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No Demand June 15, 2019

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June 14, 2019 – For those that are new to my blog, I update over the weekend (Saturday or Sunday).  I try not to miss a week, but if I’m on the road, postings will be a little briefer than “normal”.

OK, last week was interesting, especially the last 3 days.  Looking at the chart below I note very narrow bars that are in an unusually tight grouping.  This indicates that buyers equaled sellers; i.e. little net price movement.  That coupled with lower volume would indicate “No Demand”, at least in the short term.

It just looks like everyone is waiting for a sign to either go back to buying or to go back to selling.  Since so much of trading now is affected by computer algorithms it is interesting to see what the volume actually is when there is not a clear cut trend (up or down) or a “reversion to the mean” (over bought or over sold) condition.

Market Sentiment has improved as well as Volume Flow, but Money Flow remains negative and Price Strength neutral.  My more advanced market model is giving similar signals; lightly net positive but far from being fully committed to the Long side.  A close above 7965 would be a positive and a close below 7292 would be negative.  It just seems like there is to much uncertainty out there + it’s summer time to boot.

Looking at a longer term view of the pie charts of the percent of stocks in the “investable” S&P 1500 Index . . . . . .

% of stocks in Accumulation / Distribution :
% of stocks with Strong / Weak prices (past 20 days):

The A/D is about evenly balanced; a normally healthy sign.  The strong/weak is biased toward Strong to Neutral.  No major warning sign yet.  The sector analysis table shows a little different picture (IMHO).

I note the rise in more defensive sectors of Utilities, Real Estate and Healthcare.  Something to monitor as concerns about growth both in the US and worldwide seem to have investors on edge.  Broadcom (internet & cell phone parts supplier) estimated down their earnings due to the China tariff war and semiconductor companies are doing the same.  If Technology earnings fall flat in the second quarter (reporting in July) that would be a significant blow to the entire US market.

I am modestly long, but will take some “off the table” early next week if markets continue to weaken or cannot show a clear sign.   Have a good week.  ……..  Tom  ……..

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

Right at (price) Support Level May 25, 2019

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May 24, 2019 – Once again a up & down week, but of note is that we’re right at the 7645 price support level on the broad NASDAQ Composite Index.  This is a “logical” level to spring upward, but also a level to be concerned about if it closes below that.  That break below doesn’t mean a crash, but just validates market weakness and a likelihood of further decline.

It’s rough to keep up with the quick moves; mostly driven by news & “tweets”.  Looking at a longer term perspective the McClellan (volume) Summation Index shows that over the past months there has been roughly 5.5% more downside volume than upside volume.  Also the chart above shows most indicators are negative or at best, neutral.  It’s looking like the “Sell in May & Go Away” idea has caught on this year.  It could be a long summer of back and forth.

Earnings season is wrapping up and it has been generally “OK”, with a few cautions going forward.  The trade war with China is beginning to weigh on an increasing number of businesses, and that will likely affect the next earnings reports over the summer.  I haven’t shown the SP 1500 Index pie charts for awhile so let’s take a look:

Price Strength – % of Stocks in S&P 1500 Index:

No surprise that most stocks in significantly below their 20 day moving averages (red shades above).

Accumulation / Distribution – % of stocks in S&P 1500 Index –
The 3 sections above are about equal (roughly 1/3 each), so not a whole lot of selling just yet.

As far as sector strength (in the short term), there is strength in defensive issues; Telecom, Wireless, Government Bonds, Utilities, Real Estate.  Weakness in Emerging Markets, especially China.  Semiconductors continue their weakness with Technology not far behind.  I remain modestly invested and modestly “hedged” to protect the portfolio.  Since the economy is fairly strong, a rebound in prices could happen at any time depending on news.  A time for caution and to keep an eye on the exit door, but not to run toward it.  (IMHO)

Have a Good memorial Day (in the U.S.) and a great week.     …………  Tom  ………..

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

Between a Rock and a Hard Place May 18, 2019

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May 17, 2019 – I was temped to title this “Between Iraq and China”, but decided to drop the idea of a pun.  This market continues to be majorly influenced by news.  To be bouncing between a trade war and a fighting war is not a recipe for a stable investing environment.  Nuff said.  But the real “Rock” is the 7645 level (green dashed line; price support) and the “Hard Place” is 7965 (red dashed line; price resistance); note chart below (NASDAQ Composite Index).

The indicators are mixed: Money & Volume Flow are negative, Price Strength positive and Sentiment negative.  I find it interesting that prices did stop near the 7645 area, that’s where the last “buying” occurred, and that was drawn in quite awhile ago.  The same for the 7965 level, where selling came into the market.  These are “weekly significant bars”; not true Wyckoff, but inspired by his work.  This is a fairly narrow range in between these levels so we won’t have to wait very long for something to happen.  I should point out that on an intraday basis, we should be on the lookout for a “shake out” if market makers try to do a “head fake” at either level and then head the other way.

The table below shows where the market is strongest in the short term.  Namely Telecom, Wireless, US Treasurer Bonds, Real Estate Utilities, etc.  The trend I see here is that these are generally speaking, defensive sectors.  Sure, Tech and Internet stocks have recovered, but so far they are not registering.  Note how low the Semiconductor sector ranks.  Major weakness continues in Latin America, China and Emerging Markets.

