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At the “Spring Level”, due for a Bounce (up) April 7, 2018

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April 6, 2018 –  OK, I’m going way out on a limb and predicting (oh, I hate that word) that this market will react higher next week.  Why? Because we’re at an important price level that Richard Wyckoff would call a “spring”.  And the other reason is that I’m seeing early signs of volume coming back into the market on “up bars”.  Now, that is by no means a guarantee, and a true Wyckoffian would wait for a “Sign of Strength” (SOS).  That SOS would be a wide range bar, with a close near the top of the range, on above average volume.  That SOS bar may take a few days to develop, but that’s what I’m watching for.  It’s kind of my “clear” to start selective buying; but not yet.

The chart above shows Sentiment, Volume & Money Flows negative, but the glimmer of hope is that the Price Strength has moved out of the Bearish range into Neutral.  That’s NOT an “all clear”, just the possible beginning of one.

This market is weak.  Just look how it is reacting to any news item.  It doesn’t take much to push it in any direction.  And as such, my idea of a possible recovery could easily get blown out or only short lived.  Earnings for the first quarter are just around the corner so there is plenty of opportunities for market moving news, let alone what comes out of the White House.  This is not an easy market to trade and make money in unless you’re very short term focused.

The pie chart below shows the current damage with a fair amount of red.

S&P 1500 stocks; Price Strength:

S&P 1500 stocks in Accumulation / Distribution:

Here are the strong sectors (in the short term):

No surprises since most are defensive in nature.  Let’s carefully watch for our SOS confirmation next week before we take any significant positions or take off a hedge.  Have a good week.       ……………  Tom  ………….

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

Back in the Channel Again March 17, 2018

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March 16, 2018 – The NASDAQ Composite is “Back in the (Saddle) Channel Again” . . . guess I’m showing my age.  🙂  But in any case prices have returned to that “Long Term Channel” (gray on the chart).  That’s great but there are some signs of at least a slowing of the advance (chart below).

Sentiment (top) remains positive but Money Flow & Volume Flow are slowing / weakening.   My new Price Strength indicator also shows a “Neutral” status.  The 7332 level is the first support level with 7205 being more of a “primary” level.  Breaking these will raise concerns.

It’s been a while since I’ve shown the S&P 1500 stocks in the pie chart format, so let’s look at them.  The % of stocks in a Price Strength position:

This confirms the recent advances, but Neutral is about equal to Strong, which indicates the moves are not universal; one should be selective for sure.

Next are the % of the 1500 stocks in Accumulation (buying) and Distribution (selling) status:

Not much revealed here.  This was not a great week for the previous leaders (Tech. Semiconductors, Internet), the big movers were more defensive in nature such as Utilities and Real Estate.  IF this is an early move to a defensive position we should monitor those sectors closely next week for follow through and clues.

I am 80% invested, having paired down a few lagging stocks.  If my Price Strength indicator softens more I’ll continue to raise Cash and / or hedge positions.  Have a good week.        ………… Tom  …………

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

Markets Stabilizing February 18, 2018

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Feb. 16, 2018 – We now are fairly sure what the cause of the recent market swoon.  An over bought market in the background, many people in the “safe” selling volatility trade (i.e. short the VIX).  Couple this with the end of the month ETF VIX contract “roll forward” and all it took was 3 days of weakness, followed by panic.  It happened quickly with a spike down and will (likely) recover with a “V” shape back up.  (Note chart below)

Since this market was over brought, it will take time to recover back to those levels.  My continued concern is the susptability to “bad news”.  While the Money & Volume Flow indicators are recovering, but not back to positive, my very short term Price Strength indicator is back to a modest plus / long status.  For this reason I’ve removed my hedges and will slowly look for high potential stocks to buy.  I am happy that I never fully exited this market.

We can also see just how well the market has recovered in a week from the pie chart below, which shows the percent of stocks in the S&P 1500 index that have Strong or Weak price structures.

That it for this week.  Be patient for the right stock and the right sector, but it looks like they will be coming to you.  Have a good week.      ……….  Tom  ……….

Along The Watch Tower February 3, 2018

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Feb. 2, 2018 – The big question on everyone’s mind this weekend is whether or not “this” is the beginning of the long awaited correction.  I’ll cut to the bottom line:  Yes, it certainly could be.  First let’s look at how weak this market is:

SP 1500 Price Strength

The pie chart above shows the percent of stocks within the broad S&P 1500 Index (1500 of them) that are in a short term (20 day) trend.  Obviously, more than half are “weak” with only a small amount that are considered “strong” (i.e. green).

