jump to navigation

Back to the Trading Range December 8, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Dec. 7, 2018 – Wow what a week.  Even though the markets in the US were only open for 4 days (because of the Bush funeral) there was volatility galore.  This market appears to be settling in a trading range between 7520 and 7000 on the NASDAQ Composite Index (see chart below).

Both the long and short term channels are pointing lower but they are beginning to flatten out.   I know many people feel strongly that the markets will either go up or down a fair amount before the end of the year, but what they may be missing is that we just remain within this basic base building range until some economic news sends the markets in some other direction.  I note that Market Sentiment (top window), Money & Volume Flows are Bearish.  Price Strength is Neutral.  Actually, this rather supports a trading range theory.

Looking at the stocks in the very broad S&P 1500 Index –

Accumulation / Distribution:Far more stocks in Distribution, but about equal to those in Accumulation & Neutral.  OK, weak but not terrible.

Price Strength:Here is where we note a strong bias toward weakness in price.  No surprise since this market has fallen a bit since it’s highs.  Bottom line: yes prices have fallen, but we’re not seeing a major rush to sell and get out of the market (i.e. not a major Distribution . .  at least not yet).

Stocks that are holding there own in the sectors of Utilities, Real Estate, Consumer Staples and (even) Gold Miners.  These are all defensive sectors to hide out in IF you must be invested.  Right now I’m heavy in Cash (still) and have a small “hedge on” via a Bear fund as “insurance”.  No need to be heroic here since there is no clear path in either direction.

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

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

Market at a “Hopeful” Point December 2, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Nov. 30, 2018 – Overall a positive market reaction since a cool Thanksgiving week.  Currently I’d call it “Hopeful”, but quite an all out Up Trend (even in the short term).  Looking at the chart below I’d really like to see the NASDAQ Composite Index close above the 7332 level and we’re very close to that now.

Sentiment is positive as is Money Flow and Volume Flow has just turned up.  That’s all good, but the structure still is in a short term down trend with lower lows and lower highs (purple channel).  There has been so much damage done since late September that some base building is in order before we can be confident of any resumption of a Bull market.

Late word is that the China tariff increases have been put on hold for 90 days while a longer term agreement is being worked out.  The market will initially like this but again the “devil is in the details” and a longer term agreement will need a lot of work and compromise.  Are both sides willing to compromise?  We’ll see.

Here’s a list of short term sector strength –

We’re starting to see some upward movement is the previous market leaders like Consumer Goods, Technology and Healthcare.  I’m beginning to take small cautious positions in stocks and the “Q’s” index (NASDAQ 100 Index).  Continued strength will quicken the exposure while the opposite will be true.  This market is “hopeful” but not healed just yet.  What type of response we get from the China news and particularly how long it lasts will be an indication of overall strength.

Have a good week.    ………  Tom  ……….

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

Trend Lower, but at Support November 24, 2018

Posted by Tom in Thoughts.
Tags: , ,
add a comment

11/23/2018 – This will be short to match the abbreviated trading on the U.S. exchanges and the very low volume due to the Thanksgiving holiday.  Well the trend continues to be down but we’re right at an important support level of 6880 (red line) on the NASDAQ Composite Index (see below).  To move higher I’ll have to see a close above 7225 (green line) and some measured buying volume returning.

Trade tariff concerns, BREXIT and general international economic concerns are just making buying common stocks a difficult decision.  Oil has dropped dramatically over the past month and there just is a negative “funk” in the world markets; no one is in a hurry to do anything it seems.  I sure would like to see a Selling Climax to wash out the weak hands.  There really aren’t any “strong” sectors presently, so I’ll forgo that for the time being.

I thought it would be nice to take a look at how the big trend following hedge funds are doing as we close out the year.  This data is from the website http://www.automated-trading-system.com/trend-following-wizards-october-2018/ , it’s free and you too can subscribe to it; it comes out monthly.

