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Mixed Signals = Volatility September 12, 2021

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Sept 10, 2021 – I’m seeing some mixed signals so I’m thinking ‘volatility ahead’. Up until Friday, we had strong price action and improving market breath. All good signs. But we can get too much of a good thing too. Actually the market breath improved so much that one could call it a ‘thrust upward’. Those typically occur at market tops and not in a well developed bull market. Nothing “magical” about a thrust and I think it is more an indication of a “FOMO” (Fear Of Missing Out). Nobody wants to be left behind especially as the 3rd quarter end is only a few weeks away.

click on chart to enlarge

I note Sentiment remains positive, Money Flow negative, Volume Flow slightly positive and Price Strength neutral. Since we hit all time highs this week there are not resistance levels as such; the support level is 14896 on the NASDAQ Composite Index. Friday was weak and volume increased. We’ll need to wait on Monday / Tuesday to see if that weakness (i.e. volatility) follows through. One of my “early warning” signals fired on Friday, so that’s got my attention . . . a “yellow flag”. But we’re still within the up sloping channel, so let’s not over react and get whip sawed here.

Technology sectors have eased off a bit and Bonds have shown some strength. China and Japan are kicking up their heels too. The Short Term Sector table is shown below:

That’s about it for now. Markets rarely go in a straight line so an orderly ease back would be “normal”.. Have a good week. …. Tom ….

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

A “Line in the Sand” August 21, 2021

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Aug. 20, 2021 – I feel that the markets are near / at an important support level, a “line in the sand” so to speak. This week price came down to the first support level at 14584 and closed just below it on Wednesday. That close below triggered a yellow flag for me to pay particular attention to the following bars (days). Thursday also closed just barely below, but the close was near the high of the day (possible strength, so no hedging / selling was justified). Friday was a strong up day, back above the support level.

click on chart to enlarge

Now next week will be important. Does the “buy the dips” folks come back or does the “sell the strength” folks come into play. The market “breath” (advance decline ratios) has been looking very weak for over a month; less and less stocks were holding the market indexes up. When I look further at other Breath indicators (Up/Down Volume, New Hi’s/Lo’s) I see a potential that this would be more of a Re-Accumulation structure rather than Distribution. In either case I think that we’re at or near an important price level that will confirm or reject one structure or the other. With the FED Jackson Hole meeting next week that may be a news catalyst in either direction. (You can almost taste the hesitancy in this market; no one wants to miss the next move for sure.) And of course the continuing saga of Covid is yet another wild card. So far the market has discounted much of the virus since the economy and earnings are doing pretty well, at least for now. One last observation: Volume last week on those red bars was at best average. There doesn’t appear to be a rush to the exit right now.

Looking at all of the stocks in the very broad S&P 1500 Index we see that most are Weak or Neutral right now. If this market deteriorates the price erosion will be reflected here very quickly. For now it looks like a typical mild correction.

The Technology sectors are what made a big come back late Thursday and Friday. Those sectors will be important IF a market rebound will continue. I’ll be watching for signs of weakness and increasing volume here as a major trouble sign.

Short Term Sector Strength

I’ve got some Cash to invest but I’ll wait for a confirmation before nobbling; not hedging at this point though. Current holdings (most tech based) are holding up in the mean time. An interesting market that right now is indecisive. Have a good week. …. Tom ….

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

Summer Doldrums: Rev. 2.0 August 14, 2021

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Aug. 13, 2021 -Just as a reminder . . I update this blog every weekend. That might be Friday evening up to Sunday evening, it all depends on what’s happening “in house”. 🙂

A quick look at the chart below shows not a bunch of stuff happening. Conditions have improve just a little over the week and I’ve updated the Support & Resistance levels to reflect that, but really not much.

click on chart to enlarge

With that I’ll say that I’m “invested” but not enthusiastic about it; it’s been a slow period in here, hence “summer doldrums” . . . not much wind to our back. Let’s look at where the stocks are in the S&P 1500 Index.

