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Consolidating in a Trading Range September 22, 2018

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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

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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

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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

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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.

At The Top of Channel August 24, 2018

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Aug. 24, 2018 – OK, here’s where it gets interesting.  Note the chart below: we closed at / near the top of the channel.  This is where the market has recently bounced lower & headed “south”.  So next week as we head into the (US) holiday weekend, will it bounce lower or continue higher?  We’ll have to wait but I do note Price Strength and Volume Flow heading higher.

Volume lately has been anemic but late in the week it did pick up.  The question remains: will this strength follow through next week.  Support & Resistance levels remain the same and will serve as a guide.

Else where, I get a monthly e-mail from his site: www.automated-trading-system.com/trend-following-wizards-june-2/ , which puts out performance figures on some large “trend following” CTAs (Commodity Trading Advisors).  Many of these are well known in the industry, and I find it interesting to benchmark myself off of these guys.  With hundreds of millions of $ (or more) under management they make a heck of a lot more in fees than I can even imagine.  Check out the website & subscribe (it’s free).  In the mean time, here’s the report for June and Year To Date.
Hopefully you can read this OK or blow it up.  I find it interesting.

I see strength in Healthcare, Government Bonds (yes, hard to believe), Consumer Services and Pharmaceuticals.  My dominate index is Small Cap. Growth.  I’m being a bit careful here as we approach a channel & market top, but ready to commit more in either direction.  My stock positions are 90% full, so hedging is my insurance if we drop.

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

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

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.

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