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Not Much New; Maybe Next Week October 19, 2018

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Oct. 19, 2018 – As the headline reads, “Not Much New; Maybe Next Week”, pretty much sums up the past week ending just about where it began.  We’ve had a few earnings reports but the big ones start to roll in next week.  Those earnings and the forward guidance could very well likely tip this market one way or the other.  It sure seems like the momentum & feel indicate a move lower and there are many investors waiting for something to propel the market in one direction or the other.

We’re right at the infamous 200 day moving average on many US indexes and recent behavior would say that is a “buy the dips” place to jump in.  But this time things just feel “different”.  Small Cap(ital) stocks and Tech stocks are weak . . . very weak.  So where is the leadership coming to drive this market higher?  Not the Drugs or Financials.  Consumer stocks have already made a big move . . .  so where?

The answer must be some super blow off earnings that is totally unexpected; or a news item.  A China trade deal could do it, but that doesn’t seem to be happening soon.  Hence the “feel” of going lower.
The broad NASDAQ Composite Index chart above shows the weakness and a lack of commitment in any direction in the short term.  We can’t break above the 7700 level and fell back to the 7443 level.  The next target (lower) would be 7205.  All of the indicators on the chart remain bearish for now.

Let’s look at how the stocks in the S&P 1500 Index are holding up.  The pie charts graphically show the percent of those 1500 stocks that are in Accumulation (buying), Distribution (selling) and their Price Strength (over the past 20 days).  There’s a lot of red there, but that’s not surprising.

Accumulation / Distribution –Price Strength –What I found interesting is answering the question “So just what stocks are doing well?”.  “Well” is a matter of perspective, since it’s being compared to all other stocks in the index, “Well” could be just “Better Than” everything else.   But the sectors that are doing “Well” and holding their own are centered around Utilities and Consumer Foods; all defensive sectors.  Another sign perhaps that no one is buying this dip right now.

I have slowly sold off weak stocks and “Hedged Out” (with a bear fund) the rest of my holdings.  The only things looking relatively OK from a sector fund perspective are Rising (interest) Rates and Stronger Dollar.  We need to be patient right now.  The time to buy will come, we just don’t know when just yet.

Have a good week & let me know what you like me to cover (or not to cover).  Always happy to get feedback.  Cheers !  … Tom  …

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

Expecting a Bounce Higher, then . . . October 14, 2018

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Oct. 12, 2018 –  Well now, quite a week !  This was not a surprise but the speed that it unfolded was rather rapid to say the least.  With the number of “Algo Traders” (a.k.a. computers that trade without human intervention) we shouldn’t be surprised by how fast market can move now a days.  So what next?

We started to see potential issues with this market over a week ago when it struggled to make a new high; I’ve labeled that point “Failure” on the chart above.  All of the indicators on the chart are Bearish but let’s look at price levels.  Yes, we blew through the 7700 level and are now (possibly) stalling out in the 7443 area.  Friday had a good close, so it’s reasonable to expect a bounce higher soon.  Going back up to around 7700 would be a likely estimate for a bounce higher, and possibly all the way up to 7933 just to fake everybody out.

The real test will be what happens during that bounce.  Will sellers use that as an opportunity to sell into strength (watch volume), and then head back down again?  We won’t know until that shows itself but we shouldn’t have to wait long to find out.  My next (lowest) support level is 7205.  Folks are getting nervous about stocks being overvalued and the continued issue of high tariffs with China.  BTW, those 25% tariffs won’t click in until after the new year.  Will importers “front load” to beat them?  Watch for inventories and not shipping tonnage.

Sector wise there’s not anything worth talking about except for Rising Rates and perhaps Rising Dollar funds.  I’m still watching Latin America; it is volitile.  Right now I’ve cut back on stocks and have a fairly substantial hedge on the rest of the portfolios.  “Hedge” meaning short the Russell Small Cap index and the NASDAQ 100 Index.  Both small caps and technology got hammered; it’s the value thing again.

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

chart by MetaStock; used with permission

October Swoon October 7, 2018

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Oct. 5, 2018 – The “September Swoon” came a little late this year.  I guess they had to wait for the 3rd quarter to end and report, but this was not unexpected.  The only question was when.  The next question is “how far”.  I’m sticking with my 7700 target on the NASDAQ but also added the next level down at 7604.

What happens on Monday (10-8) will be a big indicator of where this market is headed.  I’d anticipate retail investors to sell on Monday morning; what happens after that will be key.  Do the “big guys” come in after the selling slows to buy the dip or do they also sell or just sit on their hands?  Friday was a average volume day closing off the lows after two high volume days on Wednesday & Thursday.  Indicating that in the short term perhaps the selling is over.  But that doesn’t mean buying will replace it.  The market can fall on low volume . . . . because nobody is buying (no one to hit the “ask”).

No surprise that all indicators on the chart above are bearish, but lets look at what lead up to this point.  For over a month now the price of the S&P 500 Index has been going higher, but the number of stocks making new highs has declined, while the number making new lows has increased.
This is just one of the many “market breath” indicators, but it does point out that the market index was being held up by fewer and fewer stocks; not a good sign.

