1/23/2023M UPTREND Market broadly rises for second day in a row
THE MARKET’s MESSAGE: Market (QQQ) shows upward strength, +6.2% in 2023
The market rose broadly Monday on encouraging rumors from the Wall Street Journal (and others) that the Federal Reserve is likely to settle on a smaller interest rate increase than at recent meetings. Investor’s Business Daily published an expectation of only a 0.25% increase. That figure won’t show up as noticeable in my cashflow but it is important to the banks and other financial institutions.
The good news in my world is that the sooner the interest rates stop rising so fast, the easier and quicker it will be to bring the whole interest rate world back into sanity.
In Monday’s Big Picture column, IBD’sBig Picture column listed a surprising number of “Leaders Up in Volume,” 11, an unusually high number versus just 3 leaders down in volume. IBD included an encouraging statement for this Uptrend.
In fact, the whole market seems optimistic:
· The S&P500 has risen 14% above its 2022 low of 14weeks ago, rising from just below 3500 to just over 4000 .
· The Nasdaq hit similar low to high pattern, just 1.8% below that previous “local” high over the same 3-month period.
Is this how the market turnaround begins? I hope so and am watching closely.
Although all three major indexes rose on Monday, the sprightly Nasdaq won the race again with the biggest rise of2.0%.
If you are new to stock market investing, you should not assume that 2020 to 2023 period shows “normal” stockmarket movements. Instead, step backand look at the following table showing the 10-year history of the QQQ, the SPYand the DJIA plus 5-years, 3-years and 1 year returns.
It is not surprising that the QQQ had the biggest gains in the 10-, 5-, and 3-years categories. Remember: The faster they rise, the faster they fall. So the QQQ 1-year losses should not be a surprise. I don’t have to do the compounding math for you to know the 2022 QQQ losses did not deflate my delight after the prior growth.
>>>If you had followed the Armchair Investor recommendations during last 10-, 5- 3- years, you would have earned even more than the buy-and-hold numbers below.
· The QQQ is an ETF (basket) investment in the largest 100 stocks of the Nasdaq (excluding the slower moving financial companies).
· The SPY is an ETF of 500 large stocks traded as a single investment
· The DJIA is a basket of “30 prominent stocks” selected by the DJIA committee usually considered a more conservative investment.
As I have highlighted above, the Nasdaq100 has certainly won the returns race over the last decade. But when the rare but periodical prolonged downtrend hits, the QQQ is usually the looser only to more than recover thelosses during the next rising market. . .
Using the information in this newsletter, you can join the others who take advantage both the Uptrending and Downtrending market.
Good news from the ACCUMULATION/DISTRIBUTION RATINGS OF STOCKS table. Notice over the last 4 weeks, that the % of stocks with A or B (top) ratings, has rising from 44% to 57%, showing the buying of top stocks continues.
Note the mediocre ratings in the MARKET FACTORS table below.
· The number of accumulation days is just 2 above the number of distribution days.
· The Rising/Falling stock ratio is 0.9, just 1 click below even.
· And note two of the three major indexes have mediocre “C” ratings with the Nasdaq leading the rise with a B rating.
In the MARKET FACTORS, COUNTS AND RATINGS tablebelow, note the large number of GREEN ratings, indicating the strength of this Uptrend.
Regarding the MARKET ACTION TABLE below
What do the last 20 days show us more? Notice the highlights in the price column.
· The RED highlights point to new lows in these 20 days. Notice there were just 2 in the past 20 days (4 weeks.)
· 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 9 days.
Note in the last 13 trading days, only one day was a distribution day - last Wednesday. Nine of the last 11 days were rising days.