12/01/22H Uptrend – Nasdaq and S&P500 showmoderate optimism holding at 10 week highs
THE MARKET’s MESSAGE: All indexes are above their 50-day lines - a sign of Uptrendoptimism. Download this nightly newsletter at www.armchairinvestor.com
When the market pauses as it did on Thursday, it frequently has no significant news to drive it up or down. A day of rest is nice in my life is nice, but in the market it gives me concern about the health of Uptrend. I’m not sure what it is waiting for.
I agree with Investors.com’s Big Picture column today. I am “cautiously optimistic!”
To step back, I note that over the past year, I was also cautiously optimist about the markets reversing back up and ending the year in the green. But alas, that goal is most likely out of reach today:
In 2022, the major indexes are far from recovering therecent all-time highs:
Nasdaq all-time high was: 16,212.23 on11/22/21 down 29.1%
S&P500 all time high was: 4,818.62 on 1/4/22 down 15.4%
The above results are typical for these two indexes overtime. The Nasdaq usually rises and falls faster and more than the S&P500.
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 if they have a strong breakout.
On the MARKET FACTORS, COUNTS & RATINGS table below, note the high amount of green boxes showing data consistent with the Uptrend.
NOTE: This is an AMAZING market. Over the last 20 tradingdays, only 2 days were Distribution days – days of heavy selling when the price fell and its volume rose. But notice the 6 Accumulation days – 6 of them were strong Major Accumulation days rising at least 1%. The other accumulation day was a minor accumulation (with a rise at least 0.2% but less than 1%.)
When you look at the rightmost column of the MARKETACTION table, 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 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 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, 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.
Catalyst Pharma fellv0.8% Thursday, moved back to the recent cup-with-handle breakout point.
I’m sure you have noticed that a stock's moves are a combination of:
· the health of the stock and the market,
· the buzz flying around about the stockand the stock market.
And on Wednesday, it took just the market buzz to send Catalyst Pharma rising back above its base handle and back on track fora rise in breakout profits to the investors. On Thursday, CPRX slipped back $0.03showing there are buyers waiting in the wings to buy CPRX at the breakout price.
On Thursday, CPRX paused with much of the market/
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:
Wishing you, "Many Happy Returns,"
CharlotteHudgin, The Armchair Investor, (214)995-6702