2/13/2023F Uptrend day 25, Indexes recover 2 days of losses, but lighter volume disappoints
THE MARKET’s MESSAGE: Nasdaq slowly dips lower. Volume lighter.
NOTE: PLEASE TAKE THE TIME TO WORK THROUGH THESE IMPORTANT CONCEPTS:
Lighter volume from one day to the next means the second day has less power behind it – perhaps even uncertainty about market direction.
Monday had a nice price rise in the indexes across the board – the Nasdaq, S&P500 and DJIA all took significant steps higher after Friday’s small rises. Monday’s rise recovered the losses of Wednesday and Thursday.. But all of the indexes had lower volume again on Monday.
But step back and look at the lines I have drawn above and below the price bars ON THE nASDAQ CHART BELOW. you will see what I see – a market that is drifting downward. The definition of a downtrend is not that every day drops lower…… it is that the high and lows during the last few week are drifting lower. The lines through the highs and lows on the chart certainly points to the above “downtrend” definition.
Please note a short downtrending period (the last 2 weeks) that started with a 6-week rise is not enough to turn the market direction into downtrend. But it does show some market weakness… which could grow into a downtrend, or take off to a new high. Stay tuned. See this recent weakness in the MARKET ACTION (Nasdaq) OVER THE LAST 20 DAYS table (shown a couple of pages below this note.)
I suggest you jump down to the MARKET ACTION table now.
Below you see Monday’s results – the nice rises in the major indexes but without the support of higher volume. In fact, Monday’s volume was the lowest volume in the last 2 weeks. So I hold onto my QQQ but could sell half or all if Tuesday disappoints me.
NOTE for NEXT WEEK: The stock market will have a 3-day weekend because of the Presidents Day Monday holiday on2/20/2023.
I have highlighted the price changes of the last 7 days on the MARKET ACTION table below with a heavy box around the Prices.
It would be easy to see the 5 down days (in orange or red) and wonder if the market is in a downtrend. >>>>But to see the full picture, pleaselook at the price and volume. Of the 5 down days, only one of those down days had higher volume making February 9 a distribution day. All the rest has lower volume (denying powerto those down days.)
Monday had a nice 1.5% rise, but left us in market direction limbo with lower volume. Stay tuned!
Another place to question the strength of the recent 6 down days out of the last 8 trading days, is to look down the “Type of Day”column.
>>>>>Of the last 20 days, only 2 days were distribution days (down days with higher volume). ALL THE OTHER 18 DAYS WERE EITHER ACCUMULATION DAYS (8 DAYS) or had lower volume (neither accumulation nor distribution days.)
TO make it clear, look down the right-most column in the following MARKET ACTION table. Note all the GREEN!
· Three days had price-volume action consistent with a DOWNTREND (lower price with higher volume),
· Two days were consistent with Neither Uptrend nor Downtrend (price moved less than 0.2%) and
· FIFTEEN DAYS were consistent with an Uptrend ----either “rising price and rising volume” or “falling price on lighter volume.”
Join me in a collective, "WOW!!!"
Please take the time to understand the above concepts. They are the hardest ideas I teach but undersanding them will help you make betting investing decisions!
On the MARKET FACTORS table below, the ONLY RED is at the bottom – showing how far the major indexes have risen above their end of 2022 highs.
On the ACCUMULATION/DISTRIBUTION table below, notice the percent of stocks that are rising with higher volume (under Accumulation) versus the percent of stocks that are falling with higher volume (under distribution) is almost FLAT over the last 5 weeks.
>>>>> BOTTOM LINE: This market continues to rise, showing strength – I hope you are “riding the rise” and grinning as much as I am!
STOCK WATCHING: Send your suggestion on which stocks to follow in this newsletter. I am looking for just one stock at a time, for training purposes.
Wishing you, “Many Happy Returns.”