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Market in Consolidation September 30, 2017

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Sept. 29, 2017 – Uber busy (again), so I’ll get to the point(s).  This market sure appears to be in a consolidation / re-accumulation phase.  Yes, I know I labeled the chart as Distribution, but I tend to always be on the lookout for a worse case scenario.  The BC (buying climax) was weak and the UTAD (up thrust after distribution) has yet to even form.  But . .  . went I see market trends begin to soften, I get extra cautious.

The chart above does show strength, or at least a continuation of the last up trend.   We may be beginning a break out to the horizontal channel that started in mid-July, but that’s just a “maybe” for now.  Money Flow, Volume Flow and Sentiment are good, so let’s be patient here.

The pie chart above shows the % of stocks that are considered “Strong” or “Weak” based on their 20 day moving average.  There’s a lot of green up there, which means that most stocks are at least participating in the current up trend, even though it may be a mild trend.

The table above shows us where the current short term strength is.  Ideally, this is where we should be holding our “long” positions.  I hope this quick analysis helps.  Hopefully I’ll have more time later, though that might be a few weeks from now.

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.

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.

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 As She Goes June 10, 2017

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June 9, 2017 – This will be short because really . . . not much has changed.  Yes, the market did drop quickly and significantly on Friday afternoon, but by the close a good bit of it was recovered.  I think the question is not “is this the top of the market” but more like “are the big guys rotating out of Tech and into something else” (like Financials)?  There are a few reasons why I believe this, but note that while the major indexes did drop, the Russell 2000 (small cap) index hit a high.  The vast majority of the time the small caps will lead the markets down as investors exit the more speculative small cap stocks.

Also, note that price still remain in the upward price channel and still above the most recent support level.  What caused this sudden drop is anyone’s guess, but the quickness and volume point toward computer algorithms and not just humans.  Once the “algos” kick in and start moving prices resting stops (all ready in the market) are taken out, thus the move increases in strength.  We should know early next week if there is real cause for concern.  In the grand scheme, the market was over bought, that is it was at the top end of that price channel.  Correcting back down toward the lower edge is typical.  I’d wait until Monday afternoon though, as the weekend investors may panic and sell out on Monday morning.  That’s how money is made on Wall Street: buy at wholesale and sell at retail.

For the time being (subject to immediate change) I’ll stick with Semiconductors, China Utilities and Consumer Goods.  Have a good week.  … Tom …

 

Market In Wait Mode May 27, 2017

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May 26, 2017 –   This will be short because there’s not much enthusiasm out there either to buy or sell.  Corporate profits were reasonable good as a whole, but the “hope” that was generated after the Trump election has subsided.  True the NASDAQ & S&P 500 have been inching up, but small and mid cap stock have not kept up.  This is a “yellow flag” over the long run, because strong markets typically show strength from small through large cap stocks.  And . . . most speculation happens in the small & mid cap areas.

We note in the chart above volume (i.e. activity) falling off.  Part of this is going into the first summer holiday (in the U.S.), but likely also a “wait & see” stance by traders.  I’ve moved the support level up to 6096 (and 5970) on the chart.  These levels are the weekly lows where we have seen buyers coming into the market; thus a price support level.

China, Semiconductors, Utilities and International stocks are showing the most strength right now.  The coming week will be interesting.  Since there is so much news coming out of Washington DC now, traders have an excuse to sell.  The question is whether they are that uncomfortable or not.  We could be in for a very uneventful summer, unless folks choose “Sell in May and Go Away”.  I’m not expecting much of a move in either direction.

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

chart by MetaStock, used with permission

Not Out of the Woods May 21, 2017

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May 19, 2017 – Despite the rally (attempt) from the recent sell off, the market internals remain “iffy” and not broadly strong.  As shown below, we did just touch the lower channel / trend line as a Secondary Test before a recovery, but participation in that rally has been modest at best.  Sentiment is neutral and Money Flow is lower; volume is lethargic.

This does not mean ‘sell’ because we’re still in the upward channel and above support levels (5970), but being extra watchful would be recommended.  What are doing well are the previous strong sectors.  Generally, Technology and Specialty / Niche companies.  Here’s the areas that I’m watching for strength:

Back to the market in general: the pie charts below shows the overall status of the S&P 1500 stocks (a very broad sampling).

Price Strength –Stocks under Accumulation & Distribution –These charts support my idea that “We’re Not Out of the Woods”, at least not just yet.  Perhaps we have a “Sell in May & Go Away” situation and the “Summer Doldrums” have arrived, but more likely the euphoria of the Trump election has succumb to reality that all of the wonderful things promised won’t happen.  Welcome to politics Mr. Trump.  I have taken positions in select International sectors.  Europe & certain Asian countries have been performing well (avoiding Latin America for now).

So we’re back to this market looking for direction and good (or bad) news.  There just doesn’t seem a need to jump all the way in, but there really isn’t a need to sell either.  Have a good week.        ………….  Tom  ………….

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

Break Out or Fake Out ? April 29, 2017

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April 28, 2017 – No doubt that this past week the market broke out of the trading range that has persisted for over a month.  Higher bars on increased volume, market sentiment back to Bullish and money flowing into the markets.  All generally good news, which likely is being fueled by good earnings reports.

So far a little over half of the S&P 500 companies have reported, and of those, 77% have beat earnings estimates and 70% showed increasing sales revenues that were above forecast.  Pretty good news corporate wise all around.

This is looking more like a “stepping stone” pattern inside of an overall bullish price structure.  I’ve moved price support levels up and trend lines to reflect that.  I think it’s still a wise thing to look out for a distribution bar on heavy volume, just in case.  Geo-politically, there’s a bunch of things that could cause it.

The pie chart below shows sectors that I’m prospecting for stocks.  In addition to Wireless and Internet stocks, there is strength in Internationals (especially European), Consumer Services and Technology.

So I’m “cautiously Long” right now, building a few more positions and still a little concerned about the investing environment in general.  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.

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