10-20-2022 DOWNTREND Market stuck in indecision: Up....or...Down?

October 21, 2022

10/20/2022   DOWNTREND    Market stuck in Indecision: Up….or….Down?

THE MARKET’s MESSAGE:   Awaiting clear direction signal. Cash is safe harbor.

I am itching to jump into this market. Butto do that, I’d like to get a clear market direction signal. What hints I can find… are in conflict.

So I wait until the market makes adirection decision.  Sometimes waiting in cash is the sane move.

So I wait until the market makes adirection decision.  Sometimes waiting in cash is the sane move.

Good news for a possible new Uptrend signal:

·      The Nasdaq, S&P500 and DJIA continue holding in an Attempted Uptrend  (Thursday was day 6.) The major indexes are all missing the key price/volume action to signal a new Uptrend - a strong rising day with higher volume.

·      Weekly jobless claims declined by 5.6%.

·       ENCOURAGING NOTE: Notice the volume barsin the Nasdaq chart to the left. In the last 6 days of this Attempted Uptrend,the 3 blue lines (rising days) all have higher volume than the day before.  Two of those volume bars were the highest daily volumes in a month. Are the institutions trying to sneak into a new Uptrend without exciting the general public?

REMEMBER:As an individual investor, you have the distinct disadvantage compared to the huge institutional players:  

·      They have better research and better connections (known as “insider information”). But you have one key advantage they can never take away from you….

·      You are small and fast!

……. o   You can buy a full position in just one click!

....... o  But Institutional investors can take monthsto buy their full positions. With their huge funds, they have to buy in smaller steps over time so they push the stock price too high, too fast.

o  The trick for you to beat them is in two tools:

§ Good research (we have that with Investors.com) and

§ Daily evaluation of each stock in your portfolio.

·      BOTTOM LINE: Your advantage over the institutional players is:

o  You are small and fast

o  They are big and slow

o  >>>> And that advantage will never goaway.

Your dailyassignment to outperform the Wall Street big boys:

·      Review each stock in your portfolio for signs ofweakness – consider selling losing stocks

·      Continue to build and tune your watch list soyou can buy the best stocks at the best time (breakouts from strong bases or atadd-on points.)  

Recapon Follow-through day definition:

A Follow-through day, as discovered by William O’Neil, founder of Investors.com, can occur on day 4 or later of a new “attempted uptrend.”

Tuesday is day 4. You can see the prior 3 days on this Nasdaq chart. Note that not everyday in this 4+ day period has to be a rising day. But every day must NOT undercut the day 1 low. Since the Nasdaq is now almost 6% above the recent low,an undercut is unlikely unless this attempted rally is faling.

>>>  The current “Attempted Uptrend” the market is in will stay in effect until one ofthe major indexes (or both) . Either the Nasdaq or S&P500 ::

·      has a Follow-through day signaling  the start of a new Uptrend, or

·      undercuts the recent low (killing the currentattempted uptrend).

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Charlotte Hudgin
Editor, Armchair Investor
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