Currently I have a light hedge on portfolios as a defensive tactic, but that will come off if I see a strong close above 7965 & then go to Cash while I wait for an “all clear” signal.  Time to get ready for a possible break, the question is which way, but it seems most are thinking defensive right now.

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

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

At an Important Level May 11, 2019

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May 19, 2019 –  This will be rather short, but that’s O.K. since we’re at an important level.  That support level being 7965 (close to it).  Note on the chart below that every “heads up” indicator has turned negative in the short term, and we’re resting just a small bit below the 7965 level.

While it sounds like we’re in bad shape from news reports, the price action has really not been that bad.  Volume is up just a little, so people are not rushing for the exits and the lows for many bars (days) were made in the morning with a strong close at the end of the day.  People are on edge with all of this trade talk but so far no panic.

Looking at the stocks in the broad S&P 1500 Index we note that there remains a health, near equal, split between the number in Accumulation, Distribution and Neutral.

But I have seen a shift in the sector strength table (below).  The technology stocks have been hit hard while the rotation has been toward “safer” Treasury Bonds, Real Estate, Healthcare and Pharmaceutical sectors.

Of note is that Banks and Financials are hanging in there for now.  Gas/Oil, China and Emerging Markets join Tech at the bottom.

Right now I’m moderately “hedged” via purchase of a “Bear Fund” that will go up when the market goes down.  I look at this as a synthetic Cash position / portfolio insurance that can be added or removed quickly.  Next week will be interesting to see who or what will push this market in one direction or another.  I’m watching bar price action and volume for clues, but right now things look OK for the time being.

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

The Grind Higher May 4, 2019

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May 3, 2019 – With all the news about the (US) economy, jobs and new market highs, it’s easy to get caught up in a near euphoric state of mind.  But as some have pointed out, a market correction starts at the top, not the bottom.  This week started slow then got hit on Thursday only to recover on Friday.  Not much movement really.

We see on the chart above how we were about to get indicators to rollover in sync and then they recovered.  Money Flow and Market Sentiment showed weakness only to barely recover.  I note that Price Strength did go from “strong” to “neutral”.  Earnings have been pretty good but stocks are fairly well valued.  We’ll need added buyers coming into this market to drive prices higher; earnings alone won’t do it at these prices.  I’m looking at the 7965 level on the NASDAQ Composite Index as a near term support level.  So where does the incremental buyer come from?  The chart below shows that “Dumb Money” (small retail buyers) are approaching a high and “Smart Money” buyers (intuitions) are getting cautious & less confident.

This data along with the number of stocks advancing vs. declining and the number of new highs vs. new lows shows that the upward momentum is slowing and the participation in the moves is getting smaller.  (my Thanks to SentimentTrader.com for this chart)

Another factor is the issue of sector rotation.  We’re seeing Tech slow down and Internet stocks really slowing, while Banks and Financials are finally showing leadership.  Healthcare and Pharmaceutical are recovering from the “social medicine” scare a few weeks ago.  The table below shows the current strength of the major sectors.

That’s about it for this week.  The market loves low interest rates and high consumer confidence so the grind higher continues, but it’s beginning to shows signs of being tired.  Bad news could be a trigger and if it comes (when it comes) it will be quick.  Have a good week.        ………….  Tom  …………

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

Rally Continues, but Narrows April 28, 2019

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April 26, 2109 – The march higher for this market continues, but it’s beginning to narrow down to fewer and fewer stocks.  More on that shortly.  Looking at the chart below it’s clear that all basic indicators are positive and now we’ve broken to new highs.  Earnings drive the market and generally they have been fairly good so far.  Next week will bring more reports, especially from the big name companies.

So . . . what’s to worry about?  Well, not to worry so much as to be concerned.  I thought it would be interesting to see just how many stocks (in the S&P 1500 Index) are at or near their 52 week high (price).  After all, most should be up there since the market indexes are . .  right?

The pie chart above shows that nearly half of the stocks in the index are actually more than 20% below their previous 52 week high (pink).  And, only about 25% are within 5% of their high (darker green colors).  What this means is that the climb in the index value is being fueled by fewer and fewer stocks.  The general term for this is “market breath”; i.e. how broad is the actual market and how many are participating in the rally.

Since many indexes are weighted by either the size of the company (S&P 500) or the stock price (Dow Jones Industrials) or by industry (NASDAQ 100 – technology) we sometimes forget about the “other guys”.  This doesn’t mean that “all Hell is breaking loose”, but it does bear watching.  If this narrowing continues into the major indexes and only the “big guys” (Apple, Amazon, Google, etc.) are participating, then we have a problem.  For the time being we just have to go where the price strength is and monitor the rest.

Speaking of price strength, here are the sectors that show it (in the short term):
In the same vein, no surprise that Tech, Internet, Consumer Services continue their leadership roles while Banks and Financials are catching up now. I continue to be long this market but I’m seeing fewer good opportunities.  Is it time for “Sell in May & Go Away”?  Could be, but in this 4 year election cycle it probably will be a minor correction that will be short lived.  We’ll see.  Nothing is promised, that’s for sure.

