2023-10-04W Downtrend Day11 – Wednesday was a brutal day of losses across the major indexes. I CONTINUE to WAIT in CASH
and am considering purchasing an INVERSE POSITION on Wednesday.
>>>>>Before I get into the usual charts, please review the SERIOUS DECLINE in the number of stocks with A, B, or even C ratings as SHOWN on the ACCUMULATION/DISTRIBUTION table below.
This drop is the result of widespread SERIOUS SELLING in the current market.
I do not ever remember this rating dropping so hard, so fast.
· The percent of A and B rated stocks has dropped from 47% to 25% - almost a 50% drop – in just 4 weeks! What a turnaround!
· The drop tells me there are a lot of trader trying to exit this market but buyers are a scarce commodity.
Yes, the major indexes had nice rises Wednesday but without volume support. The Nasdaq and S&P500 volumes dropped….. again! I suspect there are a lot of traders who wish they were NOT holding many of their current positions.
Yes, there certainly are some rising stocks, but the indexes are getting dragged down with all the selling.
>>> There are times to be in the market and times to be out. Yes, hold stocks that are rising, perhaps even holding flat if you believe in them. (Personally, I would not hold a stock that is “hanging in there.”)
I do not know how long this selling spree will last, but given the amount of the recent market rise, I am comfortable taking profits and waiting in CASH.
>>>>>The Nasdaq and S&P500 lost in 1 day what had taken it 4 days to win.
· Tuesday’s1.4% rise is encouraging, but the Nasdaq is still near the end of May prices. Yawn!
· In that loser’s vein, the S&P500 and the DJIA dropped to 17-week lows.
· On the good news side: Be sure to note how strongly the Nasdaq has out-performed the S&P500 and the DJIA this year. (see the GROWTH OF THE MAJOR INDEXES
I repeat: Look below at what the 3 major indexes have done this year, as of 10/4/2023.
I hope you rode the Nasdaq up through July… and then exited as it gave back a significant part of the July gains….selling with a nice profit this year (much more than the current Nasdaq year-to-date return since I encouraged you to exit weeks ago.) Even if you held on to the Nasdaq and rode it down during its August-September dips, you still have a nice 25% gain this year!
Definition of a Major Distribution day: A stock or Index falls 1% or more in a single day with higher volume than the day before.
And I REPEAT: The Nasdaq rose significantly more than the other major indexes
in the first 5 months (January – July)of this year as you saw in yesterday’s comparison of the three major indexes:
>>> You could now avoid paying them back for those losses by selling and sitting in cash.
When looking at the market moves in 2023 (shown above): I’m sure you are not surprised at which index is the biggest winner (the Nasdaq) or the lower performance of the struggling S&P500 and the drowning DJIA.
SHOULD YOU “SHORT” THIS MARKET? If you understand the question,then you may decide that market is likely to continue lower and will take on an“inverse” position such as the SQQQ. The ETF is a single purchase that has consistently risen when the market has dropped.
WARNING: If you put some funds in the TQQQ, you can’t ignore this piece of your portfolio. Since the market have already pulled back substantially, we may find that the pullback is over. The “T” in TQQQ stands for “Triple” and means this managed fund aims at moving up and down at 3 times the rate of the single QQQ.
If the market changes direction,you could quickly lose your gains and more.
>>>I am leaning toward expecting a continuation of the market fall.
CASH IS A FINE PLACE TO PUT YOUR MONEY WHEN THE MARKET IS FALLING ESPECIALLY IF YOU ARE UNCOMFORTABLE WITH HOLDING AN “INVERSE” ETF, YET.
For those of you who are more aggressive in a falling market, remember the major indexes have inverse ETFs that grow when the market is falling.
>>>>>CHARLOTTE’S PROGNOSIS FOR THE NEAR FUTURE :
My current MARKET thoughts….. Data updated, but the conclusion is unchanged
This market is teetering on another drop below 13,000.
It took only 1 falling day (Tuesday) to wipe out those recent 4 rising days.
If you want to see how strong this DOWNTREND is, do this quick exercise:
1) Count the number of distribution days (price drops and volume rise). Then count the accumulation(rising) days on the table below.
2) And your question will be answered.
A GREEN Nasdaq price highlight means the index hit high a NEW HIGH on the 20-daylist.
A RED Nasdaq price highlight means this index hit a new low on this 20-day list.
A NOTE ABOUT THE TABLE BELOW.
The SEVERE DROP in the stocks with A, B and C ratings is a HUGE WARNING that this market is crashing.
One additional “Word to the Wise”…
>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE!
Please send questions, comments,suggestions ideas and requests to: My text message account at(214) 995-6702.