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Continuation Higher . . . For Now February 16, 2020

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Feb. 14, 2020 –  This will be short because there’s really not much to add from the previous 2 weeks; this market just continues higher.  Regardless of the reason / cause, it just continues . . . . until it doesn’t.  (tongue in check comment)

As shown in the above chart, prices continue to hug the upper trend channel.  That’s a little concerning because of the potential of being “over bought”.  All indicators confirm a continuation, so we must abide and be invested, at least for the time being. (click on chart to enlarge)  I have moved the support level up to 9493 on the NASDAQ Composite Index.  That would be the level where things start to peak my attention of a possible change; but until then.

Sector strength is relatively unchanged.  Technology related sectors continue to do well, but Real Estate has moved up too.

That’s about it for this week.  Continuing on, but be watchful of a change of character in this market.  When it does happen, it will happen quickly.   …………..  Tom  ……………..

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

Climbing The Wall February 8, 2020

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Feb. 7, 2020 – This market continues to “Climb the Wall of Worry” and keeps on going.  We’re half way through earnings season and so far its been pretty good, though a number of companies have given weaker guidance going forward.  Market Sentiment (chart below) has returned to positive, but Money Flow remains negative.  I’ve labeled the current price formation a possible Up Thrust.  This occurs at new highs with narrow bars (buying = selling) and light volume (decreasing demand)(click on chart to enlarged it for easier viewing)

Nothing is chiseled in stone so we’ll have to wait but this does indicate a reluctance to push higher in the immediate / short term.  The news will likely be a catalyst should any significant move up or down occur; trader are nervous.  Also I’ve moved the support level up to 9123 on the NASDAQ Composite Index.

Other than that, the table of short term sector strength is shown below.  Of note is the recent strength in the BioTech sector, likely driven by the Corona Virus scare.  The next couple of week will be a critical time for the virus.  It will either show signs of containment, or not.  The infection rate is pretty high right now.

Now much else to say.  I am “lightly long” mostly because it’s getting harder to find good stocks to buy.  This is born out by the fact that fewer and fewer stocks are driving the market indexes higher.  The majority are being left behind.  I’ll post a chart on that next week to illustrate the point.  Until then, have a good week.   …..  Tom  …..

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

Back Within the Channel January 25, 2020

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Jan. 25, 2020 – The price action on Friday afternoon took out all of the gains for the week.  We could kind of see it coming . .  narrow range bars that have overshot the top of the price channel.  A narrow bar shows that buying is being absorbed by selling and that they are nearly equal.  Bringing prices back within the channel can be considered a healthy sign.  I’m thinking that short term traders were nervous holding positions over the weekend, plus it’s always nice to “ring the cash register” every so often.  A little move was likely amplified by computer programs (a.k.a. “algos”) which instantly jump on a price move in either direction for a quick profit.  In & out.

Also of note is that the Money Flow indicator turn (barely) bearish and Sentiment has gone from Bullish to Neutral.  We’ll need to wait until Monday to see if there is any follow through past the first hour of trading.  We could go back to “buy the dips” mentality in short order.  So this test is a good one to gage the overall health of this market.  Sure, the virus and impeachment scare could be factors, but I’m hesitant to accept all of that right now.  (click on chart to enlarge it)

Broadly the 1500 stocks in the S&P 1500 looks like this . . .

Price Strength –

Accumulation/Distribution –Price Strength has weakened, but stocks in general have not succumbed to broad based selling (i.e. distribution) at this time.

Sector Strength –

I do note that some defensive sectors (Utilities and Real Estate) have moved up towards the top, though select Technology issues return strong (so far).  This correction is OK as long as it stabilizes at / near the support level of 9193 (red dashed line on the price chart) and it was expected.  We will know the actual strength early next week by observing the price bar spread (difference between high & low prices) plus the volume being traded.  Wide down bars on higher than average volume would confirm weakness.

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

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

Keeps Going and Going and Going . . . . January 18, 2020

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Jan. 17, 2020 – This market is like the TV “Every Ready Bunny” (a battery commercial).  It just keeps going higher and higher.  But . .  we know from experience that it WILL stop.  The only question is when.  So, for all practical purposes, there really is not much new to talk about.  A few earnings report last week (mixed) with the real activity starting next week.  All eyes will be on Consumer stocks earnings.  Nearly everyone is looking for the first signs that consumer spending is slowing.  Oh yes, the impeachment “wild card”; who knows?

