11/30/22W Uptrend – Market Rallies as Fed Chair confirms probable move to lower rate increases
THE MARKET’s MESSAGE: All indexes are above their 50-day lines - a sign of Uptrendoptimism. Download this nightly newsletter at www.armchairinvestor.com
I remember an old adage: “As the Fed goes, so goes the market.”
In this market, what that phrase means is:
As the Federal Reserve slows down interest rate increases, the market gets excited and rises.
And that was exactly the market’s reaction to the Fed Chair’s comment on Wednesdaywhen he said moderating the pace of interest rate increases “may come as soon as the December meeting” according the New York Times.
My only instructions today? “Sit back and enjoy the ride!”
Or, if you are not fully invested, this is a good time to start culling through your watch list for your best stocks to add to your portfolio.
I ALSO SUGGEST: You turn to the end of this newsletter to get an update on the stock we've have been tracking, Catalyst Pharma. I believe you will find it as intriguing as I do.
HOW STRONG IS THE CURRENT MARKET? (a repeat of Monday’s note)
What would you think of a market with only 2 distribution day (day of heavy selling) in the last 4weeks? Yes! I would think this Uptrend must be quite strong!
Just two distribution day in 20 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 haveadded 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! Keep those comment/suggestions coming! Thanks!)
Note that despite the Major Distribution day label on Monday’s index action,…. You have to agree this market is in pretty good shape.
On today's MARKET FACTORS, COUNTS & RATINGS table, note ALL THE GREEN! Wow! This UPtrend has taken off!
When you look at the right most column, you will see 16 days have price-volume action "consistent with 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 of it like this:
In any healthy Uptrending period of a stockor 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 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 day of heavy selling when the price fell and its volume rose
Repeat of my analysis of mysummary 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 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.
ACCUMULATION/DISTRIBUTION RATINGS of STOCKS
Catalyst Pharma rose 3.1% Wednesday, moving back above the recent cut-with-handle breakout point.
I’m sure you have noticed that stocks move are acombination of:
· the health of the stock and the market
· the buzz flying around about the stock and the stock market.
And on Wednesday, it took just the market buzz to send Catalyst Pharma rising back above its basehandle and back on track for a rise in breakout profits to the investors!
CPRX’s ratings set still amazes me – and the Accumulation/Distribution rating jumped back into an A-rating Wednesday.
A stock just doesn’t get anystronger than this set of ratings (Note the Acc/Dist moved back to A- on Wednesday.)
Wishing you and yours a happy andsafe holiday season.
CharlotteHudgin, The Armchair Investor, (214)995-6702