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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.

 

Market Neutral April 1, 2017

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March 31, 2017 – I want to see a UTAD (Up Thrust After Distribution) so bad, and it may well happen yet, but for now I’ve got to call it “Market Neutral”.  The market is struggling to climb the lower trend line, narrow bars on modest volume.  But it is holding on right now.

Sentiment has improved to “neutral” and both Money & Volume Flows are holding onto a light Bullish posture.  We’re just going to have to wait and see what pushes this market higher or lower.  Earnings season starts with Alcoa on April 10th and it just keeps rolling for the next 3 weeks for the “big guys” to report and guide.  Political news is a wild card in the whole thing.  I’m keeping an eye for either a rush to the exits or a more positive “all clear”.  Make no mistake, this market is expecting very good things.  A case could be made that it is over price and due for some correction, but the markets run on expectations, and not reality (until it can’t be deigned).

I’ve got to go, a busy weekend, but here’s the market sectors that I’m watch for strength:

In the mean time, I’ll watch for an up thrust bar (to a new high), on light volume, followed by a big down bar (wide range) on heavy volume.  Right now I’ve lighted up on some holdings that are showing weakness, waiting for more proof in either direction.

Have a great week.          ……….  Tom  ……….

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

We’re Not In Kansas Anymore March 24, 2017

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March 24, 2017 – Apologizes to ‘The Wizard of Oz’, but this market trend has broken the lower channel line (note below) and that verifies a “Change in Character” IMHO.  The “Trump Rally” has lost its momentum, but the bigger question is ‘has it lost its direction?’

It’s too early to tell just yet since we’ll need a significant Close below the support level (5748).  Looking at the price and volume action, right now it just looks like the market is weak on a “Lack of Demand” / buying.  Volume is low, so there isn’t a rush to get out of this market, at least not yet.  We could just bounce around in a trading range until earnings come out.  Then, we will likely see some action one way or the other.  The lofty expectations for the Trump admiration are coming back to earth and that’s not really a surprise.  It had to happen, this market can’t continue going at this pace without some pause or correction.

We see confirmation in a weak Money Flow and Bearish Volume Flow indicators.  My Sentiment indicator has switched to  Bearish, but remember, we need price follow through to the downside (below support) before we can raise the “red flag”.  Time to honor stops and pay particular attention to market action.  Is the market down, or is it down on increasing volume?  A big difference.

We do have strength in the market, as show below:

The overall stocks in the broad S&P 1500 Index are showing weakness with the number of stocks in Distribution, and increasing.

Price Strength (below) also parallels that of Accumulation / Distribution (above).

I opened with: “We’re Not In Kansas Anymore”.   But we’ll have to evaluate price and volume next week to get an idea where this market is headed.  Right now, I’d say laterally until earnings forces a move either way.

Have a good week.  …….  Tom  ………

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

Still Chugging, but Momentum Slows March 18, 2017

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March 17, 2017 – This market continues to chug along even in the face of “not so positive” political news.  We’re less than 4 weeks away from the next earnings reporting cycle and that could be interesting.  I feel that a lot of good news is priced into this market and if earnings or the expectations don’t hold, that could be about it.  Until that point, it’s likely only minor 3-5% pull backs.

On the chart above I’ve tentatively labeled a possible Buying Climax (bc?) along with an Automatic Reaction (ar?).  This is just a “heads up” possibility as volume doesn’t really support it very well.  Sentiment, Money & Volume Flows all support a Bullish position, so we go with that flow.

The important part is to watch what sectors are strongest and leading the averages.  The table below shows my current sector rankings.

Since these are US sectors, I should also note that China and International funds in general are doing fairly well.  That includes Emerging Markets and Europe.  These have climbed up my World Index ranking over the past few weeks.  I think I may “dip my toe”.

That’s it for this week.   ………..  Tom  ……….

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

Climbing the Upper Channel February 10, 2017

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Feb. 10, 2017 – As the 60’s Rock-n-Roll saying goes: “And the hits just keep on coming !”, and so does this market rally.  Prices continue to hug that upper trend channel line (purple).  The latest rally was (supposedly) sparked by Trump commenting that he’d have a tax reform plan out in the next 2-3 weeks.  This market has high expectations for the new administration.  How it delivers remains to be seen, though past execution of plans leaves room for concern.

nasdaq

In any case “it is what it is” and the markets continue higher.  I’ve spotted in new support price levels to watch for.  The 5575 level is the last price pivot level and the 5522 is the low for the last weekly “significant bar”.  The significant bar idea is based off of Wyckoff’s idea that the low of a major weekly up bar is significant since it showed where significant buying had come into the market.  I may start plotting that level here in the future.