What is of concern is that the price bars are hugging that upper trend channel line (purple).  The daily spread on those price bars are fairly narrow, indicating seller and buyers are about equal with the bias toward the buyer demand, thus prices increase.  Volume is back to “average”, so not much of a clue there.  (click on chart to enlarge for easy viewing)

Let’s look at the stocks in the broad S&P 1500 Index and see where they are in comparison to each other.

% of those in Accumulation / Distribution% of those with Price Strength

Yes, lots and lots of “green” in both pie charts.  The market IS strong with the majority of stocks participating in the move.  But (again) this is unusual in that it can not last for extended periods of time.  So, we must be careful.  Bad news of any kind will likely re-rail or at least  cause a cause / correction in this rally.  For now, we can only stay the course and closely monitor.  Looking for selling . . . .  wide range down bars on high volume.  Ouch !

Sector Strength

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

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

Pushing Higher January 11, 2020

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Jan 10, 2020 – Wow, has this market been resilient or what?  In the face of bad news both domestic and geo-political, it just keeps going.  General concern is the timing of the overall business cycle.  The basic idea is that a capitalistic economy goes through cycles of expansion and contraction.  Expansion and growth are the result of a recession and a contracting economy (pent up demand).  The contraction occurs with things get “so good” that speculation gets out of control.  Read into that the recent mortgage “melt down”.

Next week, Tuesday I believe, we start the 4th quarter earnings reports.  Concern is that with all of the expansion and good news over the past 8 or so years are we in for a let down?  This market is priced for near perfection and broad disappointing earnings reports will catch up to the current “fear of missing out” philosophy.  Now that may not happen . .  yet, but it will eventually.  The key figure in the US is consumer spending which makes up about 70% of the overall economy.  Watch that for signs.

From the chart above we only see a positive trend, and we’re trend followers.  But I note that prices remain near the upper trend channel line and while wonderful, can lead to disappointment.  (click on chart to enlarge it)  The first level of support is 8934 on the NASDAQ Composite Index, next lower is 8790.  So I’ll get cautious with a close below 8934, and if it’s on high volume (significant selling), I’ll get very concerned.  In reality a bounce down to 8790 would be “healthy” and set things up for a run even higher IF earnings are reasonably healthy.

The (short term) sector strength table is shown below.  Not much changed but I note that Heath Care is showing recent strength.

Not much else to say.  So far in this climate one must be in the market . . . .  I just get concerned when everything and everyone is so complacent.

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

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

Continuation (for now) January 4, 2020

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January 3, 2020 – First off, I wish everyone a very Happy, Healthy and Prosperous New Year.

With a shortened and ultra low volume week, this posting will be short.  Overall, not much has changed.  The chart below shows that we remain in an upward trending price channel (purple lines).  Money Flow is showing some signs of weakness, though that’s preliminary.  All other indicators remain strongly positive.

One item that caught my attention was the significant volume increase on Thursday and Friday last week.  The activity significantly above a regular trading day (the red line is +30% above average volume). . . unusual for a holiday period.  Perhaps early signs of investment shift in the new (tax) year?  Not to get ahead of ourselves, but something to watch closely next week . . .  rotation, either by sector our to cash.  (click on chart to enlarge)

The sector strength table is below.  Again, little changed, Oil, Technology and China remain strongest for now.

 

Have a good week and keep an eye on volume confirming price (direction).  That will be a pre-cursor to strength or weakness.       …………  Tom  ………

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

Continuation with Caution December 14, 2019

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Dec. 13, 2019 – This sounds (and is) a broken record.  One that just keeps on playing the same “groove” / track.  Case in point is the trend channel on the chart below (purple lines).  Note the rate of the incline before last week (price to the upper line) and that of price to this week (lower line).  Prices appear to be following (progressing) at the same rates.  OK, that’s all well and good plus we’re at the “all time high” scenario.  But . . . . note just how far higher prices would have to go to catch up to the upper trend line.  My support level is at 8600 for the NASDAQ Composite Index.

Damage was done a couple of weeks ago (about 10 bars back).  I’m on the lookout for a minimum of a “change of the rate” of increase or a deeper pattern change.  (click on chart to enlarge)

The China trade news could and likely will throw a monkey wrench into the entire market structure; either higher or lower.  But the Trump Tweets are getting just a little old.  (huge deal coming, big news, etc., and then nothing)  In the mean time I have to go with what I see.  Price trend up, most indicators are positive.  The notable exception is “Money Flow” which turned lower (red line above).

Sector Strength (in the short term) remains about the same.  Select Technology issues and Bank / Financials.  Watch for reports on Christmas retail sales.  They will be quite the bell weather for the economy.  I note that November sales were a disappointment.

