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At Pivot Low, Next Week Important August 19, 2017

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Aug. 18, 2017 – A quick look at the price chart below shows how the NASDAQ Composite Index closed on Friday, right near the previous swing low.  We have two lower swing highs and now two lower swing lows.

That 6216 close on Friday is just a little ominous in that IF we’re expecting a turn around, it should happen on Monday.  Otherwise the next target lower is the 6141 level.  That 6141 level is where buyers have previously come into the market (we’ve already ‘blown through” the 6303 support level).  I’ve spotted in a few important Wyckoff turning points; these would indicate further market weakness.

Also in the chart above: Sentiment is bearish, as is Money Flow and Volume Flow.  We’re entering into a period of the year where the stock market is typically weak; late August through early October.  I’m not a big fan of seasonality, preferring to observe and follow the trends as they develop.

Selling also dominates the S&P 1500 index stocks.  The pie chart below shows the number (i.e. %) of them in Distribution (red / selling) and Accumulation (green / buying).  There is far more red than green right now.

A look at the sector strength table below shows a move toward more “defensive” stock sectors.  The previous market leaders of the Technology sectors have moved down in the table.  In the short term, this is a time for either hedging (via “bear funds”) or staying close to an exit plan if necessary.

I’m seeing more strength in Emerging Market countries for the time being, as well as Utilities, Telecom and other defensive sectors.  I’d wait until Monday afternoon (after the weekend investors place their sell orders) before I’d jump to any conclusions, but it sure looks like a market that’s headed lower.  At least another 3 to 5 % next week.

Have a good week.        ………. Tom ………..

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

Fall Back to Previous High July 29, 2017

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July 28, 2017 – About noon on Thursday a couple of stock analysts decided to downgrade a few tech stocks; and that was it.  Caution set in with a broad market dip, then the computers stepped in to sell, followed by “resting” (in the market)  stops being hit.  Friday was a tight range day holding on to price levels.  I found it interesting that the Index stopped falling right near the previous high (red circle), adding to the adage “what is resistance once broken, becomes support”.

And so it goes.  If this market is to remain strong, this current price level is a logical place to stop and hold.  The next level down is 6164, but that would certainly be considered much more serious, and we could see some serious selling hit the markets.

For the time being I’m patiently holding my longs in growth stocks but watching for signs of continued weakness; we’re overdue for a +10% correction IMHO.  In the mean time I note that the other indicators above remain positive so this appears to be a shallow correction . . . more like a blip.

Where I am seeing strength is in China, Emerging Markets, Latin America, Internet & Biotech sectors.  Telecom and Technology are not far behind.

That’s it for now, have a good week.     ……… Tom ……..

Chart by MetaStock, used with permission.

A Break Above July 21, 2017

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July 21, 2017 – Wednesday of this week the NASDAQ Composite Index broke above the previous high and continued on for the rest of the week.  The old favorites were back at it: Technology, Biotechnology, Semiconductors and even some Basic Materials.

One area that has been under the radar of some folks is the International markets.  Latin America, China and Emerging Markets have quietly moved higher as well as most developed markets.  On the chart above it’s easy to see the positive flow of Money (top pane) and Volume (second pane).  Market Sentiment also turned bullish this week.

The bottom line is we don’t have much “choice” but to continue to be  long / bullish in the market.  There are geopolitical risks out there but this market just does not seem to care.  The only “caution” is that average daily volume is moving lower.  The question is whether this is due to summer vacations or the lack of new buyers coming into this market.  The rather tight daily bars (range between the high & low price) is a little concerning as well.  That narrow range indicates that buyers and sellers are about equal.  That’s OK with low volumes, but let’s keep an eye open for the “smart money” trying to slowly leave this market and leave everyone else “holding the bag”.

Let me know (via the comment section) if there is any topic that you’d like me to cover.  Comments are always welcome.  Thanks.

Have a good week.          ……….  Tom  …………

Chart by MetaStock; used with permission.

Still Within (trading) Range; Sans Volume July 15, 2017

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July 14, 2017 – Listening to the financial media one would think that “Happy Days” are here again; and the markets have recovered from a small swoon.  But with all of the talk about “new highs” we should consider that we are really only returning to the top of a trading range.

We bounced off the 6097 support level and we’re now just about near the previous peak (dashed purple line).  One thing I note is the steady lowering of volume over the past week (lower arrow). Also “market Sentiment” is bouncing between neutral and Bearish.  OK, up is up and the previous leaders (tech, semiconductors, biotech, etc.)  are once again doing well.  Maybe the lack of volume / interest is due to the summer vacation schedule, but maybe it could be lack of commitment.  That lack of commitment could be forming an Up Thrust.  We’ll just have to wait and see next week.

