10/12/2022: Quiet day waiting for Consumer Price Index update Thursday 8:30 am
THE MARKET’s MESSAGE: Market in DOWNTREND (CORRECTION)
The market was almost flat Wednesday with only one index moving +/- 0.2% (my criteria for “significance” in price change.)
Stepping back and looking at the current market action, the major indexes continue to fall to new 2022 lows. And the recent index drops are adding up. Here’s how far the 3 major indexes have fallen since their all-time highs near the end of 2021:
The above data is from the table on page 4 and is updated and included nightly in this newsletter.
If you feel like you have accumulated some significant losses this year, you might reconsider the weakness in a “buy and hold strategy!” Cash is sometimes the safer place.
The Investors.com Big Picture column today pointed to the continued weakness in this market.
· The market accumulation/distribution ratings are just about as low as they can get:
· 4 stocks on their leaders list rose in price and volume (accumulation days).
That’s nice to see there are some rising stocks to pay attention to. But the Big Picture column also listed:
· 8 stocks from the “leader list of strong stocks” that were down with higher volume (distribution days).
That unbalanced ratio of the day’s leaders losing versus winning is another indicator of the continued weakness of the current market.
Shorting dropping stocks can be tricky. Quick recoveries can eat up your gains.
>>>> You can avoid much of the impact of a Downtrend by simply stepping out of the market into a cash position. If you are confident this downtrend will continue, you can buy an inverse ETF like the PSQ which rises about 1% for every 1% drop in the QQQ. Not only do Downtrends happen fast, but so can a reversal back up. If you are holding an inverse ETF like the PSQ when the market rebounds higher, you will lose money in the rising market.
Notice the last 5 days were all red (falling) days. Add to that concern, the fact that 3 of those days had higher volume than the day before (see blue arrow on chart.) Those 3 days were Distribution day indicating institutional selling.
GOOD NEWS:The percent of stocks with A or B Accumulation/ Distribution ratings rose from 19% to 26% in just the last 2 weeks! That shift shows a lot of new buying going on –They can’t hide their buying from us!
Here is the complete Accumulation/Distribution Ratings of all Stocks that Investor's Business Daily covers.
NOT let it crash just because you believe the correction might be over. The only way I confirm the correction is over when a new Uptrend takes off.
The Market Factors, Counts and Ratings emphasize the weakness of the current market:
I hope you have not ridden this market down as it fell this year. Yes, it will come back up – but when? And how much can you lose by hanging on a falling market? (Answer: A lot! )
Cash is a position!
Wishing you, “Many Happy Returns,”
Charlotte Hudgin, the ArmchairInvestor, (214) 995-6702
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