Overall they look to be in good shape with the “green” are covering nearly half of the pie chart and the “weak” area about a third. Fairly typical of a steady market. (BTW, the colors refer to where the stock price is in relation to their Bollinger Band “buckets”; +/- 2 standard deviations from the stocks 20 day moving average.) Next let’s take a longer term look at the major indexes of stocks in the USA:

chart courtesy of Stock Charts.com Click to enlarge

This chart is the indexes year to date. Early in the year I note that Small Cap stocks were outperforming. Lately the Large Cap S&P 500 Index has been out performing, and to take it a step further, the NASDAQ 100 stocks are out performing the broad NASDAQ Composite Index. Once again it sure appears that big cap Technology stocks are back in the lead. Small Cap strength is consider to be “risk on” indicator, so it looks like money is moving to the more “well healed” Big Cap stocks. More typical of a maturing market.

Lastly, the Short Term Sector Strength table below:

I note some Financials in the lead group, but the broad Technology sectors seem to be the place for the time being. The lack of movement has me wishing for Labor Day, when the Wall Street traders (of size) return. Have a good week. ….. Tom …..

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

“Not a Whole Lot-a” August 7, 2021

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Aug. 6, 2021 – When I’d ask my daughter “What’s new?” she would (sometimes) respond: “Not a Whole Lot-a”, and it looks like the Summer slow down is in force. Without new news or astonishing corporate earnings surprises it appears that both positive and negative force are neutralizing price movement in the markets. COVID Delta on the negative side and good earnings and a rebounding economy on the positive side. Couple that with many traders being on vacation and we see a pretty much range bound market.

I’ve changed the typical chart by drawing in a “box” that encapsulates the range. It’s somewhat inspired by Nickolas Daris and referred to as a “Darvis Box”. Yes, there is a slight slope upwards, but the point is things have slowed down considerably. And, I’m thinking, because of counteracting forces. Investors don’t want to commit any more, at least for the time being.

click on chart to enlarge

Money Flow has turned down and Volume Flow is lethargic at best. We do see prices moving higher in the short term, hence Price Strength is positive. I remain “moderately invested” for the time being. The strongest sectors are positive, but not by much, thus I don’t see the “risk / reward” as being compelling to be there 100% for the time being. (I guess I’m like many others then too.) 🙂

The Short Term Sector Strength table is shown below.

We see a fair amount of Technology sectors in the lead . . . again. and that’s positive. It would be nice to see some Financials and Consumer sectors moving higher though. All in all things are “OK” some we keep tabs on things and try to enjoy the rest of the Summer. It seems like Wall Street is on vacation too.

Have a good week and please stay safe. ……….. Tom ………..

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

A Cautious Breakout Higher June 12, 2021

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June 11, 2021 – OK, on Monday we got the breakout above the 13836 level and continued higher. The next level to keep an eye on is the 14206 level which was the previous high level. Price support now moves to 13548. Everything is good; right? (click on chart to enlarge)

Sentiment (top window) is Bullish, as is Money & Volume Flow. Price Strength is very good as well. What’s there not to like? Well I note at the bottom of the chart how volume is falling off. I was hoping for at least an average level as prices push higher. But one can’t have everything line up perfectly.

The pie chart below is of the number of stocks in the broad S&P 1500 and where they are in relation to their 50 day simple Moving Average. Generally, when a stock is above it’s 50 MA that’s considered a positive / Bullish sign. The good news is that there are about 65% of them above their MA. IF that were to drop to say 40%, it would be a sign of narrowing market leadership and a sign of contraction and a price correction. Also of note is the color coding of just how much the stock is above / below its MA.

The last piece of information is that of the Short Term Sector Strength table. This is where I tend to “prospect” for candidates that are performing better than the general market.

