2023-10-17T UPtrend Day 8 – The market was mostly unchanged – See my new thoughts for Tuesday
The Uptrend remains uncertain Both the Nasdaq and S&P500 haven’t broken significantly above their 50-day moving average lines!
The Nasdaq continues to ride its50-day line which, unfortunately, is slowly falling.. The Nasdaq does continue to out-perform the S&P500 which is outperforming the poor DJIA.
On the daily chart below, notice that the volume also dropped as the price dropped from the 2023 high of 1719 (vertical dashed line) but the volume started 2 weeks earlier, showing an exhaustion occurring after the 5 month run-up to that July top,
On the daily Nasdaq chart below, look back at the exciting runup the Nasdaq had after the 4th of July up to the July 19th high. But where was the volume during that final runup?
>>>The day after the 4th of July holiday is frequently a low volume day as traders extend their family time. But this year, the Nasdaq’s price took off like a rocket for the 2 weeks after the 4th of July when the Nasdaq had its final runup. The while the volume started dropping away.
Although periods of dropping prices frequently have intermittent rising days with higher volume, the Nasdaq did NOT have a rising day with above average volume until 9/29 almost 3 months after July 4.
The Nasdaq is 5.5% below its June 2023 high. The major index has risen 4.4% in the last 2 weeks and is now stalled at its falling 50-day line.
I am cautiously holding my QQQ position again. But if the QQQ continues to ride its red 50-dayline lower, I will sell my QQQ and wait on the sidelines….unless the price continues down and the volume picks up. With that signal of more selling, I will wait in cash.
The following section is a repeat of the weekend, It struck me as the appropriate analysis for this market which has dipped twice recently
FROM THE WEEKEND ARMCHAIR INVESTOR NEWSLETTER: a GOOD LESSON IN MANAGING YOUR PORTFOLIO IN A SLOW DOWNTREND.
“As you follow the Nasdaq’s moves in the chart above…, since the July high, the Nasdaq has dropped twice and recovered some of those losses before diving again over the last 2 days.
TAKE NOTE: The above chart shows you how many downtrends form. They don’t just drop,drop, drop. They drop some….. then other traders may see the lower price as a bargain and jump in…. pulling the price back up. Repeat.
Thus since the middle of July, we have had 2 downtrend periods and 2 partial recoveries. And “partial” is the keyword here. Since the high near the start of August:
· The 2 lows were “lower lows” and the highs after those lows were also “lower highs!”
· Traders sometimes say,“The market fell lower and lower with the traders fighting it all the way down.”
But look closer at the volume on the price recoveries (rises.) If you examine the volume on the recovery days, you won’t see higher volume on the way up. That is a HINT that the OVERALL PUSH IS TO THE DOWNSIDE.
The last high is not yet a “high.” It will be a high if the Nasdaq price continues down. But no uptrend goes up every day….. and no downtrend goes down every day:
· Do you see the aspect of the Friday price move that warns that Thursday’s high may have been the start of dip number 3?
Answer: Friday was a significant dip (-1.2%)which closed near the bottom of the day. That drop is where the traders went when faced with 2 days of not being able to trade (Saturday and Sunday.)
BOTTOM LINE FOR ME ON THIS TUESDAY:
Since I have recovered about half of the Nasdaq drop off the July high, I am feeling hesitant to hold my QQQ if they can’t hold above the 50-day moving average line.
Idea 1) If this second recovery since the July high continues to rise, I’ll stay in the QQQ and could move back into the TQQQ.
Idea 2)Sometimes CASH is the best position. I am watching out for another dip in theQQQ to tell me to step out to cash.
Note: On my tables like the one above and below, you will see the red boxes have white lettering in them. Why?Because RED is a “fully saturated” color which means if you printed this presentation out on a black and white printer and I had not turned the numbers white, you would simply see black letters on black boxes. If that doesn’t make sense, call me or your printer-savvy friend.
Now look below at the NEW UPTREND on the MARKET FACTOR, COUNTS &RATINGS table below. Wow! look at all the green!
>>> CAN YOU SEE THE SLIGHT UPTURN IN THE STOCK BUYING OVER THE LAST 2 WEEKS? (Look at the table below.)
The count of A and B rated stocks rose from 25%2 weeks ago to 31% today, I am NOT EXCITED about a new Uptrend….. yet…. BUT I AM WATCHING HOPEFULLY...
The 6% RISE in As + Bs over the last 2 weeks is encouraging…. but the QQQ still sits on its 50-day line in a 6-day sideways huddle!
Those birds just aren’t going anywhere!
One additional “Word to the Wise”…
>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE so give this market some time to reclaim (and beat??) its prior highs.!
Please send questions, comments,suggestions, ideas and requests to: My text message account at(214) 995-6702.