You can see that there are some very big funds with assets under management (AUM) in the billions of $.  But . . . look at how they are doing !  So don’t feel to bad about your own performance as these pros typically get 2% fixed of assets + 10% of your gains.  It doesn’t look like a good year for any of them.

That’s it for now.  Next week should set the environment for the rest of 2018 as many traders return.  I’m heavy in Cash right now and that looks OK to me.

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

chart courtesy of MetaStock; used with permission

Better but, “Wait For It !” November 2, 2018

Posted by Tom in Thoughts.
Tags: , ,
add a comment

Nov. 1, 2108 – The British have a phrase “Wait for It!”, which is “English” for ‘Be Patient’.  And that’s about how I read this market.  Yes, improving but not enough to start phasing back in just yet.  The chart below shows prices breaking above the “short term channel” (purple line) and Money Flow improving.

Market Sentiment remains Bearish as does Volume Flow (above).  Another reason that I’ve observed on Thursday & Friday (both daily up bars) on an hourly chart, is that the intraday volume is rather low.  The only thing I can surmise is that prices are going up because of a lack of sellers and opposed to buyers rushing in.  The NASDAQ Composite Index hit my 7443 resistance level (dashed red line) on Friday.  Just above it is the 7520 level which is via a “Wyckoff Significant Bar” (weekly); that’s the level where buyers previous came into this market.

IF this market is to continue higher I’d like to see a close above 7443, but better yet, a close above 7520.  And to round out confirmation I’d like to see volume increasing on up bars; i.e. buyers coming into the market.  Could it be that the last two days were just a short covering rally?  Yes, it could be.  With all of the damage that was done in October it makes sense that we need some time to consolidate and build some type of a base before a spring back higher.  So, for the time being, I’m skeptical about this two rally.  Hence: “Wait for It!”.

Even with all of that, I did close out my market shorts on Thursday and went to a very heavy Cash position.  My model rules “required” the short close out, so it’s not good to second guess it.  Besides, Cash now give me the ability to go in any direction.  Nuff said.

The table below shows that sectors are doing in relation to the others.  In a nut shell . . . consumer products are the safe havens for the time being.

That’s it for now.  Have a good week and those of you in the US . . . Vote !     …………  Tom  ………….

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

Not Much New; Maybe Next Week October 19, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Oct. 19, 2018 – As the headline reads, “Not Much New; Maybe Next Week”, pretty much sums up the past week ending just about where it began.  We’ve had a few earnings reports but the big ones start to roll in next week.  Those earnings and the forward guidance could very well likely tip this market one way or the other.  It sure seems like the momentum & feel indicate a move lower and there are many investors waiting for something to propel the market in one direction or the other.

We’re right at the infamous 200 day moving average on many US indexes and recent behavior would say that is a “buy the dips” place to jump in.  But this time things just feel “different”.  Small Cap(ital) stocks and Tech stocks are weak . . . very weak.  So where is the leadership coming to drive this market higher?  Not the Drugs or Financials.  Consumer stocks have already made a big move . . .  so where?

The answer must be some super blow off earnings that is totally unexpected; or a news item.  A China trade deal could do it, but that doesn’t seem to be happening soon.  Hence the “feel” of going lower.
The broad NASDAQ Composite Index chart above shows the weakness and a lack of commitment in any direction in the short term.  We can’t break above the 7700 level and fell back to the 7443 level.  The next target (lower) would be 7205.  All of the indicators on the chart remain bearish for now.

Let’s look at how the stocks in the S&P 1500 Index are holding up.  The pie charts graphically show the percent of those 1500 stocks that are in Accumulation (buying), Distribution (selling) and their Price Strength (over the past 20 days).  There’s a lot of red there, but that’s not surprising.

Accumulation / Distribution –Price Strength –What I found interesting is answering the question “So just what stocks are doing well?”.  “Well” is a matter of perspective, since it’s being compared to all other stocks in the index, “Well” could be just “Better Than” everything else.   But the sectors that are doing “Well” and holding their own are centered around Utilities and Consumer Foods; all defensive sectors.  Another sign perhaps that no one is buying this dip right now.