I have highlighted the 20 Year Treasury (#7) and the S&P 500 Index (#14) to point out a caveat. Note that (in the short term) Treasury Bonds have out performed the S&P 500. Humm. A flight to safety or just concerns about inflation, etc. ? I also saw that Treasury bonds have been out performing (a.k.a. Relative Strength) Corporate bonds. That’s unusual. So everything is not lining up perfectly, but it rarely does.

I have been taking increased positions in instruments (stocks & ETF’s) in the strong sectors, but watchful of the overall strength. We’ve come a long way in an unusually short period of time. It would be quite appropriate for things to slow down or become volatile over the Summer. Keeping an open mind about the next move.

I should note the next 2 weeks will be short posts, not that they may be less important, but I will be extra busy over that time. Have a good week & Take Care. …………. Tom …………

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

Oh So Close . . . June 5, 2021

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June 4, 2021 – Last week I mentioned the possibility of “green shoots” and the market showing early signs of returning to a Bullish stance. A number of my market model indicators were showing recovery from a very mild drop and I just needed one more factor to “click”. And . . it almost happened on Friday. That factor is the closing price.

I’m looking for a closing price above the 13836 level to confirm a more Bullish direction. Interesting that all of the other indicators show in the chart above are in a Bullish position and interesting that my “Short Term Channel” trendlines (in purple) virtually overlay my Support and Resistance levels. (BTW, both are drawn automatically via an algorithm and not by hand.) I also note that trading volume has picked back up, another positive sign.

But not to get tooo carried away, we are entering the Summer months where thing typically slow down. Even if these markets push higher it’s likely to be slower and more subdued than the previous 6 months. That said we should remain selective in investment selection since it’s more and more likely that not everything will be moving the same.

The Short Term Sector table is shown below.

I find it interesting that the Oil complex is so strong, but much of that is the recovery of the economy and not necessarily a long term trend. Same goes with Real Estate and Latin America.

Have a good week. ………. Tom ………

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

Early Positive Signs May 29, 2021

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May 28, 2021 – I’m starting to see some return of positive short term market indicators. These are coming from the Russell 2000 Index (primarily small cap stocks), which tend to indicate “risk on” or “risk off”. The broad NASDAQ Composite Index (below) is showing some early signs as well. To soon to say the the coast is clear, but perhaps we can get to a “muddle through” summer and not go into the Summer Doldrums.

click to enlarge chart

From what I see above, Market Sentiment is slightly bullish, Money Flow remains bearish, Volume Flow is not determined (?) and Price Strength is now neutral. At least the steady down price channel was broken to the up side and volume has increased. I do note that Friday, the last bar, closed toward the lower range. Concern remains about inflation; not a surprise since the economy is awash with liquidity.

We also see early signs of returning strength in the SP 1500 stocks. The first pie chart is where they stand in relation to their individual 20 day moving averages. We’re seeing an increase in Strong and Neutral slices here.

Next are the same 1500 stocks and their 5 day percent price returns. Again, more greens and less red slices. Overall a good week for many stocks.

And finally a table of where the strength is coming from. The short term sector strength table is below.

Interesting to note that the Technology sectors are beginning to rise toward the top. Encouraging. So I’m looking at next week to confirm at least some of this strength. I doubt if the past long steady climb returns, but we may see indications that certain sectors and stocks in those sectors are gaining ground in a more predictable way. So the yellow flag is flying. Be careful and be skeptical but also don’t be afraid, since we can always back away IF conditions don’t follow through.

To those in the U.S., have a great holiday weekend (US markets are closed on Monday, but international markets are not . . hint). …………….. Tom ……………

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

Market on Pause May 22, 2021

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May 21, 2021 This market continues to be in “pause mode”, so there’s not much new to say. Note in the chart below the drop off in trading volume over the past 6 days (bars; blue arrow). That dashed blue line is the 20 day moving average of volume and the red is 30% above the average. Not many folks see the need to buy or sell.

click on chart to enlarge

OK, we’re well past the half way point of earnings announcements and they have been overall very good . . . but that was expected by this market. Since we’re at the high end of evaluations (earnings vs. stock price, P/E ratio) there’s not a whole lot of incentive to push things higher without some good reason to do so. Small businesses are coming back and the economy is gaining strength everyday. But that’s the concern; inflation and higher interest rates.

