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Within Range March 31, 2019

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March 29, 2019 –  I’m pretty busy this weekend with family activities, so this will be short and to the point.  The chart below shows how this market is steadily strengthening and has broken above the 7643 level (NASDAQ Composite Index).  That’s where selling took place on a weekly basis the last time.  This is a good sign, but many under estimate the damage that was done in December of last year.  There was a ton of selling volume.  So while breaking above 7442 is bullish, it only is in the near term.

For this (and other) reasons, my thinking is that we’re in a longer term trading range between 7850 (past top) and 7442 (previous swing low); these are marked with blue dashed lines in the chart above.  Note Market Sentiment remains bearish and Money & Volume Flow indicators are fairly anemic.   Hence my gut feel that we’re likely in a trading range scenario right now.  We’ll just have to see if the only way traders can make money is to “sell the rips & buy the dips” in the coming days / weeks.  The strength in the Bond market (higher prices & lower rates) is another concerning factor.  The old saying that the bond market is wiser than the stock market has some validity.  What does the bond market know that the stock market doesn’t?

The table below shows what sectors are strong to weak in the short term.

Currently I’m modestly long this market, but have Cash to deploy if & when we get a solid turn in either direction.  Have a good week.  ….  Tom  …..

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

Inversion, Slow Down or “The Report”? March 23, 2019

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March 22, 2019 – Was the sudden sell off Friday due to the interest rate inversion, the FED’s report of a slowing economy or advance notice of the Muller Report ?  Likely (IMHO) a combination of all three.  Thursday was a big up day, so these news items did cause a sudden down day.  The 2 year yield is now slightly above the 10 year yield and prophecies hold that a recession is due in 19 to 24 months . . . . OK, but that’s a ways away.  The FED came out with an estimate of 2% growth this year and 1.9% next year . . . . the “sugar high” of tax cuts are now behind us (so much for long lasting growth of +3%).  And the long awaited Muller Report was sent to the AG on Friday at about 5pm.  Funny, because the markets sold off hard in the last 15 minutes of trading on Friday . . . . did someone know something ahead of time?

But to put things in perspective, the close on Friday just put us back to around the close of the week before.  What I call attention to is the volume on Friday (red arrow).  It was about average, nothing big.  Some might call Friday a “key reversal day”, but I think not; not with just average volume, there was no big move to the exits.

This market was getting toppy with Sentiment bearish, Money Flow bearish and Price Strength weakening.  And so we’re back to the 7643 level, the last significant bar break out of resistance.  Let’s see how the stocks in the broad S&P 1500 Index are doing:

Price Strength –

Stocks in Accumulation / Distribution –

Price Strength shows significant weakness as does stocks in Distribution; more red.  My thoughts are that we’ll be in a congestion phase for the next couple of weeks as the markets digest the news on the economy and the Muller Report.  There is always the “Sell in May and Go Away” idea that could arrive early this year.  I have a feeling that we’ll see a continued sell off Monday morning as fear overrides logic, then some buying of “the dips”.  The key will be watching the volume on Up & Down bars for an indication of how strong the selling and buying are.

Just about every sector got hammered except precious metals, so I won’t belabor that topic.  This market is jittery and it’s reaction to any news items shows that.  If weakness continues into Monday afternoon it may be prudent to hedge by buying a bear fund.  Honor stops and monitor weakness is the call of the week, but don’t overreact.

Take Care and have a good week, it should be interesting and perhaps historic as well.      …………..  Tom  ……………

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

Market Back but Lathargic March 16, 2019

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March 15, 2019 – The market has recovered from its latest “March Swoon”, but the underlying data is not that impressive.  We did break above the 7643 level which is positive, but you’ll note in the chart below, Market Sentiment and Dollar Flow remain behind in the recent move.

What that means is that certain areas, notably Technology based, are leading while other areas are just “so – so”.  Let’s jump into the sector strength tables and see where the leadership lies.

Tech based Electronics, Software, Semiconductors, Wireless and (to some extent) Biotech & Telecom companies are moving this market forward.  What did show up in the table is Emerging Markets (i.e. BRIC: Brazil, Russia, India, China).  China & Brazil are key factors right now and perhaps the weaker U.S. Dollar.  But . .  we still see Utilities Holding strong.