I have slowly sold off weak stocks and “Hedged Out” (with a bear fund) the rest of my holdings.  The only things looking relatively OK from a sector fund perspective are Rising (interest) Rates and Stronger Dollar.  We need to be patient right now.  The time to buy will come, we just don’t know when just yet.

Have a good week & let me know what you like me to cover (or not to cover).  Always happy to get feedback.  Cheers !  … Tom  …

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

Watching & Waiting for Something September 29, 2018

Posted by Tom in Thoughts.
Tags: , , , ,
add a comment

Sept. 28, 2018 – We’re in a classical trading / consolidation range and the market seems to be just “watching & waiting” for a reason to go up or down.  There is plenty of news to spark things, but we just haven’t seen “The Big One” yet.

8105 is my resistance level (green) and 7976 my support level (red); these are (my version) of Wyckoff “significant bars”.  I’ve mentioned before that the low price of a weekly bar that closes much higher on volume is a significant price level of support.  That’s where “buying” last came into the market.  As is the high price of a weekly bar that closes much lower on volume is a significant resistance level; where “selling” came in.  The tricky part is in a consolidation phase where these two levels tighten up and get close to each other.  But, my feeling is that we may be in an Up Thrust phase of a Distribution structure; that remains to be confirmed.  Let’s not get tooo bearish just yet though.
I note market sentiment remains negative, Money Flow a little bearish, Volume Flow just sideways, not saying much.  (Short term) Price Strength just kicked up to slightly bullish.  Long term trend line channel is up and Short term channel shows a price break above the upper line, which is bullish.  The problem with (my) automatic Trend Channel lines is that they need price pivots (swing highs & lows) to reference and draw off of, and in a consolidation, that can take a while to develop.  I’m still thinking we could head lower to around 7700 on the NASDAQ Composite Index.

Let’s look at where strength is in the market in the short term –
Biotech, HealthCare, Energy (oil) and a very few Technology companies are showing up in my stock scans.  Japan has been doing well and I’m watching Latin America as well.  China is a rollercoaster for the time being.  Well, there’s not much else to cover.  I do have positions on but also a light hedge” just in case.  I’ll put more hedge on or remove it when this market gives me a better indication of direction.  One thing to gauge the market strength is how it reacts to news (either good or bad).  I learned that a long time ago taking a course from Michael Price.  (“Strong markets don’t react much to bad news, where Weak markets fall hard”.)  It will be interesting to see how this market reacts in the coming weeks.

Take Care, Good Trading and have a good week.  ….  Tom  …..

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

Consolidating in a Trading Range September 22, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Sept. 21, 2018 – With all of the talk about “all time highs” let’s keep in mind that we’ve not gotten above the late August levels (NASDAQ Composite Index wise).  So let’s not get too carried away with the strength of the market.  Money and Volume Flow is holding steady but no one is rushing into this market right now.  The Long Term Channel is still pointing up but we’re hovering around the 8000 level of price support (red line).

I am about 80% invested with a small “hedge” on as “insurance”.  My hedge is short the Q’s, a.k.a. technology which has not been able to get much going as of late.  What I do see is strength in Japan, Industrials, Rising (interest) rates and Healthcare.  China and Latin America are beginning to draw my attention, as well as some select energy stocks.

We haven’t looked at the broad S&P 1500 stocks very much so it’s time to see if there is any underlying strength or weakness indicated.  Below are pie charts of the number / percentage of stocks within that index that fall into three categories.

Price Strength –Those in Accumulation / Distribution –

Overall it’s looking like a relatively even split between the three categories.  That generally is healthy and status quo as far as trends are concerned.  My current thinking is that we’re in a price consolidation zone right now.  There may be some sector shifting and repositioning for the next move, which is likely higher unless bad news stops the trend.  And . .  that could happen in this environment.

