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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.

Uncertain Market Driven by News January 5, 2019

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Jan. 4, 2019 – First off I’d like to wish everyone a very Happy New Year.  By all indications (economic, political & governmental) 2019 will be a “doozie” of a year . . . much to expect in the months ahead.  In the past week we’ve seen a near 10% change in prices of the major indexes in just 2 days from top to bottom.  Amazing since is some years that would have been the price range for the entire year.

We’ve seen a significant rally from the Christmas Eve lows, but there has been so much damage done since late September that a weeks rally on modest volume won’t wipe away the lingering bearish concerns.  Apple dropped the bomb that investors should NOT expect healthy gains in profits and the tariff war continues though news leaks try to paint a more optimistic future.  The US government shut down and Fed concerns  make investors nervous and uncomfortable; a bad recipe for higher prices.  With all of those in mind my feeling is that we’ll trade in a broad range roughly between 6930 at the top and 6130 at the bottom (purple freehand drawing below).
The chart above shows investor Sentiment improving while most other indicators remain Bearish or Neutral.  Next week the full complement is back on Wall Street, so we’ll see if they drive prices much higher or not.  Right now it’s anyone’s guess.  For the time being I’ve removed my hedge (i.e. sold off the bear funds) and only hold modest positions in Bonds and Precious Metals.  I’m considering buying Latin America (index) and Biotech, but that’s about it . . . heavy in Cash.

Here’s a look at the major US sectors as far as short term strength is concerned.

Even “the strong ones” are not that great right now.  Have a good week and buckle up for volatility in the coming months.  Weak markets don’t like surprises.………  Tom  ………..

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

Volitile Bottom (?) looking for a Bounce December 29, 2018

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Dec. 28, 2018 – The last post of the year and wow, what a week.  Massive moves inter and intraday.  I understand that we had a nice rally after Christmas but so much damage has been done on the way down that the light buying volume has not made up for it.  I’m still looking for a “head fake” rally to around the 6930 level (green dashed line) then likely a big move lower, but let’s take this one step at a time.  There’s always a possibility that we just chop around between these Resistance and Support levels and build a base.
All of the indicators shown above remain Bearish except for Price Strength which is neutral.  I don’t think we’ve seen the true market here due to the end of the year portfolio rebalancing from bonds to stocks by big pension funds and institutions.  Also there has been a fair amount of short covering (buying back stocks that traders shorted a month ago).

Price Strength of stocks in the S&P 1500 Index has improved but is still predominately “red”.

The Accumulation / Distribution pie chart hasn’t changed much from last week; it moves slower and the volume last week was very light.  The table below shows the very short term sector strength.
For the time being I’m happy to be mostly in Cash &/or hedged out.  Let’s see what the new year brings and maybe the markets will show their hand.

Happy New Year to All !            ………..  Tom  ………

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

Within The Range December 15, 2018

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Dec. 14, 2018 –  I’ve removed a few lines on the NASDAQ Composite Index chart this week, kind of getting back to basics, to make a point.  First this market structure is pretty much in a defined trading range. At the top is the 7520 green dashed line and at the lower edge is 6920 with the red dashed line.  Now these levels are not chiseled in stone but rather rough benchmarks to alert us when there is a change of character in either direction.

Also I note that the last 3 days of this past week have had volume falling off; Low Demand to Buy and Low Supply to Sell = lower prices on low volume.  For the time being that shows there is no rush for the exits, but also no rush to get onboard either.  The typical scenario for a trading range.  It just feels like everyone is waiting for either some news (trade talks or BREXIT) or for the end of the year.  The price levels that we’re at go back to February of this year . . . . we’ve lost the “Trump Bump” as reality sets in.  Reality is that stocks were expensive and the sugar high of corporate tax cuts have worn off.  It’s back to “what have you done lately!”.

The pie chart below is a new idea.  I took the stocks in the broad S&P 1500 Index that were within 5% of there 52 week high price.  Then put them in a pie chart by their industry groups / sectors.  You can follow the list down by going counter clockwise around the chart.

No surprise that Utilities, Real Estate and Consumer Products are holding up better than other sectors.  Another way to look at this is via my regular table which is ranking sector by there short term strength.  This style ranking will be valuable when an up trend develops, but for now it sure looks like being defensive or in Cash is a good idea.

The best news is that Christmas is coming, no matter what !  🙂  Have a good week.     ……….. Tom  ………..

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

 

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