Looking at the number of stocks in the very broad S&P 1500 Index we see a confirmation of that broad weakness.

# of Stocks in Accumulation / Distribution –# of Stocks in a Strong or Weak phase –There is a fair amount of red in both pie charts, maybe indicating that this time is different and “buying the dips” may have to wait a while.

Last thing I wanted to show is a price chart of Bitcoin, the Crypto currency.  These and other pseudo currencies have been the rage over the past year with hyperbolic rises and falls.  No judgement, just showing what can happen when everyone wants to jump aboard and then fade out.  Reminds me of the old J.P. Morgan comment that “when the barber and the shoeshine boy ask about buying, that’s a sign of a top”.
I am partially hedged as “insurance”; will add more or reduce as necessary.  Time to honor stops and trim out holdings that are weaker than the market.  That’s it for now, be careful out there.  ……  Tom  …..

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

 

Consolidating in a Trading Range September 22, 2018

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Sept. 21, 2018 – With all of the talk about “all time highs” let’s keep in mind that we’ve not gotten above the late August levels (NASDAQ Composite Index wise).  So let’s not get too carried away with the strength of the market.  Money and Volume Flow is holding steady but no one is rushing into this market right now.  The Long Term Channel is still pointing up but we’re hovering around the 8000 level of price support (red line).

I am about 80% invested with a small “hedge” on as “insurance”.  My hedge is short the Q’s, a.k.a. technology which has not been able to get much going as of late.  What I do see is strength in Japan, Industrials, Rising (interest) rates and Healthcare.  China and Latin America are beginning to draw my attention, as well as some select energy stocks.

We haven’t looked at the broad S&P 1500 stocks very much so it’s time to see if there is any underlying strength or weakness indicated.  Below are pie charts of the number / percentage of stocks within that index that fall into three categories.

Price Strength –Those in Accumulation / Distribution –

Overall it’s looking like a relatively even split between the three categories.  That generally is healthy and status quo as far as trends are concerned.  My current thinking is that we’re in a price consolidation zone right now.  There may be some sector shifting and repositioning for the next move, which is likely higher unless bad news stops the trend.  And . .  that could happen in this environment.

That’s about it for now.  Looks like a heavy news week next week and how the market reacts (or doesn’t react) will give us a clue as to its strength.  Have a good week.      ………..  Tom  …………

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

Some Improvement, But Caution Remains September 15, 2018

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Sept. 14, 2018 – Late last week overall conditions improved, but just a bit.  You can see on the chart below that Money Flow & Price Strength got “better”, but the other indicators remain “Bearish” overall.

What I do find interesting is the volume bars at the very bottom, especially on Friday (the last day).  “OK” but certainly no one was rushing in to buy bargains off of this dip.  The spread between my Support (red) level at 7976 and my Resistance level (green) at 8105 is very tight.  That pretty much echoes the tightness of the daily bars and the sideways consolidation as well.  It just looks like there is too much indecision out there for anyone to be excessively Bullish or Bearish right now.

Looking at where industry sectors within this economy stand (in the short term) I note in the table below are generally defensive or stable (boring?) sectors.  There is not much leadership coming from Financials, Technology or other (typical) leaders in a bull market.  Now, that could change, but for now it goes back to indecision.

The boring stalwart of Industrials and Rising Rates seem to be the strongest areas for the time being.  I’m keeping some powder dry for the time being. That’s about all for now.  Have a great week.    ………  Tom  ………

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

Off The Top Channel September 8, 2018

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Sept. 7, 2018 – As pretty much expected from last week, price did soften and headed lower bouncing off the upper long term channel (dashed gray line).  An approximate estimated low price would be in the neighborhood of the lower channel line, which I’ve highlighted as the 7700 level.

Of worthy note is that the Sentiment, Volume and Money Flow indicators have turned down.  Price Strength is down & red as well.  Time to be extra watchful to see how your holdings are reacting to the lower general market.  A quick look at the chart above does not indicate “panic selling” as the volume is modest to lower.  It appears that what we see is just a lack of buyers for the time being.  Hence (if things don’t deteriorate) this should be a shallow correction; thus the lower channel as a likely target.

I’ve pulled in my Index long positions to Cash and cut back on my sector holdings.  My market model suggests hedging my stock positions IF further weakness develops.  Buying a “bear fund” to hedge is like buying insurance; one holding helps to counteract the other.

The pie chart below show a mild weakening, but so far nothing major.  (These show the % of the total stocks in the broad S&P 1500 index that are in this status.)

Price Strength –Accumulation / Distribution –I really don’t see any sectors, whether they be long or short, that merit much consideration to buy currently.  IF the market continues to soften then sector bear funds may be in order, but let’s not jump to any conclusion just yet.  Of course, news is always a “wild card”.  This market is weak, and piling on bad news would push it even further lower.