That’s about it for now.  Looks like a heavy news week next week and how the market reacts (or doesn’t react) will give us a clue as to its strength.  Have a good week.      ………..  Tom  …………

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

Some Improvement, But Caution Remains September 15, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Sept. 14, 2018 – Late last week overall conditions improved, but just a bit.  You can see on the chart below that Money Flow & Price Strength got “better”, but the other indicators remain “Bearish” overall.

What I do find interesting is the volume bars at the very bottom, especially on Friday (the last day).  “OK” but certainly no one was rushing in to buy bargains off of this dip.  The spread between my Support (red) level at 7976 and my Resistance level (green) at 8105 is very tight.  That pretty much echoes the tightness of the daily bars and the sideways consolidation as well.  It just looks like there is too much indecision out there for anyone to be excessively Bullish or Bearish right now.

Looking at where industry sectors within this economy stand (in the short term) I note in the table below are generally defensive or stable (boring?) sectors.  There is not much leadership coming from Financials, Technology or other (typical) leaders in a bull market.  Now, that could change, but for now it goes back to indecision.

The boring stalwart of Industrials and Rising Rates seem to be the strongest areas for the time being.  I’m keeping some powder dry for the time being. That’s about all for now.  Have a great week.    ………  Tom  ………

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

Off The Top Channel September 8, 2018

Posted by Tom in Thoughts.
Tags: , , ,
add a comment

Sept. 7, 2018 – As pretty much expected from last week, price did soften and headed lower bouncing off the upper long term channel (dashed gray line).  An approximate estimated low price would be in the neighborhood of the lower channel line, which I’ve highlighted as the 7700 level.

Of worthy note is that the Sentiment, Volume and Money Flow indicators have turned down.  Price Strength is down & red as well.  Time to be extra watchful to see how your holdings are reacting to the lower general market.  A quick look at the chart above does not indicate “panic selling” as the volume is modest to lower.  It appears that what we see is just a lack of buyers for the time being.  Hence (if things don’t deteriorate) this should be a shallow correction; thus the lower channel as a likely target.

I’ve pulled in my Index long positions to Cash and cut back on my sector holdings.  My market model suggests hedging my stock positions IF further weakness develops.  Buying a “bear fund” to hedge is like buying insurance; one holding helps to counteract the other.

The pie chart below show a mild weakening, but so far nothing major.  (These show the % of the total stocks in the broad S&P 1500 index that are in this status.)

Price Strength –Accumulation / Distribution –I really don’t see any sectors, whether they be long or short, that merit much consideration to buy currently.  IF the market continues to soften then sector bear funds may be in order, but let’s not jump to any conclusion just yet.  Of course, news is always a “wild card”.  This market is weak, and piling on bad news would push it even further lower.

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

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

At the Top of the Channel September 2, 2018

Posted by Tom in Thoughts.
Tags: , ,
add a comment

Aug. 31, 2018 – We’re at the top of the “Long Term Channel” (dashed gray lines) again and this is where this market typically pulls back.  Think of it as 2 steps forward and one back.  So far the pull backs have not been significant and the net progress continues.  Things looks fairly positive on the chart below.

Market Sentiment is Bullish, Money and Volume Flows are positive / Bullish and we’ve broken above the “Short Term Channel” (purple lines).  Of note is the upward move for price support to 7976 for the NASDAQ Composite Index.  Not much else to say except a pull back here would not be a surprise.

What is leading the market higher (in the US) are: Healthcare, Small Cap. Growth stocks (in general), Consumer Services, Technology, Biotech and Internet sectors.  What will be interesting is if we see leadership broaden beyond technology based sectors as we head into September.  Also, when a down blip occurs, how will these sectors react?  Will the sell off be shallow & brief or severe on high volume?  That will give us a key to the overall heath.

Right now I’ve got to “go with the flow” and the flow remains positive in the near term.  Have a good week.    ………….  Tom  …………

Price chart by MetaStock; pie chart. Used with permission.

%d bloggers like this: