12/05/22M Uptrend – Major indexes fall, S&P500 and DJIA had Major Distribution days

12/05/22M Uptrend – Major indexes fall, S&P500and DJIA had Major Distribution days

THE MARKET’s MESSAGE:  All indexes are above their 50-day lines - a sign of Uptrend optimism. Download this nightly newsletter at www.armchairinvestor.com

NOTE: due to the lateness of this morning's newsletter, I am sending out the commentary right now and will send out the whole newsletter in about 30 minutes (it takes that long to convert it from Word to Webflow.)

Charlotte

All three major indexes fell hard on Monday. Only the Nasdaq avoided a distribution day with its lower volume. Volume was below average for all three major indexes. Looking at the table below, that combination of price drop with higher volume resulted in  Major Distribution day for the S&P500 while the Nasdaq avoided that designation with lower volume.

It is interesting to me that the DJIA leads the other major indexes in its percent above the 200 day-moving average at 6.6%while the Nasdaq and S&P500 are below their 200-day lines. When you think of it ….. when the DJOA doesn’t fall as hard as the indexes, a sharp turnaround can create a leader.

After rising for 7 weeks, the Nasdaq is UP 11.5%. And the S&O500 is up 14.5%. Nice!

But the DJIA leads the current recovery with an 18.4% rise off its last low.

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Good news – I have finished my major time commitment project and am back with time to create more inclusive notes in this nightly newsletter tonight.

Wishing you and yours a happy and safe holiday season.

Charlotte Hudgin, The ArmchairInvestor,   (214)995-6702

www.ArmchairInvestor.com   (214)995-6702   editor@armchairinvestor.com

On the MARKET FACTORS, COUNTS & RATINGS table, note the number of accumulation days during the last 20 trading days! 7 accumulation versus 2 distribution days.  I use “versus” because I do somewhat see it as a battle. AND THE GOOD GUYS (US) ARE WINNING TODAY!

On the 20-day table of the Nasdaq price and volume, note that the volume last three days have been low. Blame it on the holiday season.

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 my explanation of the “consistent with” criteria 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 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, 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.

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After 2 weeks, just a 2% base breakout? Why am still interested in CPRX? The stock’s rating is perfect for every ratings except a slight flaw (very slight) in it’s 1 Accumulation/Distribution rating of an A- . I know A- isn’t much of a flow – but it does point to an important note –There is some selling of this stock occurring. You can see it in the red volume bars – those are days the price dropped. And it is a sign of some “profit taking.”

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If you go back to a longer chart, you will note that CPRX was at $6.15 on 6/15/22. That’s a 175% rise in less than 6 months. I’d feel like taking a vacation on the gains!

I’m sure you  have noticed that stock move sare a combination of:

·      the health of the stock and the market

·       thebuzz flying around about the stock and the stock market.    

CPRX’s just about perfect ratings set still amazes me! And the Accumulation/Distributionrating of A- is almost perfect! That is very rare in the inextesting is the only major rating that isn’t at the top.

>>> In the last 5 days, Catalyst Pharma has fallen in price three times but each time had lower volume. Thus, these are NOT distribution days. They are probably days of pocketing some ofthe profits many investors have waited for.

Wishing you and yours a happy and safe holiday season.

Charlotte Hudgin,The Armchair Investor,   (214)995-6702

www.ArmchairInvestor.com   (214)995-6702   editor@armchairinvestor.com

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