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

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

At The Top of Channel August 24, 2018

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Aug. 24, 2018 – OK, here’s where it gets interesting.  Note the chart below: we closed at / near the top of the channel.  This is where the market has recently bounced lower & headed “south”.  So next week as we head into the (US) holiday weekend, will it bounce lower or continue higher?  We’ll have to wait but I do note Price Strength and Volume Flow heading higher.

Volume lately has been anemic but late in the week it did pick up.  The question remains: will this strength follow through next week.  Support & Resistance levels remain the same and will serve as a guide.

Else where, I get a monthly e-mail from his site: www.automated-trading-system.com/trend-following-wizards-june-2/ , which puts out performance figures on some large “trend following” CTAs (Commodity Trading Advisors).  Many of these are well known in the industry, and I find it interesting to benchmark myself off of these guys.  With hundreds of millions of $ (or more) under management they make a heck of a lot more in fees than I can even imagine.  Check out the website & subscribe (it’s free).  In the mean time, here’s the report for June and Year To Date.
Hopefully you can read this OK or blow it up.  I find it interesting.

I see strength in Healthcare, Government Bonds (yes, hard to believe), Consumer Services and Pharmaceuticals.  My dominate index is Small Cap. Growth.  I’m being a bit careful here as we approach a channel & market top, but ready to commit more in either direction.  My stock positions are 90% full, so hedging is my insurance if we drop.

Take Care & have a good week.   …………  Tom  ………….

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

Range Bound August 19, 2018

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Aug. 17, 2018 – A quick look at the chart below shows why this market is range bound; i.e. bouncing between high & low price levels.  Note the “short term” trend channel and the support and resistance price levels are nearly the same.

NASDAQ

This market is looking for a reason to go up or down, but can’t find the follow through to break out of this range; at least not yet.  Echoing that idea is the rather low volume . . . not much commitment in either direction.

Looking at the top performing sectors (below) we really don’t see the typical leadership; that being Finance or Tech or Energy.  So the major sectors are on vacation too.

Top Sectors

Looking at the percent of stocks in the broad S&P 1500 Index and their status we note it being fairly even without much bias in either the Bullish or Bearish direction:

Price Strength –

Price Strength

Stocks in Accumulation or Distribution –

A-D

So, overall not much to dwell on for now.  The old saying “Never short a dull market” may have some validity here because this appears to be more of a pause.  Keep an eye on these levels and watch for volume confirming any directional change.

That’s about it for this week.  Take Care.    ……….  Tom  ………..

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

Summer Doldrums ? August 11, 2018

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Aug. 10, 2018 – This is another short post as I’m winding up my “road trip”.  A short look at the chart below shows some very narrow range bars from Tuesday through Friday of last week.  We’ve bounced off the previous swing high and now that swing high is resistance to future price increases. That resistance is at the 7933 level on the NASDAQ Composite Index (green line).

Support of prices are at the 7604 level (red line).  These are our “lines in the sand” and represent where buyers and sellers have previously taken a stand.  I own personal feeling is that this market has entered into a trading range, a.k.a. the summer doldrums”.  Hey, it’s August and many of the big guys are on vacation.  Likely not much will happen until after Labor Day.   . . . . . unless a big news item comes along.  This administration appears to be trying to solve problems by edict . . . . and that doesn’t appear to be working out well in the short term.  (i.e. tariffs)

Where I see some strength is in Pharma, short China, short Gold, Wireless and Healthcare.  Banks and Financials bring up the rear.  So, let’s be a little patient for now, but be careful also.

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

Weak Market – Waiting for Confirmation July 28, 2018

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July 27, 2018 – Thursday and Friday showed us weak bars.  Does that mean the market will correct, and if so, how much ?  The answer is: Possibly.  My hedging indicator confirmed a possible weak market on mid week, but I will need confirmation of that on Monday.  If the market momentarily (a couple of hours) blimps down then recovers, that will negate the signal.  If it continues to go lower, then I will “buy insurance” and hedge (some) of my positions (i.e. buy a bear fund).

IF I had to predict, I’d say this is a short term weakness, with the NASDAQ going down to around the 7443 level (red line), which is also the lower level of the trend channel.  That would put us back to the late June swing lows.  From there we could ether expect buying coming back in at these lower prices, or a more severe drop.  Volume will confirm the price action.

In the longer term, this market doesn’t look too bad.  That’s one reason I doubt if we’re in for anything major.  Right now here’s how the stocks in the S&P 1500 Index are looking:

Price Strength –
Price Strength is fairly evenly distributed; no major issues of “over bought” which may indicate a major top.

Accumulation/Distribution –Accumulation is dominate; likely no major issues.

My philosophy is to error on the side of safely, so my hedge indicator is very sensitive to weakness and does NOT distinguish the level of weakness.  Thus I’ll watch Monday’s price action and volume closely.  As the saying goes “It’s better to be out wishing you were in, than in wishing that you were out.”

Have a good week, it could be interesting.    ………… Tom  …………

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

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