One area I’ve been working on is evaluating industry sectors based on the performance of the stocks in those sectors.  Sure price is important, but so are the number of stocks advancing and the volume of those, compared to the declines.  Strong & broad participation are very positive for continued strength.  The idea of market analysis, then sector / industry analysis, before stock analysis, is very Wyckoff based as well.  Today we call it “top down analysis”, but it goes way back to the 1920’s.

So here’s my latest ranking (it could evolve, nothing is 100% set) of major industries, using the behavior of all stocks in those sectors.

sectors

The colored bar is a percentile ranking and the raw score is next to it.  My goal is to (quickly) provide good information on where to look for opportunities.  That said, I continue to like Metals & Mining, China, Technology and Emerging Markets (especially Latin America).

Always looking for comments & feedback from readers.  Take Care and have a good week.   ………  Tom  ……..

Price chart by MetaStock; table by http://www.HighGrowthStock.com; used with permission.

Year Ends with a Whimper December 31, 2016

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Dec. 30, 2016 – First let me wish everyone a very Happy & Prosperous New Year.  With a new administration in the U.S., continued world geo-political issues and a stock market at / near all time highs, I’m sure that it will be dynamic.  May you always be on the “right side of the markets!”

The past 2 weeks have now proven to be a time of selling.  We can see that from the “Money Flow” indicator at the top (below the zero line).  The good news that it has been rather light.  We can see that in the “Volume Flow” indicator below (flat & has not crossed the red moving average).

nasdaq

I’ve spotted in a new reverse trend line (purple) and it coincides with the 5340 level of near term support.  While Sentiment is neutral, my other trend indicators (not shown) have recently put up the yellow flag of caution.  From Wyckoff analysis we know that the “CO” (a.k.a. smart money) will liquidate inventory over a period of time when the market remains strong to camouflage their activity.

Is this an Up thrust after Distribution?  On an index chart it’s hard to tell because indexes are averages of many stocks.  Also the light holiday volume makes it tough too.  My concern is what happens during the first week of 2017.  We could see significant tax selling as profits are booked early in the year and taxes delayed; maybe even lower.  For the past couple of weeks VERY few stocks have made it through my potential candidate filters.  A sign of weakening.  Right now I don’t see a significant rotation from one sector to another, at least not yet.

This could be just a pause with buyers sitting on the sidelines, and with the volume light, that’s the indication.  But let’s pay very close attention to the coming week (actually 4 days; US & most European markets closed on Monday).  I think a test to 5340 is now a given and if we don’t see buying coming in it could easily go down to 5250.  That would be the pre-elections lows.  Watch the spread of the price bars, the volume of those bars and what stock sectors are moving.

For those of you who want to see a performance review of major hedge & commodity operators, please click on the link below:  http://www.automated-trading-system.com/trend-following-wizards-november/ .  This data is through November, so not complete 2016 data, but you’ll see how the “big guys” have done this year (hint: not all that great).

Here’s an overall look at market strength using stocks in the S&P 1500 Index –

First, Price Strength:

price-strength

Next, # in Accumulation or Distribution:

a-d

The pie chart below shows the sectors of stocks that have made my initial cut for buying candidates.  It also gives me an idea what sectors are strongest now by the number of stocks in those sectors.

sectors

As always, click on a graphic to enlarge it for easier viewing.

That’s it for 2016.  Watch the early 2017 movements.  It could start of with a bang.   …….  Tom  ……

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

How Long Can This Go ON ? December 10, 2016

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Dec. 9, 2016 – “How long can this go on? Lord I’m so tired!”  Lyrics from “Work’in In The Coal Mine”, but hopefully you get the idea.  The point being that since the election (11-8-2016) the S&P 500 has gone up 5.61% . . . .  that’s an annualize rate of 86.81%.  Does anyone believe that a year from now the S&P 500 will be up 81%?  OK, then.  While I’m not predicting gloom & doom, I do think that this steep rate of increase is unsustainable for much longer.