Not much more to comment on right now.  I’m about 80% invested Long and will phase more into this market over the coming week IF it continues to strengthen, hopefully broadening leadership.  Have a good week.   …….. Tom  ………

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

A Pause That Refreshes March 9, 2019

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March 8, 2019 – It appears that we’re in the midst of the long anticipated “pause” in the market recovery from the Fall correction.  I’m thinking that this is a “pause” because, so far, we haven’t seen a significant Distribution structure.  I’m thinking that a 7 to 10% drop from the recent highs could be likely.  Looking at the chart below the called out resistance level of 7643 held as a “rejection of price” point with 6931 being the next support level below.  That 6931 level would be approximately a 9% drop.

Now, IF volume picks up on down bars next week this “pause” could develop into something more, so let’s not get ahead of the price action here.  Also noted are the confirmation of price weakness in Market Sentiment, Money and Volume Flow indicators.  The Price Strength indicators have gone to mildly bearish as well.  Looking toward the stocks in the broad S&P 1500 Index gives us an idea just how weak the overall market is.

Price Strength –The last 3 days have hit a large number of stocks moving to the weak side (red); the strong (green) section has diminished quite a bit lately.  This indicates a fairly wide spread decline.

Accumulation / Distribution –The number of stocks in a Distribution (selling) phase is not as great and is generally about equal to those in Accumulation (buying) and Neutral.  Fairly even on all three areas.  (Note: accumulation & distribution are a combination of both price and volume; two dimensional so to speak.)

Sector Strength –The table above shows the sector strength on a relative short term basis.  Not as much “green” up there but so far the Tech areas are holding up the best.

Over the past week my (more) involved market model went from Bullish, to Cash and as of Thursday is lightly Bearish.  The purpose of this model is to indicate when it is appropriate to “hedge” and protect the overall portfolio.  Protection is in the form of buying “bear funds / ETF’s” which are inversely correlated to the market.  Since Small Cap stocks are the weakest, that’s the index I purchased (bearish wise).  IF weakness continues I will buy more protection and go to a theoretical neutral / synthetic cash position overall.  The idea is to “win by not loosing”.  🙂

Also the number of stocks that I hold has gradually been reduced; selling the weakest ones.  OK, that’s a bout it for this week.  I’m expecting more weakness, but so far, not a rout . . . . that could change especially via a news item.  Time to be careful.  Have a good week.       ………… Tom ……….

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

Market On “Pause” February 23, 2019

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Feb 22, 2019 – A quick look at the chart below shows what’s been going on for the past week and a half . . . . narrow range bars not really going “anywhere” very fast.  Generally narrow bars indicate that buying and selling are about equal; little momentum in either direction.  This can be the start of a pause or worse yet, Distribution where “sellers” are liquidating into the willing public (buyers).

For now we can only assume a temporary pause in this market because volume remains near the 20 day “average” level.  If volume was higher, I’d lean toward the Distribution theory.  Other that that, the chart indicators continue to show “Bullish” readings.  A break decisively above this 7486 level would confirm bullishness, but there is always a possibility of a breakdown to the 6931 level IF we get some bad news.  And . .  news seems to be a big factor in this mature market.

We are seeing some rotation in the sector tables.  The current short term one is below.

Not much else to say as we continue in a generally positive way.  Have a good week.   …  Tom  …

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

Resistance in an Up Trend = a Close Watch February 17, 2019

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Feb. 15, 2019 – OK, this is sounding like a broken record but the (US) market remains in an upward, bullish trend.  My concern is that over the last 3 days the price action has yielded narrow range bars.  This accentually shows that buying and selling are about equal with no “winners”.  The volume on these bars is just a little above average but not much.  If we saw higher volume I would be much more concerned.  Perhaps traders didn’t want to hold anything over the long weekend (Monday is a US financial holiday).

The bottom line is while we’re concerned, we must / should remain invested for the time being.  The major concern is that a major news item will come out of the blue and drive this market down 10% in a matter of hours.  It could happen; right now it’s just a concern.  Also we’re just at a resistance point of 7486 on the NASDAQ Composite Index (green dashed line).  Perhaps a likely spot to pause or ?

There’s been some sector rotation going on with Energy & Services and Healthcare moving up while Internet and Real Estate are moving down.  Again, I point out that the table below is momentum and volume driven in the short term, and thus changes rather quickly.

That’s about it, “short and sweet”.  Staying the course with a close eye on price action / reaction.  Have a good week.   ………..  Tom  ……….

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

 

A Minor Pause February 10, 2019

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Feb. 8, 2019 – This week we saw a minor pause in this steady advance; that is expected and overdue.  Though one may think of this as an Upthrust (of price) I really doubt it due to the lack of volume.  In fact the volume this past week was generally edging lower.  It just looks like any future buyers are just waiting.

