2/28/2023T Market has minor REBOUND. But does it signal Uptrend strength?
THE MARKET’s MESSAGE: Nasdaq & S&P500 50-day lines are holding close to 200-day lines showing an extended sideways period.
Small moves on the last day of February pointed at market direction uncertainty. (See the DAILY MARKET ACTION table below. The small moves aren’t worth showing a chart.
The stock market is stumbling, as shown by the “Uptrend under Pressure” rating by IBD in its Big Picture column. The Nasdaq is showing only 3 distribution days in the last few weeks, but the S&P500 has racked up 5 d-days, showing more selling in that pond.
It is widely expected that the Federal Reserve’s rate will continue to rise in slightly smaller moves, further taming the market’s growth.
I found this Investors Business Daily’s comment interesting: The IBD Leaderboard portfolio is, “currently 47% invested.” If I had written that thought,I would have said, the portfolio is, “currently ONLY 47% invested.” Investors know we can’t make money if we are not invested and waiting in cash can be frustrating. But cash can be a great safe haven for waiting out uncertain markets. I will sleep at night NOT being fully invested at the moment.
I encourage you to go down to the MARKET FACTORS, COUNTS AND RATINGS table below to see how the recent Uptrend has faltered.
So take a moment and appreciate what it took for you to get to your current portfolio. I hope it included much of the Armchair Investor strategic gains.
Please, note: Being a retired financial manager, C.P.A and internal auditor for Fortune500 companies, I am always reviewing my work. And I noted that I had shortchanged the Nasdaq and S&P500 buy-and-hold strategies above, I recalculated them and the corrected numbers are shown above. .They still pail compared to the simple Armchair Investor Strategy’s 3+ year returns.
THE BOTTOM LINE on the total returns of the 4 strategies is not changed. The Armchair investor strategy significantly outperformed the indexes on just a few trades each year,following the rules of this newsletter.
On the MARKET FACTORS, COUNTS AND RATINGS table below, note the green and red highlights on the PRICE column. I highlight a price in green when it hits a new high in this table.
· February1 closed at a higher price 2.0% than on January31 earning a green highlight.
· Then February 2 closed even higher also earning it a green highlight.
But look down the rest of the prices. No more green days. Eventually, the red days started to show up as the price dropped to a new low for the 20-day period. , closing the 20 trading days (about 4 weeks)
REMINDER: ONE or TWO RISING DAYS DO NOT MAKE A SOLID FOUNDATION FOR A NEW UPTREND. Stay tuned.
>>>>> On the ACCUMULATION/DISTRIBUTION table below, notice the percent of A and B stocks (under Accumulation) took a serious drop in the last week – from 60% As + Bs just 2 weeks ago to 50% Tuesday. That is a notable signal of broad selling the market.
>>>>> BOTTOM LINE: Review your individual stocks for weakness. Consider selling losers. Stay tuned!