The chart of the NASDAQ Composite Index (another broad index) is shown below:

NSADAQ

I note that the first level of price support at 7332 has been broken and the next level is 7111.  The significance of these price levels is derived from what Wyckoff called “significant weekly bars”.  That is the low price of the week where significant buying came into the market.  The other way to look at it is this is where money started to flow into the market, thus it’s low price is important.  Also in the chart above are the Money and Volume Flow indicators, which confirm price and volume “outflows”.  Sentiment is neutral.

OK, back to the correction question.  Is this the start?  We’ll know more early next week.  Will buyers come in and “buy the dip” or will additional selling happen?  Right now, no one knows.  But we do know that investors cash levels are at an all time low; and who will be the next incremental buyer to push prices higher?  The market has been over extended by being at the upper trend channel, so a pause / minor correction is not unusual.  Time to shake the market out?  Looks like it.

What is “the cause”?  Fear of higher interest rates?  Problems at the Trump Whitehouse?  Does it really matter?  Since the volume on Friday was only slightly higher, it really looks like “lack of buyers” and “extra sellers”.  That is a position of caution, thus not to get overly concerned about it just yet.

Overall, the S&P 1500 stocks look more like this:

SP 1500 A-D

With those in Accumulation and Distribution about equal (though this indicator is a slow to react one).

Let’s watch both the price and volume action on Monday and perhaps on Tuesday for indications about the seriousness of this (so far) 3 day event.  Corrections are OK, as long as we don’t get whip sawed by them.  I lighted up on just about everything on Friday afternoon, but if it gets ugly, I’ll buy a Bear Fund to hedge positions.  That gives me time to make an orderly withdrawal should that become necessary.

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

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

In a Continuation Pattern January 28, 2018

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Jan. 26, 2018 – This will be short because not a whole lot has changed.  The international markets continue to be in an economic recovery mode and the US markets continue to be quite pleased with the tax cuts (about 1/3 off corporate and nearly half off repatriated cash).  With all of that financial tail wind behind them nearly all worldwide stock markets are headed higher.

The chart above shows all bullish signs.  I’ve moved the first level of price support up to 7332 and the next (lower) level to 7111.  A pause or a minor pull back would be normal here, but that would likely draw in more “buying of the dips”.

I do like international stocks in here.  Latin America, Emerging Markets and China are strong.  Consumer Services, Internet and Biotech US sectors are also doing well.  The NASDAQ 100 Index appears to be the strongest followed by the Dow Jones Industrials.  The only “wild card” out there is the Trump Russia Investigation.  I think there are many who will jump ship to lock in these profits IF they perceive bad news on the horizon.  Until then, we ride the wave.

Have a good week.  ……… Tom ……..

Price chart by MetaStock. Used with permission.

Roll’in . . Roll’in . . . Roll’in January 12, 2018

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Jan 12, 2018 – This market just keeps “Roll’in (Down The River”; pardon to CCR).  But, this too will end.  Why am I so dog gone concerned?  Here’s a chart of longest periods without at least a 5% correction.  We’re waaay up there as the third longest period.

OK, that doesn’t “prove” anything but it does show that this move, for this long, IS unusual.  And that is one of the big reasons why I keep a close eye for a possible correction.  Maybe not a bear market, but at least a meaningful correction.  With extra “income” coming to corporations in the form for lower taxes, this market is in love with stocks.  And that could continue for a while.

Is this market over bought and over optimistic?  The price chart below shows the number of stocks in the S&P 1500 index that have strong, neutral or weak near term price action.

What I think is more typical “healthy” is an even split between strong, neutral and weak.  That shows balance and not euphoria.  Waaay to much “green” up there for my liking of a stable market.  Next are the number of stocks in Accumulation (buying), Neutral and Distribution (selling).

The same thing goes here though not quite the unbalance as was in the price strength.  In short, the market is getting ahead of itself and pricing in all of that good news.  We’re in the earnings reporting season and all eyes (ears) will be on forward guidance.  Expectations and fear drive a market and right now they are excepting a lot of good news.

For now I have moved the initial support level up to 7111 on the NASDAQ Composite Index.  All primary indicators are positive / Bullish but the price is above the upper channel line; again, over bought.

This can go on for quite awhile, so I remain invested and in this market.  Strength is in the Oil and Emerging Market sectors, followed by Industrials and Basic Materials.  Take Care and have a good week.        …………….. Tom  …………..

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

New Year – New High January 7, 2018

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Jan. 5, 2018 –  Happy New to all.  Well we didn’t have to wait very long in the new year to see if tax selling at a lower rate would influence the market.  It didn’t.  The broad NASDAQ Composite Index (below) just kept on moving higher, and is now in a rather “over bought” condition (that being above the upper price channel).

