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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.

Pivital Point (?) March 11, 2017

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Mar. 10, 2017 – This market could be at a pivotal point.  On the Bear side, we’ve seen the momentum in market leadership steadily fall for weeks now.  The momentum in the Advance / Decline line has dropped quite a bit.  Now, this does not mean the market “has to” fall or correct, but it is an indicator of slowing and shallow market leadership.  That typically means either a slight correct / pause in the up trend or a more significant correction.  Also, Small Cap stocks (considered to be higher risk) are not nearly as strong as the Large Cap stocks; agressive speculation drying up.

On the Bullish side, the VIX options index remains low (option traders are not concerned) and price support is holding up well.  The chart below shows this price support.  (click on graphic to enlarge it)

The Money Flow index (top window) is hovering around zero / neutral, so there is no significant selling pressure at this time.  Same goes for the Volume Flow.  My Sentiment indicators remain “Bullish”.  Until that purple lower trend gets broken on a Close and (more over) the 5748 support level gets taken out, I have to remain invested and long overall.

Price strength of the stocks in the broad S&P 1500 Index are pretty mixed, but tend to be much less strong compared to 2-3 weeks ago.

Accumulation & Distribution in those S&P 1500 stocks show a slowing down of buying (Accumulation) as well.

Here are the industry sectors that I’m trying to participate in for the time being.  This is where the strength is currently.

That’s it for the time being.  Take Care & Good Trading.      …….. Tom …….

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

Noth’in New February 24, 2017

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Feb. 24, 2017 – This is sounding like a broken record because most markets worldwide continue their upward pace.  I do note a slight change, in that some defensive sector are showing some strength.  Notably, Utilities, Tobacco, Aerospace-Defense and REITs.  (See the table below.)

nasdaq

The NASDAQ Index remains within it’s price channel (purple lines) and I’ve moved my “Wyckoff Support” level up to 5748; which is derived from the Low of a weekly significant bar.  Sentiment, Volume & Money Flow indicators remain “Bullish”.  Volume did drop off late this week, so we’ll be watching for signs of an Up Thrust on low volume . . . a warning sign.

Here’s my sector strength watch list:

sectors

The overall strength also shows itself in the broad S&P 1500 stocks:

% of stocks, Price Strength –

price-strength

% stocks in Accumulation & Distribution –

a-d

There’s a fair amount of green up there and expectations are high for tax cuts, government spending (infrastructure & defense) and lower regulation.  If the markets get concerned that they are not going to happen, that could mean trouble; but not yet.

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

Chart by MetaStock; table and pie charts by http://www.HighGrowthStock.com; used with permission.

Year Ends with a Whimper December 31, 2016

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Dec. 30, 2016 – First let me wish everyone a very Happy & Prosperous New Year.  With a new administration in the U.S., continued world geo-political issues and a stock market at / near all time highs, I’m sure that it will be dynamic.  May you always be on the “right side of the markets!”

The past 2 weeks have now proven to be a time of selling.  We can see that from the “Money Flow” indicator at the top (below the zero line).  The good news that it has been rather light.  We can see that in the “Volume Flow” indicator below (flat & has not crossed the red moving average).

nasdaq

I’ve spotted in a new reverse trend line (purple) and it coincides with the 5340 level of near term support.  While Sentiment is neutral, my other trend indicators (not shown) have recently put up the yellow flag of caution.  From Wyckoff analysis we know that the “CO” (a.k.a. smart money) will liquidate inventory over a period of time when the market remains strong to camouflage their activity.

Is this an Up thrust after Distribution?  On an index chart it’s hard to tell because indexes are averages of many stocks.  Also the light holiday volume makes it tough too.  My concern is what happens during the first week of 2017.  We could see significant tax selling as profits are booked early in the year and taxes delayed; maybe even lower.  For the past couple of weeks VERY few stocks have made it through my potential candidate filters.  A sign of weakening.  Right now I don’t see a significant rotation from one sector to another, at least not yet.