And so the market is on a “pause” for now. My only concern is that it is vulnerable to bad news. But one can’t predict these things. In the mean time let’s look at the stocks in the broad S&P 1500 Index. The pie chart below shows how many are above their 20 day moving average adjusted for volatility (i.e. Bollinger Band strength). Pretty neutral right now.

Next the short term sector strength table.

Of note is the strength of Precious Metals (gold & silver), plus the weakening of Oil related sectors. The number of “green” sectors (top 20%) has shrunk down lately.

I’ve raised some cash mostly because there’s not much sense in being exposed to sudden news items and there is little compelling need to be totally invested right now. Have a good week. ………… Tom …………

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

A Good Place to Stop, but . . . May 14, 2021

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May 14, 2021 -We’ve known that the markets are “overvalued” and certainly nervous about interest rates and inflation, so this drop is not much of a surprise. Looking at the chart below, the 12985 level would be a “logical” / nice place to stop a correction, but . . .

click on chart to enlarge

But . . . the low volume ‘up bar’ on Friday (note arrow on the volume portion) gives me pause. A nice move higher on low volume . . . not much commitment to stopping at least not yet. The other indicators remain bearish so let’s wait and see what Monday / Tuesday of next week brings.

The pie chart below shows the 5 day % return of 48 major industries. Only one (recreational) managed a decent week and there is a lot of weakness out there.

Earnings continue but are now slowing. There are a few ‘darlings” but nothing really that surprising. It just seems like the market is looking for leadership and a excuse to resume the steady upward trek. Retail sales were good but the street was expecting a lot more. The Consumer Confidence indicator will be coming out May 25th but that’s over a week away. We need some bullish news coming out of somewhere.

The Short Term Sector Strength table is below –

Banks and Materials continue to do well. Oil / Energy as well, but how long can that continue? All of these are basing off of the increase in economic activity . . . . as pretty much expected. Where is the new growth?

I’ve pulled in some positions for Cash but remain about 70% invested. Waiting for the next move in either direction as the signs are rather mixed as of Friday afternoon. Have a good week. ………… Tom ………..

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

Ho – Hum Market April 30, 2021

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April 30, 2021 – As April closes and we’re in the midst of earnings season the market last week didn’t really seemed motivated to move much at all. Over the past 3 weeks not much movement. Some Tech stocks (like Amazon) blew the doors off earnings (not surprisingly) and Financials are doing well, but others were just “good” (i.e. expected in any case). I’m thinking cross currents both positive and negative that basically balancing each other out. Thus not much overall movement.

Many companies see strong earnings and a stronger economy, but they also see higher taxes. Covid seems to be a waning problem in the US, but much of the rest of the world is in turmoil. The Yen & Yang of forces are encouraging a pause. But a pause in not necessarily a bad thing right now.

click to enlarge chart

And so the chart above paints a similar picture. Mildly bearish sentiment, mildly negative Money Flow, barely positive Volume Flow, neutral Price Strength and a price structure at the top of an upward sloping channel; good & bad in check. The price range is tightening and so the foundation is set for a breakout in the future. Right now it looks like a re-accumulation scenario.

A little bit different analysis below. I took the stocks in the S&P 1500 Index and plotted out a pie chart with the 5 day percentage return. I note nearly equal greens, yellow and red shades. Generally indicating a balanced market, but this is over only 5 days.

The Short Term Sector Strength table is shown below.

One curious thing to note is the revival of Oil and Energy stocks. Under valued in the short term but perhaps and “iffy” future. Earnings continue over the next 2 weeks for the bigger companies so the watch continues. Have a good week. ……………… Tom ……………

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

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