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Wait For It ! June 23, 2018

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June 22, 2018 – A quick look at the chart below implies the early stages of weakness.  The circled indicator on Fridays Close are all headed in the same direction.  My master hedge indicator also shows a trend toward heading to Cash IF the markets don’t rally on Monday.  Also I note the big jump in volume with a narrow range down bar; selling into strength perhaps.  The bottom line is that risk has increased and this is no time to be “hanging out to dry”.

IF this market does correct, how much and for how long?  I have no idea, but likely this would not be a major move; just one for the “hot hands” to dump and reload for the next move up.  Hey . .  it’s Summer and time for some selling into the Fall (possibly).

OK, here’s a list of sectors by strength.  Of note we see Technology, Industrials and Finance toward the bottom . . . not showing leadership.  Just a thought.

Since readership is down, I’m going to make things “short and sweet” . . . . perhaps many are on vacation.  🙂  Cheers and have a good week.   ………….  Tom  ………….

Ditto . . . Not Much Change June 18, 2018

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June 15, 2018 – I’m on the road so this will be brief; but then again, not much has changed.  The market continues to shrug off trade tariff and political issues, so the status quo remains in effect.  The steady rise continues (note chart below), and thus we must follow until weakness appears.

The very near term warning level would be around 7669 (a 3 bar low), with the major concern coming in at the 7354 level.  But so far, we see none of that weakness, however a pause would be totally appropriate in here.  I remain looking for opportunities in Consumer Services & Goods as well as Internet and Healthcare.  I’m “short” Latin America.

More details next week, but really not much has changed.  Continue to “ride the wave”.  Have a good week.  …  Tom  …

Sluggish Market May 26, 2018

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May 25, 2018 – Not much movement in market in general this week.  The S&P 500 index was up a modest 0.31%.  Most of the market movement was in mid and small cap stocks (i.e. non-S&P 500).  Note the broad NASDAQ Composite Index remained bogged down near the 7421 level.  We’ve talked about the significance of that level last week as being the last point were “buying came into the market”.  What is needed to move higher is more buying, but it looks like investors are taking a ‘wait and see’ approach.

Geo-political issues continue to cause caution.  Q: Why invest new money when things are bouncing around so much?  Good point.  Oil got hit hard late last week with comments coming out of Saudi Aribia.  Note how far Oil fell in the table below (red circle); was in the top 5 last week.  That may be a short term reaction, but we’ll have to wait and see next week.  Indicators remain bullish / positive, but it sure would be nice to see a decisive break above 7421 (blue line on the chart).  Not much else to say right now so I’ll close with a look at sector strength in the US stock market.

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

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

Market Meets Resistance May 19, 2018

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May 18, 2018 – The market (as measured by the broad NASDAQ Composite Index) met resistance near the 7421 level (blue line).  All week long it hovered around that level and just couldn’t break through it decisively. Remember that this level is determined as a (Wyckoff) “Significant Bar” on a weekly scale; that’s the weekly high where selling last appeared.  Since the market “balked” the last time it was there it is significant to note and monitor.

This is not a bad omen, it just means that in an average market one would expect the price action to slow before breaking one way or the other.  The short term indicators remain positive from Market Sentiment to the Money & Volume Flows.  In order for the market to move higher we’d like to see a Sign of Strength (SOS) which would be a daily bar with a wide range, closing near the top on increasing volume.  That would indicate buyers stepping in.  Attention is given to the fact that as we approach summer it is a typical slow / weak season.  I don’t subscribe to the phrase “Sell in May and Go Away”, but summer is usually slow.  We could just bounce around in this range for a few months; that would not be surprising.

Looking at the market health from a different perspective, we note the number (i.e. percent of) stocks in the S&P 1500 Index that have strong price action and those in an Accumulation, Distribution or just Neutral phase.

Price Strength –In Accumulation / Distribution –Sectors that are doing well include Energy (Oil & Services), US Small Cap Index, China, Internet and Basic Materials.  Latin America is one of the weakest areas,  That’s about it for now.  Have a good week.          …………  Tom  ……….

