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Watching & Waiting for Something September 29, 2018

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Sept. 28, 2018 – We’re in a classical trading / consolidation range and the market seems to be just “watching & waiting” for a reason to go up or down.  There is plenty of news to spark things, but we just haven’t seen “The Big One” yet.

8105 is my resistance level (green) and 7976 my support level (red); these are (my version) of Wyckoff “significant bars”.  I’ve mentioned before that the low price of a weekly bar that closes much higher on volume is a significant price level of support.  That’s where “buying” last came into the market.  As is the high price of a weekly bar that closes much lower on volume is a significant resistance level; where “selling” came in.  The tricky part is in a consolidation phase where these two levels tighten up and get close to each other.  But, my feeling is that we may be in an Up Thrust phase of a Distribution structure; that remains to be confirmed.  Let’s not get tooo bearish just yet though.
I note market sentiment remains negative, Money Flow a little bearish, Volume Flow just sideways, not saying much.  (Short term) Price Strength just kicked up to slightly bullish.  Long term trend line channel is up and Short term channel shows a price break above the upper line, which is bullish.  The problem with (my) automatic Trend Channel lines is that they need price pivots (swing highs & lows) to reference and draw off of, and in a consolidation, that can take a while to develop.  I’m still thinking we could head lower to around 7700 on the NASDAQ Composite Index.

Let’s look at where strength is in the market in the short term –
Biotech, HealthCare, Energy (oil) and a very few Technology companies are showing up in my stock scans.  Japan has been doing well and I’m watching Latin America as well.  China is a rollercoaster for the time being.  Well, there’s not much else to cover.  I do have positions on but also a light hedge” just in case.  I’ll put more hedge on or remove it when this market gives me a better indication of direction.  One thing to gauge the market strength is how it reacts to news (either good or bad).  I learned that a long time ago taking a course from Michael Price.  (“Strong markets don’t react much to bad news, where Weak markets fall hard”.)  It will be interesting to see how this market reacts in the coming weeks.

Take Care, Good Trading and have a good week.  ….  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 the Channel September 2, 2018

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Aug. 31, 2018 – We’re at the top of the “Long Term Channel” (dashed gray lines) again and this is where this market typically pulls back.  Think of it as 2 steps forward and one back.  So far the pull backs have not been significant and the net progress continues.  Things looks fairly positive on the chart below.

Market Sentiment is Bullish, Money and Volume Flows are positive / Bullish and we’ve broken above the “Short Term Channel” (purple lines).  Of note is the upward move for price support to 7976 for the NASDAQ Composite Index.  Not much else to say except a pull back here would not be a surprise.

What is leading the market higher (in the US) are: Healthcare, Small Cap. Growth stocks (in general), Consumer Services, Technology, Biotech and Internet sectors.  What will be interesting is if we see leadership broaden beyond technology based sectors as we head into September.  Also, when a down blip occurs, how will these sectors react?  Will the sell off be shallow & brief or severe on high volume?  That will give us a key to the overall heath.

Right now I’ve got to “go with the flow” and the flow remains positive in the near term.  Have a good week.    ………….  Tom  …………

Price chart by MetaStock; pie chart. 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.

Caution Ahead July 22, 2018

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July 20, 2018 – I’m seeing the early stages of Caution beginning here.  No “Red Flags”, but just a “Heads Up” to pay extra attention to market action this week. The reasons are: lethargic Money Flow and the recent price / volume action.  Looking at the chart below I note narrow range bars (red ellipse; buying=selling demand) and very low volume (red arrow; much below the red 20 day average line).

Is this just a pause where there is equilibrium and hence little movement or is it Lack of Demand?  Either is possible but the classical chart pattern is a “Coil”, where prices go nowhere in a tight range only to breakout suddenly in one direction or another.  Personally, I’m favoring a Lack of Demand, which means a soft / lower market.  But as we’ve seen, any news item could break this equilibrium effect.

The table below shows what sectors are doing in the short term; what to favor and what to avoid right now.  I’m waiting for the market to move and IF it goes lower I won’t wait to lighten up my longs.  A touch below 7746 would concern me, likely back to a light hedge for protection.
That’s it for now.  Perhaps the “Summer Doldrums” have set in; or not.   Just a word of Caution for now.  Have a good week.   …..  Tom  …..

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

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