That’s it for now.  Have a good week and be careful with the news whip lashing these markets . . . . .  the risk increase at the “all time high”.   …………  Tom  ………….

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

Slow Markets into the (U.S.) Holiday November 23, 2019

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Nov. 22, 2019 – I continue to be a little on the cautious side, mainly because of the run up we’ve had and more than a few “non-price” indicators turning negative.  As an example, the amount of money flowing into Money Market funds has significantly increased and market breath is declining.  The number of stocks hitting new lows are about the same as hitting new highs for the year.  I note the market Sentiment indicator below is also negative.

So what’s a market technician to do?  Since prices are going higher as noted by the market indexes, one should follow the trend noting that it is a “stock pickers” market.  Not everything is doing well.  BTW, money and volume flow indictors (above) are still OK.  The near term support level on the NASDAQ Composite Index is at 8441 (a pause level) and the next lowest is at 8325 (a level for a modest correction).  Economic and trade news is driving the market now; corporate earnings are mostly out of the way.

Looking at the stocks in the broad S&P 1500 Index we see the following:

% of Stocks in Accumulation or Distribution –Generally fairly balanced between the 3 levels; usually a healthy sign.

% of Stocks with Price Strength –Here a little different story.  More red than green, but far more yellow.  This gets back to “non price” market internals.

Short Term Sector Strength is in the table below –

Heath Care / Pharma and Financials are leading the pack, with Technology stocks a little behind.  But note government bonds making a rise too, and Utilities.  Hummm, a play towards defense perhaps.

Next week in the U.S. is a slow one going into the Thanksgiving holiday.  I’d expect low volume, but also note that late last week had low volume as well.  An early “drop” on the holiday or a “Lack of Demand” (i.e. buying)?  We may have to wait for the week after to find out.  Until then  watch what sectors are increasing in strength and which are weaker.

Wishing all in the U.S. a Happy Thanksgiving.  Take Care.       ……….. Tom ……….

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

Direction Still Up: Clouds Forming? November 16, 2019

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Nov. 15, 2019 – Make no mistake, the direction of the US markets remain “Up”, but . . . . storm clouds may be forming.  Two signs of that are the percent of “Smart & Dumb money” (from SentimentTrader. Com) and my own sentiment composite (top pane, chart below).  The difference between “Smart & Dumb Money” is fairly high indicator of where market tops happen.  That does not mean “all Hell is breaking loose”, but it does raise the caution flag.  The “big guys” are cautious.

Note just how far & fast this market has come in the 6 weeks.  Due for a change or at least a pause?  I’m certainly thinking that is a strong possibility.  It’s just natural.  I also note that price action “Price Strength” is back to Neutral.  Time to Sell?  No, but not a great time to buy either.  Let’s continue to monitor the reaction of the market to any news, whether it be earnings, geo-political or the like.  That will be a clue.  Trade news is going to be a key item here.  Right now we’re being whip-sawed back and forth on that front.  There is a big incentive to inflate these market over the next year (i.e. election); watch the big picture carefully.  (click on chart to enlarge)

Short term, here’s where the sector action is:

That’s about it for now.  I’m in there with significant positions, but getting more uncomfortable as this market pushes higher.  Watch volume spikes on big move days.  Also be aware of “Lack of Demand” (low volume), especially over multiple days.

Have a good week.    ………… Tom  ………..

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

Continuation Higher November 8, 2019

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Nov. 8, 2019 – What’s there not to like?  The market gapped up higher on Monday and pretty much stayed in a narrow range most of this week.  Ignoring the impeachment and on again – off again China trade news.  So for now, I’ve just got to stay in this market even though I’m not entirely comfortable with it.

The chart above shows all positive indicators; not much else to say.  (click on chart to enlarge it)  Let’s take a look at the stocks in the very broad S&P 1500 Index below.

Price Strength –

Over 50% above their 20 day moving average, so strong price movement for most stocks in the index.

Accumulation (buying) & Distribution (selling) –

(Again) over 50% of the stocks indicating Accumulation of shares.  Maybe a little over done, so a pause is not out of the question here.

Sector Strength –

The Technology sectors continue to lead this market higher in the near term.

So the bottom line is this market continues higher until something forces investors to get nervous and sell.  We’ve come up a fair amount and survived (most) of the 3rd qtr. earnings.  The seasonality is generally good for the rest of the year, so got to go with the flow.  When changes comes, I’ve got a feeling it will come very quickly.  Hopefully the stair step higher will continue in the mean time.

Have a good week.      …….. Tom  ……..

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

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