For now I’ve removed my hedge (protection) but have not jumped back to a market “long” status.  The market is showing some positives as shown below; the % of stocks in the S&P 1500 Index that are being bought/sold, with price strength strong/weak.

S&P 1500 Accumulation & Distribution –

S&P 1500 Price Strength –

Overall these pie charts are showing a reasonable balance between the three status levels, and that’s usually a healthy sign.  Looking at a sector strength table below:

I also should mention that a few Emerging Market countries are doing well in the recovery.  Since we are in the middle of earnings reporting, the market could easily react to unexpected bad news about key industry companies as well as any geo-political news.  With Russia and Healthcare being major topics, that could be a factor.  I feel that in order to decisively break above the previous high, we’ll need to see volume (buying) increase too.  Without that I’m still cautious.

Have a good week.         ………..  Tom  ……….

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

Market Undecided July 1, 2017

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June 30, 2017 –  Before I get going, I’d like to wish Canada a Happy Birthday (Canada is 150 years old this week).

The U.S. markets were lis-less and undecided this past week, as were the world markets in general.  True that vacations are on the minds of many but it’s really deeper than that.  There was / is a fair amount of expectations for future economic growth and some are coming to the conclusions that it may not be as significant as originally thought.  Some traders are predicting another 5-8% drop on top of the current 5% drop.  That would be a mild correction so no need to “jump out the window” just yet.

NASDAQ

My new chart of the NASDAQ Composite shows the weakness in the background.  The red bars indicate short term weakness and the Volume flow is steady to Bearish. Note that Money Flow remains positive / Bullish.  More important are the support levels.  The 6164 level was violated on a Closing price, indicating possible continued weakness, but the Lows of those bars remain intact.  I would only start to get concerned if the Low of the bar where the Close violated a support level.  So, I’m cautious as this market is only showing signs of being undecided.  The next level down is 6097 (that’s the Low of a weekly “significant bar”.)

The table below shows sector strength / weakness in the short term.  Note how Semiconductors has moved from the top to the bottom.

Sectors

The bottom line is we’ll just have to wait and see if the market “decides” whether to drop any further or just go horizontal next week.  The “Summer Doldrums” are here.

Have a good week.  ……….  Tom  ……….

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

Steady but Indecisive June 24, 2017

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June 23, 2017 – OK, the trend remains positive / Bullish but if you look at the recent rally, it was pretty tepid at best.  I point out the “Volume Flow” indicator below which rather well points out the lack of enthusisium in this recovery off a minor bottom.

NASDAQ

Yes, the support levels (first at 6164) and trend lines are hanging in there and we may just be seeing the infamous “Summer Doldrums” setting.  My feeling is that we’re going to be in a consolidation phase until the Fall, but that’s just a hunch.

Editorial: I’ve updated to the latest version of MetaStock, so this chart looks a little different, plus I’ve added my bar strength indicator to the color of each daily bar.  This should provide a little more “heads up” information in the future.

From the pie charts below of the stock components of the S&P 1500 Index we note a healthy but yet “OK” market in the longer term.

Price Strength –

SP 1500 Price Strength

Accumulation / Distribution –

SP 1500 A-D

Overall things are looking OK even though the previous mass buying surge that we have seen after the November election has subsided.  What has appeared over the last week to 10 days is a rolling over of key sectors.

Sectors

The Tech, Semiconductor, Software strength remains, though lessened.  It has been supplanted by Biotech and Healthcare (note above table of current sector strength).

Where we are now is a generally supportive market, but leadership may be changing and actually narrowing.  I remain watchful of an Up Thrust bar on heavy volume as a near term warning sign of weakness.  But for now we have to “go with the flow” (i.e. trend).

Have a good week and we rolling into summer at full strength.   ….  Tom  ….

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

At The (lower) Edge June 17, 2017

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June 16, 2017 – An interesting week indeed.  Looking at the chart of the broad NASDAQ Composite Index below, we see that we’re still (barely) within the upward sloping price channel and, also above the first price support of 6164.   (Note: I look for a break of any line or level by the Closing price as opposed to the low of the day.)

The Volume Flow indicator continues to show weakness, though it is traveling in a horizontal position.  Money flow showed an up tick this weak and overall Market Sentiment is neutral.  Volume on Friday was high, but that’s typical for the 3rd Friday of the month due to options expiration and folks “squaring up” their expiring positions.

