1/19/2023H UPTREND Major indexes drop but volume lighter – Not a distribution day
THE MARKET’s MESSAGE: QQQ holding at 200-day line.
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The Nasdaq and S&P500 hit new year highs Tuesday but only the Nasdaq did it with a notable 7 days in a row of higher closes (the longest rising run since November 2021.) Volume rose on many of the rising days - creating accumulation days of wide-spread market buying.
Since the market woke up after the New Year’s holiday, the leading indexes have shined nicely:
After the Nasdaq’s 7 rising days (Wow!), Wednesday’s 1.2% pullback was not a surprise nor much of a disappointment. Thursday’s second drop in a row took the Nasdaq just below its 50-day line.
· After 7 rising days (some of which were quite significant), a second down day is not much more than a minor divot in the road.
· Another point that made the dip less of a problem and more of just a minor annoyance was the lower volume on this second down day. But I wonder if the recent rise is already losing steam?
All three major indexes had lower volume on Thursday, taking away some of the threat of 2 declining days.
Turn to the ACCUMULATION/DISTRIBUTION table below. Isn’t the shift in today’s ratings interesting?
· What was going down, went up.
· And what was going up was down Thursday.
NOTE in the ACCUMULATION/DISTRIBUTION table below the BIG GAINS in the stocks with “As + Bs” growth – That’s a 14% increase in A and B rated stocks in just 2 weeks, as the stocks that were sold off in the last few weeks of last year, were repurchased to make the start of the new year lookgood!
Note the mediocre ratings in the MARKET FACTORS table below.
· The number of accumulation days is the same count as the distribution days.
· The Rising/Falling stock ratio is 1.1, just about even.
· And note all of the major indexes have mediocre “C” ratings.
These disappointing numbers don't kill my enthusiasm for this new Uptrend. They just remind me to keep an even outlook - the market can go either way tomorrow.
Do the last 20 days show us more? Yes.
· Notice the colors in the price column. The Green highlights point to days that hit new highs in the last 20 days. You probably noted this pleasant run-up over the last 7 days.
BOTTOM LINE: This market has NOT made up its mind whether it has hit the bottom or will continue lower. The Federal Reserve’s comments, congress’s actions about the deficit and adding more (expensive) funding to help in the recovery all play into the outlook for the economy.
There is not much to say about the big picture of the current market except it has a lot of ground to cover before the market hits new high territory.
STOCK WATCHING: Send your suggestion on which stocks to follow in this newsletter. I am looking for just one stock at a time, for training purposes.
Wishing you, “Many Happy Returns.”
Charlotte Hudgin, The Armchair Investor, (214)995-6702