That said, the issue now is how much longer and what next.  The chart below is (re) labeled as a possible Distribution structure; that is selling.  The UTAD is “Up Thrust After Distribution”.  Now we may not have seen that Distribution in its entirety, but we could be getting close.  Why?  Because of those narrow range bars late last week.  Narrow ranges mean that buying and selling are about equal, and after a healthy run up, that means a pause or a possible change in trend.

nasdaq

The problem is we don’t really know just yet which it will be.  Money Flow is neutral, Volume Flow is somewhat positive and Sentiment remains Bullish.  The volume bars in the lower screen show average volume, so no panic to sell yet.  We’ll just have to watch how price and volume acts when we get a pull back.  IF volume increases on wide range down bars, I’m “out a here!”  Let’s keep an eye on the 5250 area for clues.  Every minor pull back has been met with buying and the end of the year is coming with the hope of lower taxes next year .  Any significant weakness may have to wait until after January 1, 2017.  But  . . . be careful the rest of this year.

This is what an “over bought” market looks like (% of S&P 1500 Stocks) . . .

Price Strength:

price-strengthCurrent Accumulation / Distribution:

a-d-sp1500

There’s a lot of green up there.  The question is how much more “buying” (money coming in) is there to go before everyone is onboard?  That’s something to think about.  Next, what sectors are moving the most & strongest right now:

leading-sectors

No real surprises here either.  So I’m “riding” this rally for as long as I can, but we could be getting late in the game for a significant pull back.  After that, does the buying resume?  We’ll see, one step at a time.

For further Wyckoff analysis click here: http://stockcharts.com/articles/wyckoff/2016/12/there-are-no-free-lunches.html

The next two week are very busy for me, so I’ll try and post what I can, when I can.  Please be patient; and have a Happy Holiday.  …..  Tom  ….

Price chart by MetaStock; pie chart by http://www.HighGrowthStock.com; used with permission.

Trump Rally May Be Slowing November 19, 2016

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Nov. 18, 2016 – The “Trump Rally” continues, though it may be slowing down to digest this bounce back to the previous market highs of late September.  Note on the chart below we’re at the 5342 level of the previous (swing) high.  Market Sentiment and Volume Flow are positive but Money Flow and Volume are slowing.

nasdaq

I’ve moved the UTAD (Up Thrust After Distribution) tag over to the current high.  This assumes a Distribution structure which is worse case right now, but more likely it is a Re-Accumulation formation.  The next swing will confirm the structure.  A swing much below 5170 (blue line) would start to concern me and below 5180 could indicate Distribution in the market.  If this market is to go higher, a trading range between 5342 and 5170 could be healthy for awhile.

The pie chart below shows the sectors that are leading the market higher (in the S&P 1500 index). click to enlarge

industries

The chart below shows the relative breath of buying and selling (fairly even), which is a heathy sign.

a-d-sp1500

That’s it for now.  The trend continues up, but this market needs to catch its breath after an aggressive move higher.  We’ll watch for signs of weakness as the market slows.  Have a good week.     …………  Tom  …………..

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

Some Markets Recover – “Risk On” November 12, 2016

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11-11-2016 – Wow what moves; volatility is back big time.  What this chart doesn’t show was the major down draft to near the June “Brexit” lows during the after market hours in the futures market.  By the time the US markets opened the drop was modest and it just took off higher after that.  One thing we do know is that volatility has returned with all of the geo-political uncertainty.  (What will the Donald do?)

nasdaq

In retrospect, looking at the market action on Monday & Tuesday (note the sudden gap higher) there was buying coming in before the election; obviously regardless of who would win.  I’ve labeled the chart with pessimistic / worse case Wyckoff labels in lower case with a “?”.  I typically do that trying to find contrarian price structures.  You don’t have to agree with them, they are just there to keep me grounded.  Indexes usually don’t have very good volume confirmation (IMHO) because they are averages of a wide range of stocks.  And the Supply / Demand “crispness” of price and volume is muddled via this averaging.

What is very interesting is that both very large cap and small cap stocks rallied (with the exception of tech), while the middle of the market was much more lethargic. in nature.  The Dow, S&P 500 and Russell 2000 (small cap) Indexes did well, but not so much with the NASDAQ Composite Index (above).

The pie chart below shows where the current strength is in the market:  (click to enlarge graphic)

sector-breakouts

Not a surprise that Banks and Financials did well with the anticipation of repealed regulations.  (Editorial: ‘What could possibly go wrong?”)

What is a split in market reaction is how the Emerging Market countries reacted; much lower.  In any case now we observe this market.  Do we continue higher and truly get a breakout, or fail and move lower?  The price bar and volume action will tell us.  Wide range bars with the High near the top are bullish, moderate to high volume will confirm it.  A series of narrow bars with high volume will concern me (selling coming into the market).  It remains at time to pick and choose your battles (stock candidates) and be careful.

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

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

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