Have a good week.    ………  Tom  ……….

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

Market on “Hold” April 20, 2019

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April 18, 2019 – Another lack luster week.  The S&P 500 (large cap index) down 0.08% and the broad NASDAQ Composite Index up 0.17%; in other words a flat week (though only 4 days long).  It just appears that this market is on “Hold” . . waiting for more earnings data . .  waiting for the reaction to the Mueller Report . . . waiting for direction.  Next week we will begin to see some major corporate earnings coming out and that will likely provide some reason to move in one direction or the other.  A few major banks reported last week and though it was mixed, it was better than expected and banks rallied.

Of note is the sentiment indicator that turned down this week, while other indicators remain positive.  Prices remain within the Short Term Channel (purple lines) and above the 7777 Support level but below the 8107 Resistance level.  That 8107 level is important because it was the last significant high price way back in September.

Looking at sectors we see short term strength in Semiconductor stocks, Technology, Banks, etc.  I note (again) that China has slipped down to mid pack levels.  Concerns about the trade negotiations?  Also of note were the Healthcare and Pharma sectors stocks that took a major beating this week.

I remain nearly fully invested but getting a little concerned about the momentum slow down and the overall value of stocks in the US.  In order to move much higher there will need to be signs of profit or growth or both.  Until then I’m watching for signs of Distribution . . . none yet, but I’m watching.

Happy Easter & Happy Passover to those who celebrate them.  Take Care and Good Trading.        ………… Tom ……….

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

Continuation April 14, 2019

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April 13, 2019 – Not much to say this week as this market continues to grind higher.  All indicators remain positive, though Volume Flow is weakening somewhat.  We can see a slowing of trading volume in the lower volume bars as well.

Lower overall volume does not necessarily means lower prices, but IF “everyone is in” this market that is going to buy, the next direction is not up, but rather down.  Let’s keep an eye on volume when we get a down bar.  A wide spread bar on heavy volume would indicate strong selling.  But until then I show resistance at 8107 (previous market top) and support of prices at 7777 (last significant weekly bar).

Sector strength remains very similar to previous weeks.  Semiconductors, Consumer Services and Technology issues are ahead of other sector stocks in the US.  I note that China has weakened over the past week and Banks & Financials have move up.  (likely driven by JP Morgan’s positive earnings report)

Now we are headed into earnings season and any nasty surprises could upset the “apple cart”.. I sense that many traders are nervous as we approach the previous market high.  A slight pull back would be typical.

That’s if for now; a slowing of the upward momentum but the trend continues.  Have a good week.  …………..  Tom  ……………

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

Market Continuing Higher April 6, 2019

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April 5, 2019 – The train keeps rolling down the track.  While there is “excessive” optimism from many sources you just can’t ignore the steady drive higher.  We’re now fairly close to the previous high set back in September and that 8107 level (green dashed line) is now our next point of possible Resistance.
The 7777 level (red dashed line) is a point of possible Support.  Market Sentiment, Money & Volume Flow and Price Strength indicators are all Bullish.  This week the bullishness was fueled by China trade hopes, strong employment data and Trump seemingly backing down from shutting down the boarder with Mexico.  (Editorial:  Interesting how someone can create a problem, then “solve it” by not following through, and ask for “credit”.)

Overall the pie charts of the percent of stocks in the S&P 1500 Index (below) are very bullish as well.

Price Strength – Accumulation / Distribution –There is a fair amount of green in those charts, supporting the bullishness of this market.

The table below shows where the short term strength is in this market:

Let’s not get overwhelmed by this strength but rather continue to move with it and adjust positions as it matures.  Stocks and those sectors inevitably change and rotate, and so should we.  China, for example, was going sideways just a week ago.

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

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

Within Range March 31, 2019

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March 29, 2019 –  I’m pretty busy this weekend with family activities, so this will be short and to the point.  The chart below shows how this market is steadily strengthening and has broken above the 7643 level (NASDAQ Composite Index).  That’s where selling took place on a weekly basis the last time.  This is a good sign, but many under estimate the damage that was done in December of last year.  There was a ton of selling volume.  So while breaking above 7442 is bullish, it only is in the near term.

For this (and other) reasons, my thinking is that we’re in a longer term trading range between 7850 (past top) and 7442 (previous swing low); these are marked with blue dashed lines in the chart above.  Note Market Sentiment remains bearish and Money & Volume Flow indicators are fairly anemic.   Hence my gut feel that we’re likely in a trading range scenario right now.  We’ll just have to see if the only way traders can make money is to “sell the rips & buy the dips” in the coming days / weeks.  The strength in the Bond market (higher prices & lower rates) is another concerning factor.  The old saying that the bond market is wiser than the stock market has some validity.  What does the bond market know that the stock market doesn’t?

The table below shows what sectors are strong to weak in the short term.

Currently I’m modestly long this market, but have Cash to deploy if & when we get a solid turn in either direction.  Have a good week.  ….  Tom  …..

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

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