10/13/2022 DOWNTREND. Market reverses morning drop to end up 2+% with higher volume
THE MARKET’s MESSAGE: Market still in Down Channel
Excellent quote from Investor’s Business Daily’s Big Picture column after Thursday’s market close, by Scott Lehtonen that may explain the odd price drop that then rebounded Thursday morning.
Earnings reports cause many of the largest moves in stocks, and they require special care. Strong earnings can fuel top stocks to previously untouched levels — and above new buy points — while a less-than-impressive announcement can send shares tumbling.
The stock market's reaction to an earnings release can often tell you more than the earnings themselves. If the results seem strong but the stock slides anyway, investors may be concerned about the sustainability of growth, rising costs or other potential negatives.
With the market in correction mode, investors should be tracking companies that handily beat earnings results and have strong upside reactions. They could be among the stock market's leaders if the market is able to extend its rebound.
BOTTOM LINE: Thursday was the start of a new market rally attempt – but will it stay above prior lows and have a Follow-through day to start a new Uptrend?
That market action would give us an opportunity to buy some of the stocks on well-tended watch list! Please tell me you do tend your watch list daily…. We could be very close to a follow-through day (day 4 or later substantial index rise with higher volume.) You have a few days to tighten up your “possible buys” list!
Remember: One rising day does NOT equal a new Uptrend.
What we can see is a single strongly rising day. Is it a bluff? My advice:
Wait and Watch.
With an up-to-date, watch list, when the Uptrend does take off (on day 4 or later of a new attempted rally), you can quickly get into buying action to buy best performing stocks. Just keep re-validating your waitlist stocks. Pick the best few stocks that are near a buy point, and decide how much you will buy:
– It might be a full position if the stock’s numbers are strong and it is taking off,
– Or a half position if you really like the stock and its ratings but it has some aspect you are concerned about.
If you are uncertain or uncomfortable with the current market action, remember: CASH IS A POSITION – and a safe position at that!
If a healthy new Uptrend evolves in the next few days, this market could have a nice run considering the33.3% drop the Nasdaq has just experienced.
Wishing you, “Many Happy Returns,”
Charlotte Hudgin, the Armchair Investor, (214) 995-6702
>>>>FOR MARKETSMITH SUBSCRIBERS: Friday’s workshop on 3-Waves Down was not to be missed. And the recording is on the MarketSmith site.
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Yikes!! The percent of A and B rated stocks dropped from:
· 30% of the market last Thursday
· to a weaker 25% Thursday.
That’s a lot of unforgiving selling goin’ on. What do “they” know that you don’t?
My team is in the process of bringing the nightly Armchair Investor newsletter into a blog format which will allow web “crawlers” to identify its news content and direct interested web surfers to it.
Many parts of the newsletter were simply copied over every day. These non-changing items will be left off the daily newsletter and available on the new site as your reference in the weekend newsletter.