2/16/2023W Nasdaq Gives Back Some of the Last 3-day’s Rise. Can it get Growing?
THE MARKET’s MESSAGE: Nasdaq show uncertainty - falling back below 12,000 with higher volume!
I’m am perplexed how the whole market reacts to a not totally unexpected signal that had them move the market so dramatically,…. but that sure is what happened Thursday.
Yes, no one likes rising interest rates. And the Labor Department issued “hotter than expected inflation data” as reported in Investors.com’s Big Picture today. I don’t like above-average inflation, and we certainly have been spoiled in the past with a more modest inflation rate.
The Big Picture team certainly found some great stocks today: AirBNB (ABNB) broke out Wednesday with a outstanding set of ratings, although it does have a volatile earnings history over the last 8 quarters as shown on its MarketSmith chart. That makes me very uncomfortable. (See the earnings wild ride below.):
See AirBNB’s recent 8 quarters earnings history below. Four of those quarters lost money or barely broke even . Yes, AirBNB did breakout of a very respectable base, but that base also included a dip to the lowest price in AirBNB’s 2-year history.
AIR BNB'S wild earnings over the last 2 years:
I don’t know who is jumping on it, but the volatility seems a bit risky to me. I’m looking for better, more consistent charts. Remember, I usually limit my stock holdings to 5 (plus the QQQ for trend-following.) William O’Neil frequently said (I paraphrase), “If you can buy the best 5 stocks, why would you want to play with any others?”
When I find a stock that is interestingbut not quite ready for prime time (my opinion of AirBNB), I will use a nifty MarketSmithtool – the 5 stocks in the group of the first stock I looked at with the highest RS (relative strength) rating. I can’t tell you how many times, a “good” stock has led me to a “great” stock” this way.
But sadly, no other top rated stock inthe “Leisure Travel Bookings” group had a strong enough combination of Relative Strength (RS) and Earnings per Share (EPS) ratings to get my money.
So I looked at other stocks in the Big Picture’s LEADERS UP IN VOLUME list and found Albemarle (ALB). With great ratings, I wondered why it hadn’t taken off over the last 6 months. (I will rarely buy a stock without strong chart action.)
Then I looked at the other top rated stocks in ALB’s group and found a very interesting stock, NGVT with strong ratings. But NGVT had broken out a month ago and was now too extended (12% above it’s ideal buy point)....
So I kept looking down the list of other stocks in this interesting group and I saw….. stocks that had almost enough positive attributes, but all seemed just a little less than I wanted. I decided to save my cash with my not-yet invested funds still in my pocket and to finish this newsletter. . .(I promise I will try again tomorrow.)
I would be interested how you find your winning individual stocks. My phone and email are listed below. LET'S TALK!
Looking over the last 20 trading days, you might notice the increase in red/orange days - as the market takes a rest. This rest does NOT mean the Uptrend is over. It may be over..... or just looking for the next big winners.
On the MARKET FACTORS table below, the only red is at the bottom – showing how far the major indexes ARE STILL BELOW THEIR HIGHS of2021-2022.
On the ACCUMULATION/DISTRIBUTION table below, notice the percent of A and B stocks (under Accumulation) has declined from 69% 2 weeks ago, to 62% today. Perhaps there is just some mild profit taking. Let’s watch. If the “best” stocks are being sold for profits, that tells me many of the larger players think the current run-up might be over, or at least pausing. A 69% of As and Bs (as shown in the table below), may be a sign of pocketing some profits.
>>>>> BOTTOM LINE: This market may be taken a “breather” and resting at the 12,000 Nasdaq level. Stay tuned!
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.”
Charlotte Hudgin, The Armchair Investor, (214)995-6702