I’ve raised the support levels to 6924 and 6668 based on the lows of significant weekly bars.  This is where buying come in and thus a violation of the lows of those strong bars could be a sign of a change of character.  So far the sellers are holding and everyone else is buying.  So be it.  The Money Flow indicator has kicked up after registering the low holiday volume and reverting toward a neutral (zero) reading.  Volume flow and Market Sentiment remain positive.

Not much more to say except the Up Thrust that I was concerned about does not appear to be forming; I’ll likely drop the tentative label next week.  This is looking more like continuation.  Other than that, here is a list of short term sector strength.

This is generally where I like to position my stock holding.  I remain fully invested for the time being.  Have a good week.   ……..  Tom  …….

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

No “Santa Clause Rally” December 30, 2017

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Dec. 29, 2017 – Well it’s been an interesting year.  Sure this market has been very “kind & understanding”, but what drives prices higher is earnings (or at least the hope for future earnings).  The U.S. tax plan has past and it remains to be seen exactly what companies will do with that extra money.  With unemployment in the U.S. are near all time lows, I doubt if much added hiring will occur.  The last time this type of tax abatement happened corporations bought back their own stock or issued special one time dividends.  Either of those should drive prices higher.  We’ll see.

In the mean time prices continue to remain within the upward sloping price channel.  But as I note in the headline, index prices have really not done much in December.  While Sentiment and Volume Flow remain Bullish, the Money Flow indicator has dropped to a negative reading.  Now volume is typically light during the holiday period, but this is something to be aware of.  Also, I show you the chart below (the last 6 days; 10 minute bars) of the significant selling that came in during the last 20 minutes of 2017 on Friday.

Look at that volume spike.  I’m considering this to be an Up Thrust in the immediate term.  We’ll see if that selling continues after Jan.1, 2018.  This market is due for a correction from an historical perspective.  In the mean time I’ll show the pie charts of the stocks in the S&P 1500 Index.

# of Stocks in Accumulation / Distribution –

# of Stocks with Strong / Weak Price Strength –

So far, a fairly even split in healthy to unhealthy stocks, and that supports a continuation of the current trend (higher).  But let’s watch to see if tax selling comes in during January.

Oil & Oil Equipment, Latin America, Precious Metals and Basic Material sectors are in the lead for short term performance  The entire Tech sector is struggling right now.

That’s it for this year.  I wish you & your family a very Happy & Prosperous New Year !   ………  Tom  ……..

Charts by MetaStock & Worden bros. / TC200, pie charts by http://www.HighGrowthStock.com. All used with permission.

A Cautious Bounce December 8, 2017

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Dec. 12, 2017 – This week we saw the market revert back to the lower short term price channel (purple line) but remain well within the long term channel (dashed gray line).  OK, a bit of a pull back, and that’s to be expected after a very steady run higher.  But I do note a drop off in Money Flow and Volume Flow indicators.

Two possibilities: 1) volume dropping due to a lack of buyers, and also sellers, or 2) lack of demand to buy.  We’ll have to wait until next week to see if prices recover and exactly what volume does.  I’ve VERY cautiously labeled the peak as a Buying Climax and the swing lower an Automatic Reaction.  Are they really?  We’ll have to wait a few days to see IF there is the follow through necessary to confirm a Distribution price structure.  My feeling is likely not a significant top in the market just yet, but I’m always looking for a trend change.

The 6668 price level (blue line) would also help confirm any weakness, so I’ll watch that as well.  Until then, I remain invested and monitoring sector rotation.  Right now Financials, Telecom, Industrials, Banks and Consumer Goods & Services are strong.  Sure, some of this is seasonal, but “money goes where it’s treated best.”  Real Estate, Gold and Semiconductors are now some of the weakest sectors.  (That happened quickly!)

So the market is strong right now and the pie charts show the percent of stocks in the broad S&P 1500 Index confirm that.

Price Strength:

Accumulation (buying) / Distribution (selling):That’s about it for now.  Time to watch the reaction / bounce strength and be just a shade on the cautious side.  Have a good week.    ….. Tom ….

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

“Same Old” Up Trend November 26, 2017

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11-24-17 – Really . . . not much new here, just the “same old up trend”.  I’ve added the ‘short term” trend channel to the chart below (blue lines). We quick note that the price action is above the long tern channel (purple dashed) and at the top of the short term channel.  Money & Volume Flow indicators are bullish and strong.

Volume dropped off during the past holiday week (in the US) so we’ll wait to see what next week brings as far as activity.  I’m still looking for an Up Thrust in price on low volume, but so far not seeing it.  Prices are extended to the up side and nearly everyone is bullish waiting for the famous “Santa Clause Rally” into year end.

The table below shows where the short term strength is right now.

There’s not much choice except to remain invested for now, but extended prices always concern me . . . .  that’s where the risk is.

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

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

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