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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.

“Steady As She Goes” September 4, 2021

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Sept. 3, 2021 – First off ‘Happy Labor Day’ (for those in the USA). The US markets will be closed on Monday but keep in mind the rest of the world exchanges will be open. Note: I like to peek at the Asian market before I turn in for the night and the European as I get up, they give me an idea of the overall feelings before the US opens . . . not to mention the near 24/6 trading of S&P 500 futures.

The chart below shows a steady rising market. “What’s there not to like?”

click on chart to enlarge

We saw again that this market is nearly addicted to low interest rates. Jay Powell indicated that the FED will not be aggressively tapering soon, hence interest rates will remain fairly low for awhile at least. The market loved it ! And so it goes. Here’s the recovery of the stocks in the S&P 1500 Index as they relate to the 20 day Bollinger Bands:

Fairly steady and benign, but positive. The short term sector table below shows Tech (which makes up a BIG part of the S&P 500 and NASDAQ 100 Indexes) is back in the lead. Note the sudden strength of Japan though. Let’s see just how long that lasts. Also Real Estate.

I have continued to make some minor changes in my holdings, obviously favoring the strong sectors. As stocks or ETF’s fail to keep up with the others in the group they will be sold and replaced. I’m close to being fully invested, but not quite yet.

Have a great week & Take Care. …………. Tom …………….

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

Getting By With A Little Help From The FED August 28, 2021

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Aug 27, 2021

With apologies to the (old) Beatles song, this market is getting by with help from the FED. The tone from the Jackson Hole annual FED forum was “dovish”, i.e continued accommodation. No doubt that the markets are addicted to low interest rates; that’s very clear. And so it appears that the positive environment continues for a while.

click to enlarge chart

Now then . . the market breath remains narrow, meaning there are fewer stocks that lead the indexes higher, not a good sign. But other indicators like up/down volume and new highs / lows remain more positive. We’ll take it. Looking at the short term sector strength table below we see the narrow focus is accentually on the Technology based sectors. That’s kind of OK, but it sure would be better to see Financials, Industrials and Consumer Discretionary improve as well. Since the US economy is consumer driven, that strength will be important if we are to move forward for any length of time. Also note below that Defensive sectors are toward the bottom of the list; that’s positive.

That’s about the long & short of it for now. I haven’t left the market, but I do have some Cash to deploy next week if things continue to improve. Take Care and 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.

Back Again July 24, 2021

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July 23, 2021 – What a week. Last week Thursday and Friday were major down days (especially Friday). Monday opened a big price gap lower then recovered over the rest of this week. So, we’re basically back to where we were a week + ago.

click on chart to enlarge

I note that prices gapped right through the 14371 (gray line) level on Monday then bottomed out very near the 14196 level (red) before recovering to close just above the 14804 level. All pretty much holding the previously drawn support and resistance levels.

The Money & Volume Flow indicators are now positive, but the dip on Friday of the Market Sentiment indicator could be a concern IF it continues to show weakness. Also note the very low trading volume (lower chart pane), volume tapered off as the week progressed. This does not show a commitment by traders or investors to this market rally. More of a skeptical “wait and see” approach I’m thinking.

I did close out the Bullish Market Index portion of my portfolios as a precaution on Monday Morning, didn’t go short, but I’m not quite ready to re-enter that portion just yet. Most of my positions in sectors and stocks have held, so not much of a change there. Let’s look at sector strength.

The positive news is that our “old friends” the Technology sectors (less semiconductors) are in the lead and that’s encouraging. But recall that the overall market is narrowing leadership to those specific sectors (not so positive) and it sure would be nice to see Financials and / or Industrials joining in. We’re early in the second quarter earnings reporting cycle and so far things are looking good. But (again) ‘good’ to ‘very good’ is expected. This market does NOT want to be disappointed by earnings or news, and Covid is still in the mix. The next 2-3 week will be important and possibly set the stage for the Fall.

That’s it for now. Continue to be cautious but realistic about this market environment. Have a good week. … Tom …

Not Much More Than “OK” June 26, 2021

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June 25, 2021 – I’ve got limited wi-fi so this will be VERY brief.

click on graphic to enlarge

For the time being, things have stabilized, but significant strength has not returned. We’re in a trading range / holding pattern. I’ve changed the Support & Resistance levels and the major indicators are still bullish / positive but not like before. I note the very high volume on Friday, let’s see if there is follow though in either direction next week.

I’ve place the number of stock in reference to their 50 day moving average above. It does show an improvement from last week, so that’s encouraging but not “exciting” just yet.

The Short Term Sector Strength table is below.

At least Technology sectors have regained their strength which is encouraging as well. For now I’ about 80% invested and keeping a close eye on potential moves in either direction. It’s just unsettled.

Have a good week. ……… Tom ………..

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.

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