Holding the 6164 level and going into a trading range for this summer is a likely scenario.  The axiom “Sell in May & go away” could very well hold true this year.  There’s been a bunch of talk about a rotation out of Tech & Semiconductors and into Banks & Finance.  I see some evidence of that, particularly in Banks, but so far it’s been fairly muted.  Not much sense in talking about “strong sectors” since not much is showing domination right now.

I’m thinking we’ll just have to wait for the second quarter earnings to drive the markets anywhere this summer, or maybe a political issue will drive it.  Whatever it is, it will likely be a surprise and this market is on edge right now.  Have a good week.     ……… Tom ……..

chart by MetaStock; used with permission.

Not Out of the Woods May 21, 2017

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May 19, 2017 – Despite the rally (attempt) from the recent sell off, the market internals remain “iffy” and not broadly strong.  As shown below, we did just touch the lower channel / trend line as a Secondary Test before a recovery, but participation in that rally has been modest at best.  Sentiment is neutral and Money Flow is lower; volume is lethargic.

This does not mean ‘sell’ because we’re still in the upward channel and above support levels (5970), but being extra watchful would be recommended.  What are doing well are the previous strong sectors.  Generally, Technology and Specialty / Niche companies.  Here’s the areas that I’m watching for strength:

Back to the market in general: the pie charts below shows the overall status of the S&P 1500 stocks (a very broad sampling).

Price Strength –Stocks under Accumulation & Distribution –These charts support my idea that “We’re Not Out of the Woods”, at least not just yet.  Perhaps we have a “Sell in May & Go Away” situation and the “Summer Doldrums” have arrived, but more likely the euphoria of the Trump election has succumb to reality that all of the wonderful things promised won’t happen.  Welcome to politics Mr. Trump.  I have taken positions in select International sectors.  Europe & certain Asian countries have been performing well (avoiding Latin America for now).

So we’re back to this market looking for direction and good (or bad) news.  There just doesn’t seem a need to jump all the way in, but there really isn’t a need to sell either.  Have a good week.        ………….  Tom  ………….

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

Market Looking for Guideance May 6, 2017

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May 5, 2017 – Looking at the chart below a few things stick out to me.  The last correction was minor because volume during the small blip down was very light.  Volume did increase (back to about average) on the price recovery.  But . . the last two days has volume falling off, plus the bars this week have had a narrow spread.

It just appears that buying is rather light, but there is also little selling.  Earnings have been OK, a few surprises, but generally good.  This market has priced in good earnings plus a number of things promised too.  I’m still looking for an Up Thrust bar, closing near the Low, on high volume.  So far that’s NOT the case and this market just grinds higher.

I did see a comment by a trader that breath is narrow, that is, few stocks are leading market average / indexes higher.  I would agree.  That bears watching and the longer it continues, the more concerned we should get.  Small and Mid cap stocks have been lagging behind Large cap stocks.  I’ll watch the price bars and volume along with the lower trend line and support levels for clues on further action.  For the time being, I have to stay invested.

Here’s what areas are doing best right now:

That’s it for now.  Have a good week.  …………..  Tom  ………….

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

Market Waiting April 8, 2017

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April 7, 2017 – Looking at the chart below we’ve broken the upward trend channel and have settled into a fairly narrow trading range.  I’ve labeled the chart as a possible Distribution structure to be on the cautious side.

Money and Volume flows are muted and rather neutral; there isn’t much buying or selling lately.  I’ve moved my support price level up just a little to 5769 on the NASDAQ Composite Index.  that’s were the last “buying” started on a weekly basis.  Last Wednesday could be labeled as a UTAD (up thrust after distribution), but that case is not very strong.   Market Sentiment is weak, especially when compared to where we’ve come from.  Volume on Thursday & Friday was low, not much activity in either direction.

Earnings reports begin week of 4-24, and that’s what this market is waiting for.  Prices are fairly rich so any significant disappointments or forward guidance surprises could generate a swift reaction lower.  Without any indication as to the trend, I’ve got to stay neutral and raise Cash as support levels are broken.  The stocks in the broad S&P 1500 Index are split down the middle and don’t show much of a bias in either direction:

Price Strength –

Accumulation/Distribution –

This is a rare time when I’m really not seeing any edge or strength in any sector.  Sure Precious Metals lately, but the action has been very erratic; Utilities, very muted trend; Technology, not a clear trend.  Sector wise I’d rather be waiting in Cash.

Have a good week.   …….. Tom  ……..

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

 

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