This could be just a pause with buyers sitting on the sidelines, and with the volume light, that’s the indication.  But let’s pay very close attention to the coming week (actually 4 days; US & most European markets closed on Monday).  I think a test to 5340 is now a given and if we don’t see buying coming in it could easily go down to 5250.  That would be the pre-elections lows.  Watch the spread of the price bars, the volume of those bars and what stock sectors are moving.

For those of you who want to see a performance review of major hedge & commodity operators, please click on the link below:  http://www.automated-trading-system.com/trend-following-wizards-november/ .  This data is through November, so not complete 2016 data, but you’ll see how the “big guys” have done this year (hint: not all that great).

Here’s an overall look at market strength using stocks in the S&P 1500 Index –

First, Price Strength:

price-strength

Next, # in Accumulation or Distribution:

a-d

The pie chart below shows the sectors of stocks that have made my initial cut for buying candidates.  It also gives me an idea what sectors are strongest now by the number of stocks in those sectors.

sectors

As always, click on a graphic to enlarge it for easier viewing.

That’s it for 2016.  Watch the early 2017 movements.  It could start of with a bang.   …….  Tom  ……

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

“Trump Rally” Fading December 3, 2016

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Dec. 2, 2016 – Well, “all good things must come to an end” and right now it looks like the recent “Trump Rally” is indeed slowing down.  Nothing could continue at this rate for very long anyway.  On Friday the NASDAQ (below) stopped at near the 5342 level, which is a minor support area.  Notice the narrow bar where buying = selling and the indicators that show that the buying enthusiasm is in fact slowing down.

nasdaq

The next question: is this just a pause or the start of a different trend?  Right now, no one can say for certain.  If the indexes rally back up, what type of volume do we see?  Wide spread bars on at least average volume would be Bullish and indicate this is just a pause.  However if we see continued weakness, especially wide down bars on high volume that would be Bearish.

It’s hard to get too Bearish at this time of year which is a traditionally Bullish season for the markets.  So we may just bounce around in here and wait for the New Year (that’s my guess).  What appears to be doing well are Banks, Oil Services, Oil, Japan, Basic Materials and Financials.  The Energy sector is very volatile, so caution is advised.  Many of these sectors have come up very quickly and that’s a concern too (late in the moves?).

Overall the very broad S&P 1500 stocks look fairly positive right now.  Many are in Accumulation modes –

a-d

And many have strong Price Strength as well:

price-strength

My biggest concern in here is that the stocks that I see as candidates to accumulate appear to have significantly slowed that accumulation.  The bottom line is they are “long in the tooth” and many folks have already gotten on board.   The next phase can either be a re-accumulation phase (more money coming in) or distribution (selling).  Right now things appear to be in equilibrium.  Let’s keep an eye open for signs of change.

Happy Holidays and have a good week.  ……….  Tom  ……..

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

Status Quo November 25, 2016

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Nov. 25, 2016 – This will be a very short post, because, not much has changed since last week.  Note on the chart below that, other than Monday, the bar ranges/spreads were very tight.  That goes along with the steadily decreasing volume due primarily to the Thanksgiving holiday.

nasdaq

It’s hard to make much out of the price & volume action this week so I won’t.  However next week it’s back to business and we should very quickly get an idea whether we’re headed into a Low Demand / Up Thrust situation (bearish) or a return to a steady grind higher.  This market could use a rest and I’ve drawn in a set of reverse trend line channels to give us an idea where a “normal” pullback would go.  Somewhere near 5250 on the NASDAQ Composite Index (above) should not cause much alarm.

Right now Small & Mid Cap stocks are doing well which typically indicate a “risk on” state.  Also Banks, Financials, Japan and Industrial sectors are doing well.

Thant’s it for now.  Have a great week.         …………..  Tom  …………..

Chart by MetaStock, used with permission.

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