11/29/22T Uptrend – Market quiet, waiting for FedChair’s remarks
THE MARKET’s MESSAGE: All indexes are above their 50-day lines - a sign of Uptrendoptimism. Download this nightly newsletter at www.armchairinvestor.com
The Market was quiet this week as we wait for Federal Reserve Chair Jerome Powell speaks Wednesday at 1:30 p.m. ET at the Brookings Institution in Washington, D.C.
Investors.com said in today’s Big Picture column, “After four straight 75-basis-point interest rate hikes, fed funds futures traders are leaning toward a 50-basis-point hike at the Dec. 13-14 meeting.”
“Quiet” is a good description of the current stock market – below average volume with smaller moves. You might put a not in your calendar to visit the market as the Fed Chair makes his comments to see how the market reacts to them.
The MARKET FACTORS table shows much of the current market's strength and weakness.
- Strengths: 6 Accumulation days versus 3 Distribution days in the last 20 trding days.
- The Nasdaq is riding above it's 50-days line for the last 3 weeks.
- Hesitation: But in the last 10 days, the Nasdaq has stalled resulting in only 3 rising days versus 7 down days. (overall, the market has been only slight down during that period.)
I ALSO SUGGEST: you turn to the end of this newsletter to get an update on the stock Ihave been tracking, Catalyst Pharma. I believe you will find it as intriguing as I do.
Monday’s “distribution” tag was 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 toTuesday’s price-volume as traders return to work.”
Tuesday was a quiet day since the market is waiting for the Fed chair’s thoughts today.
HOW STRONG IS THE CURRENTMARKET? (a repeat of yesterday’s note)
What would you think of a market with only 2 distribution day (day of heavy selling) in the last 4 weeks?Yes! I would think this Uptrend must be quite strong!
Just two distribution day in20 trading days is rare and is good news showing serious interest in buying and holding 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. (Itjust gets better and better!)
Note that despite the Major Distribution day label on Monday’s index action,…. You have to agree this market is in pretty good shape.
When you look at the rightmost column, you will see16 days have price-volume action consistent an Uptrend and only 4 day’sprice-volume action is consistent with a Downtrend. How can a falling day beconsistent with an Uptrend? I repeat yesterday’s explanation because this is one of the hardest ideas I teach ….Think of it like this:
In any healthy Uptrending period of a stock or index, not every day will be rising, In every trend, there will be stocksand 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 playersare 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, eventhough the price has risen.
I hope the above explanation adds some clarity to your understanding of the market direction and, especially, that rightmost column on the MARKET ACTION table.
Yes, this is an AMAZING market. Over the last 20 trading days, only 2 Distribution days – a dayof heavy selling when the price fell and its volume rose
Repeat of my analysis of my summary of the Accumulation/Distribution data – 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 thecurrent 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.
What do you think about Catalyst Pharma the stock we’ve been following for a week after its first buyable basebreakout?
The first buy opportunity (according to CAN SLIM rules) was a break-out of a classic cup with handle base week ago on11/22 with a very strong break out:
· Price move: +12.5%
· Volume: +104% .
Since CPRX hit its 17.22 , there has been some insiderprofit taking since CPRX hit an all-time high at $14 (see the circles with “-“inside them below – I have red-boxed the insider trading events. Please do notbe put-off by the insider selling. Thisstock sent public in 2007. And quickly rose to $7.43 which it didn’t rise above until it peeked over that price for one day on 9/11/2019. Thus, theprofit-taking by insiders this time as the stock continued to rise to new higherlevels, is not a surprise nor a deterrent.
The stock broke out on11/22/2022 with 1 12.5% price rise and volume 104% above average. Wow!
The stock’s extraordinary IBDratings are what won me over. And they have stayed at extraordinary levels. Thecompanies price growth is firmly rooted in its strong ratings – especially earningshistory, not future promises:
And, “YES” ! It has slipped slightly below its breakout price of $16.76 as the profit-takers have sold offa few shares. I only consider the slight drop as an opportunity to buy somemore shares at a discount. Take a lookat the stock’s recent strong earnings and you will understand.
The stock had its first distribution day on Monday but ended only 1% below the breakout price. Considering the stock price has almost tripled its price in 5 months, I’m not surprised there is some profit-taking. Insider selling is noted on MarketSmith charts with a “-“ insidea circle. I have red-boxed this recent selling as Pharma hit its all-time highin September.
Note: All of the above discussion of Catalyst Pharma is for your education only. I make norecommendations. How you benefit from these comments are up to you!
Wishing you and yours a happy andsafe holiday season.
CharlotteHudgin, The Armchair Investor, (214)995-6702
www.ArmchairInvestor.com (214)995-6702 email@example.com