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

Breakout Up, but One More Hurtle May 13, 2018

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May 11, 2018 – A quick look at the chart below confirms an upward breakout.  Sentiment, Money Flow, Volume Flow and Price Strength are all positive.  But more important are the closes above previous Support levels.  But . . one more hoop to jump through is the 7405 level, just above Fridays bar (light green line).

The 7405 level was the last level were Buying Stopped on a weekly basis.  That level was generated back in late March.  With that small caveat I’m “comfortably long”; that’s “invested but not aggressively so”.  The thing I’m looking for is where the market leadership is located.  During the post election run upwards Technology, Semiconductors and Consumer Goods were the darlings.  Tech and Oil have returned to leadership but I sense some hesitation.  Banks, Financials and Small Cap stocks in general are showing signs of strength and that would help maintain confidence in any continued upward movement.

Earnings have been good, but with the massive corporate tax cut they should be.  For now the market is looking way past this reporting period.  A run in Basic Materials would signal a longer term bullish look for the world economies.  For now here’s how sectors are looking in the short term:

Looking for leaders in the “green sectors” at the moment.  Also of note is the recent strength in China stocks.  Have a good week.  ….  Tom  ….

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

Looking for Market Follow Through Next May 5, 2018

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May 4, 2018 – The markets were generally lower this week until Friday; that’s when the jobs report came out.  Everyone found what they wanted in it.  Unemployment dropped to 3.9% (low) and wage growth was minimal (low inflation pressures).  So Friday was a recovery day.

I had a small hedge in place to protect our portfolios in this environment, but took them off (according to plan) on Friday.  That market model is now in 100% cash waiting for confirmation of a trend . . . in either direction.  I’ve placed Wyckoff key bar labels on the chart to signify a possible structure scenario.  Of note is the low on Thursday as a potential LPS (last point of supply).  Such a structure is Bullish and (theoretically) the market should take off higher very soon.  What does concern me is the rather low volume on Friday, indicating a lack of sellers and mostly low volume buyers that pushed prices.  Covering shorts it appears to me.

Of note also is the close very near the 7205 level (red line).  That was our resistance level short term.  I need to see a break above 7332 to feel more comfortable though.  Sentiment is positive but Money and Volume Flows are pretty neutral right now.  Price Strength is neutral to bearish as well.  Let’s see how the stocks in the broad S&P 1500 Index are fairing:

% of Stocks, Price Strength –

% of Stocks in Accumulation / Distribution –

Both pie charts are fairly even and that’s usually a healthy sign.  I’m still looking at more defensive sectors like Rising Dollar, Japan, Oil and Utilities now, but that could change quickly next week IF the market goes higher.  That’s it for this week.  The coming week should provide us some clues for the next move,  but uncertainty remains with earnings and geo-political issues in play.     ………..  Tom  ………..

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

At a Make or Break Point April 22, 2018

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April 20, 2018 – This market appears to be at a “Make or Break” point, in that it stopped at a resistance point (near 7332; NASDAQ Composite Index) and my Wyckoff “bar strength” indicator has (finally) given a strong bullish reading.  The resistance point goes back to early February where we had a “significant weekly bar” which is where buying last came into this market (blue line).

While Volume & Money Flow indicators are now looking more bullish but I think we need a confirmation before we get too optimistic.  A close comfortably above 7332, especially on increased volume, would help.  While I’m cautiously invested now, I still have cash to deploy and I’m thinking that we’re close to putting both feet back into the water.

This is a big week for earnings announcements so that will have a large bearing on how the market moves from here.  I am “in” Oil & Oil Services and well as Precious & Basic Metals.  Both Japan and European sectors merit attention.  While the US Technology sectors have improved, there still remains concerns especially in the Semiconductor sector.

So this week should provide us with a sign of breaking out above this resistance or a failure which would usher in concerns and lower prices.  We shall see.  Have a good week.  ………….  Tom  ………….

chart by MetaStock; used with permission

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  ……….

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