays don’t help either, we’ll start to see trading volume drop off next week with it realllly dropping the following week.   So news will move this market, we just have to wait for it.

Apple had another terrible week and that rolled through the Technology sector.  Since the NASDAQ 100 is capital weighted Apple had a unrulely effect on it (about 20% of the “Q’s” is Apple movement).  Finance has shows bursts of strength followed by dullness, with little follow through.  The market would like Finance &/or Technology to show some leadership but we’re not seeing it just yet.

What sectors are moving now:  the chart below gives us that answer.  No surprise that Pharma and Bio-Tech issues are in the top 10 along with Construction and a few basic consumer sectors.  It’s interesting to note that the R/S Ranking (1-100), that compares sector strength to the S&P 500 Index, is very modest and at mid-range, while Accumulation/Distribution (money flow, ranked A-E) is fairly strong.   Not much price action but it looks like stock is in “strong hands” in these sectors (little selling and steady accumulation).

Top Sectors

And so it goes.  Not much else to say since the market is not giving us much of a clue for what may happen next week.  I suggest that you take your significant other out to a Holiday Party and just put the market and the “Cliff” on hold untill something actually develops.  Have a Good Week !        ……..  Tom  ……….

chart courtesy of MetaStock; table from www.HighGrowthStock.com ; used with permission (of course).

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