2023-10-20F DOWNTREND Day 1 –The market fell hard Tuesday, Wednesday, Thursday and Friday with higher volume each day till Friday.

October 22, 2023

2023-10-20F DOWNTREND Day 1 –The market fell hard Tuesday, Wednesday, Thursday and Friday with higher volume each day till Friday.

THIS UPTREND HAS FAILED!

>>>>The Uptrend finally died a slow death this week:

·      The Nasdaq fell hard on Tuesday, Wednesday, Thursday  and Friday.

·      Volume rose significantly on the first 4 days this week, dropped back to its average volume on Friday.  BUT THE DAMAGE HAD BEEN DONE.

For the last 4days in a row, the Nasdaq has accelerated its downward crash (See the chart below.)

Both the Nasdaq and S&P500 appear stuck below their 50-day moving average lines! We’ve seen only one accumulation day of institutional market buying (on Monday) in the last 5 trading days.

The Nasdaq continues to drop,accelerating over the last 4 days with higher volume on every day until Friday when the week ended with its biggest daily drop of 1.5%.  

Look at the Nasdaq die as it crashed and burned over the last 4 trading days.

Notice on the QQQ chart below, the QQQ (Nasdaq largest 100 stocks with out the slower financials) is showing a July rise then an August-September-October downhill tumble.

Watch as the QQQ dropped twice to lower lows and rebounded to lower highs –one definition of a downtrend.

(and you can see a similar drop in the Nasdaq index in yesterday’s newsletter), is NOT showing signs of letting up.

>>>>> I do NOT hold the QQQ at the moment. I am in CASH.

(Note the similarity of the QQQ chart below and the Nasdaq chart above.)

I SOLD my QQQ position AT THE THURSDAY OPEN… and wait in cash.

If you missed the following lesson from Thursday, I repeat it here.  

TAKE NOTE OF THIS KEY LESSON: (Repeat from Thursday’s newsletter)  

>>>>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 a bit.

·       But the downward correction continues.

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.)  

When you examine the volume on the recovery days below, you won’t see higher volume on the way up. That is a HINT that the OVERALL PUSH IS TO THE DOWNSIDE.  

NOTE: Sometimes CASH is the best position. I have sold my QQQ (my trend-following position.)

=====

Notice the drop in the A, B, and C rated stocks below. Look at how low the number of stocks that qualify for an “A”, “B”, or “C” rating. This table makes it clear the institutions are selling off stocks that used to have strong performance.

If you look at a20-day HISTORY of the NASDAQ  table below, you will see a relatively short UPTREND period we went through. Yes, anew uptrend is exciting. But which lasts only 7 trading days and had 5 of the last trading days as falling days with 4 of them distribution days of heavy selling, you’ll have to wonder whether this Uptrend should even have a “yellow”rating of Uptrend under pressure.

>> Perhaps just one more 1%+ down day will wake the market up to the failure of the recent (and short) Uptrend.

Look below at the NEW UPTREND on the MARKET FACTOR, COUNTS & RATINGS table below. Wow! Only one rating is green, the Nasdaq is above its 200-day line (NOT a big “Whoop.”) The poor DJIA has an “E” rating signaling many investors are selling it off.

 

This is a market that continues lower. (After the big runup earlier this year, I am not surprised.)


The low number of stocks with an “A” rating certainly gives me pause before  entering any new investments.

…. Even the QQQ is now 3.1% below its 50-day line!

Stay tuned!    Those birds just aren’t going anywhere!

On the table below,note that the stocks with “A” ratings have almost dried up – at 4% of all stocks we follow.  Meanwhile, 52% of the stocks have low “D” and “E” ratings today.

Looking at the last 5 weeks, note that this period has been a hard time to find stocks that have strong or rising prices.

REMEMBER: .....CASH IS A POSITION!

NOTE ### that I have changed the last column of the Accumulation/Distribution table below to focus on the (scary) sum of stocks with “D” and “E” ratings. Yikes!

One additional “Word to the Wise”…

>>>>>--- MOST MARKETS FALL FASTER THAN THEY RISE. Beware of buying any new position unless they are very healthy.

Please send questions, comments, suggestions,ideas and requests to:   My text message account at (214) 995-6702

 

Wishing you, “Many Happy Returns.”

Charlotte  Hudgin, The Armchair Investor,                                              

www.ArmchairInvestor.com   (214)995-6702   

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