This pause around the 7485 level (dashed green line) is a logically place to rest at.  An oscillation of prices between 6930 and 7485 would be rather “normal” if it comes to pass.  Everything else appears fairly positive for the time being.  One chart I found of interest was the amount of funds withdrawn from mutual funds in December (chart below).Once again the casual investor just does not like volatility and their market timing is pretty poor.  That withdrawn money represents “new money” that has potential for driving price up once it decides to come back in.  As the old saying goes “The market will continue to go higher until the last person buys it”, or something like that.  No doubt that we live in volatile times and the computer trading programs seem to amplify any move even more.

A quick look at the short term sector strength table below:

I’m trying to stay in the leaders by avoiding the lower (red) percentile sectors.  Again, this is short term so a fall from the top rank is not necessarily a terrible thing since it can be just a pause and the raw score may indicate a minor move anyway.  Not much else to say.  I remain very near fully invested with many stocks in those strong sectors.

Have a good week.     ………. Tom  ……….

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

Signs of a Pause February 2, 2019

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Feb. 1, 2019 – While the overall trend of this market remains up, by mid week there were some signs starting to show themselves of a possible weakening of momentum.  In my more complex market model I got a “Caution – Move to Cash” signal that continued into Thursday but never triggered into an position change.  This model is fairly sensitive so not every “Caution” gets confirmed, but the case remains that momentum could very likely be changing.  Bar Strength has dropped and Fridays bar spread (the price difference between the high & low) was very narrow.  Narrow bars show that selling and buying are about equal and after a nice run up that could mean a pull back.

The chart above does show current prices at / near the 7225 resistance level so let’s keep an eye out next week for some type of pull back / pause; it’s overdue anyway.  A look at the number of stocks in the S&P 1500 Index that are in Accumulation / Distribution is shown below.  Very strong indeed.

Also the number of stocks that are showing strong Price Strength is equally impressive.

With so much “green” a pause or minor correction would be normal.  For this reason I’m a little hesitate to add any more positions right now.  I’d like to see what this market does in the next 2-3 days first.  We are starting to wrap up the earnings season now and the results have been generally OK with a few surprises.

Here’s a look at what Industry Sectors are strongest in the relative short term:
I’m about 75% invested right now, waiting to complete re-accumulation, but watchful in the near term.  Have a good week.  ……  Tom  ……

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

Steady As She Goes, but On Watch January 26, 2019

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Jan. 25, 2019 – It’s sounding “old” but so far there’s no real indication of major market issues and so the phrase “Steady As She Goes” sounds appropriate.  Prices have recovered a lot and very quickly so some pause or minor correction is not out of the question.  Prices on the NASDAQ Composite Index closed Friday very near our 7225 resistance level (green) and this would be a “logical level” for that hesitation to begin, but nothing is a given at this point.

This market seems to shrug off most news events.  The one thing that could trigger a major move (in either direction) would be trade talk results with China.  Domestic politics and Brexit don’t seem to matter much.  Interesting that these have been discounted.  Sentiment, Money & Volume Flows are all positive and Price Strength is strong.  I am selectively long, picking stocks and sectors that appear to provide opportunity and that have not got ahead of themselves.

My new sector strength table is shown below.  Technology and Financial sectors are showing strength in the short term.  Mid-Cap indexes are also doing well.

And so it goes.  We just have to go with this trend and so far this trend continues to be up, though I’m pretty uneasy about it.  Have a good week.  ………..  Tom  ……….

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

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Market Continues Higher January 19, 2019

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Jan. 18, 2019 – My first level of price resistance at 6930 was blown through, but the next level at 7225 is not far away.  Earnings coming out are mixed, some good and others rather poor.  This rally seems to be a “Fear of Missing Out” rally which is typical after the severe oversold condition on Christmas eve.  Money & Volume Flow indicators are positive as is Market Sentiment.  At least a minor pullback is overdue and that will give us an idea if the “smart money” is trying to get whole from the late Fall market correction, or if it is just a pause that refreshes a re-accumulation phase.  The key will be volume.  Light to average volume on a sell off means it will be shallow and short lived.  Heavy volume = heavy selling and the recent lows could be re-tested.

For now we just have to ride this trend and in the immediate term the trend is higher.

The table below is different.  I’ve changed it to condense the sectors but also to add the indexes and some key international market indexes.  I’m thinking that this simplifies things while broadening the scope to international sectors.  The idea is to make this more meaningful and “actionable”.  Comments are Welcome.

That’s it for now.  I’ve got a feeling that the first quarter will be a bumpy ride, since there is so much undecided that could have a major effect on the markets.  Have a good week.       ………….  Tom  …………

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

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