On Monday, the market opened up with higher volume after the Thanksgiving weekend. But was it really “higher”? The major indexes’ volumes were NOT higher than the average volume - following Friday’s early market closeon the day after a major holiday, three facts were just about 100% guaranteed about Monday’s volume:
1. Monday’s volume would be higher than the shortened, after holiday trading.
2. Monday’s volume would be lower than the average volume as traders typically extend this holiday weekend.
And thus, the day would be “mis-named” a distribution day.
Monday’s “distribution” name is technically correct (lower price move with higher volume), but it misses the day’s price-volume message which was --- nothing but “business as usual – stay tuned to Tuesday’s price-volume as traders return to work.”
So I discount Monday’s volume increase….. but not the drop in Nasdaq (and other indexes) price, That means discounting the day being a distribution day. Numerically it was, but because of the typical delay in after-holiday return, I am not concerned.
I am more interested in the price move – which foundsupport:
· slightly above that ordinal 11,000 (a historical support price) and
· slightly above the lows of the last 2 weeks.
HOW STRONG IS THE CURRENT MARKET?
What would you think of a market with only 2 distribution days (days of heavy selling) in the last 4 weeks? Yes! I would think this Uptrend must be quite strong!
A single distribution day in 20 trading days is rare and is good news showing serious interest in buying this Uptrend. The only thing I can do to show the strength of this market is to move directly to the daily look at the Nasdaq, showing you those last 20 trading days.
Note the new feature I have added to this table. When the Nasdaq index hits a new high in the last 20 trading days of this table, the day’s [rice is highlighted in green. (It just gets better and better!)
When you look at the rightmost column, you will see 16 days have price-volume action consistent an Uptrend and only 4 day’s price-volume action is consistent with a Downtrend. How can a falling day be consistent with an Uptrend? I repeat yesterday’s explanation because this is one of the hardest ideas I teach ….Think ofit like this:
In any healthy Uptrending period of a stock or index, not every day will be rising, In every trend, there will be stocks and indexes that move in the other direction.
· In a healthy Uptrend, I would like to see those falling days have lighter volume. That combination means that the majority of market players are not selling, even though the price dropped.
· In a healthy Downtrend, I would like to see those rising days have lighter volume. That combination means that the majority of market players are not buying, even though the price has risen.
I hope the above explanation adds some clarity toyour understanding of the market direction and, especially, that right mostcolumn on the MARKET ACTION table.
Yes, this is an AMAZING market. Over the last 20 trading days, only 2 Distribution days – a day of heavy selling when the price fell and its volume rose
Repeat of my analysis of mysummary of the Accumulation/Distributiondata – It is still EXTRAORDINARY!!!!
I continue to be excited about the rise in the percent of “A” and“B” rated stocks (stocks that are being heavily bought.) :
· The “A” and “B” rated stock have risen from 38%to 59% in just 3 weeks shows a very strong market:
The stocks with attractive “A” and “B” ratings rose to 59%. That means you could through darts at the current market and probably hit a winning stock (although that is NOT my recommended buy strategy.)
When I originally created the Accumulation/Distribution Ratings table below, I had no idea how valuable it would be in understanding the force of recent market moves.
NOTE: This is an AMAZING market. Over the last 20 trading days, only 2 days were Distribution days – days of heavy selling when the price fell and its volume rose. But notice the 6 Accumulation days – 5 of them were strong MajorAccumulation days rising at least 1%. The other was a minor accumulation days (with a rise at least 0.2% but less than 1%.)
What do you think about Catalyst Pharma? The stock had its first distribution day on Tuesday but ended only 1% below the breakout price. Considering the stock has almost tripled its price in 5 months, I’m not surprised there is some profit-taking. I know I would! Except, then I turn to the stock’s chart and note the stock’s extraordinary IBD ratings:
Wishing you and yours a happy andsafe holiday.
CharlotteHudgin, The Armchair Investor, (214)995-6702
TheMARKET FACTORS table (below) summarize the current market strengths anddirection. GREEN (rising markets, etc.)win!