2023-10-25W DOWNTREND Day 4 – NASDAQ -2.4%, S&P500 -1.4% w HIGHER VOLUME for a Major DISTRIBUTION day.

October 25, 2023

2023-10-25W DOWNTREND Day 4  – NASDAQ -2.4%,  S&P500 -1.4% w HIGHER  VOLUME for a Major DISTRIBUTION day.

The stock market is now in Day 4 of a new Downtrend

Top of the news Wednesday was GOOGLE’s biggest one-day loss in its market valuation in its history - a 9.5% drop, caused by Google’s revenue. But I am confused –the GOOGL revenue for the September 2023 quarter is the highest in the last 8quarters. And their earnings were up 17% in the last quarter and up a fabulous 42%in the recently reported September 2023 quarter.

Stay tuned – let’s see if we can get more details tomorrow to the cause of that almost 10% drop in valuation.  (By the way, not only do I have an M.B.A. from the University of Chicago in finance and accounting, I was a certified CPA and a math/economics double major in undergrad,I can do the numbers! But am confused about the market’s reaction to the 42%increase in Google’s earnings.

Meanwhile,back to the wider market:  The Nasdaq and S&P500 have dropped for 3+ months bouncing on 3 lower lows, confirming the DOWNTREND. This is in market valuation of a great example of why I am NOT a “buy& hold” investor. It’s true I do NOT know how to “get in at the bottom” nor“out at the top.”  (I just get closer than most.)

CONSIDERABLE DAMAGE HAS BEEN DONE IN THE RECENT DOWNTREND.

The Nasdaq which had been UP 38.0% on July 19, is now up only 22.5%.

The Nasdaq and S&P500 are far below their 50-day moving average lines!

Look at the Nasdaq rise over the next 2 days (Monday & Tuesday of this week) with undistinguished volume then had one of its bigger daily drops Wednesday of 2.4%, hitting a 5 month low.

·      The above chart is a good example of why I visit my holdings daily…. And why I have never been a “Buy & Hold” investor. (How long does it take to check in with a chart each day? It’s your money!)

·       On this Nasdaq daily chart for 2013, note that the Nasdaq found support around 13,000 about a month ago, also. Perhaps there is some big money supporting it.

I’ve been hoping the market found its footing with the second bounce back above 13,000. Why do I now doubt that idea? The drop off the October 10 high was kind of brutal. I was relieved to see the bounce back above 13,000 over the last 2 days.

 

Notice on the QQQ chart below, the QQQ (Nasdaq’s largest 100 stocks without the slower financials) shows a July rise then an August-September-October downhill tumble.Do you see the similarity to the Nasdaq? The QQQ has been a great way for me to earn the returns of the top 100stocks on the Nasdaq.

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.

As you look at a 20-day HISTORY of the NASDAQ  table below, look at the last 9 days I have put a heavy box around.

In the “Change in Price” column, look at the last 9 trading days that I have “boxed:”

·      6 price changes are red or orange indicating their price fell from the day before, versus…

·      Only 3 price changes were green or lime-green indicating they rose.

Of those last 9 trading days:

·      There were only 2 days were accumulation days (rising in price and volume.)

·      With one more rising days, only 3 days were up versus 6 days down,

·      I would expect the down days to takeaway more than the rising day added – and that is exactly what they did:

o   The 3 up days added 2.4%

o  The 6 down days took away  6.9% almost 3 times much.

LESSON to NOTE:  Most indexes drop faster than they rise.

Look below at the MARKET FACTOR, COUNTS & RATINGS table below.

 

Wow! Only two ratings are green:

·      The S&P500 had a minor accumulation day - that means the S&P500’s price rose at least 0.2% with higher volume on Tuesday.

·      The Nasdaq is above its 200-day line (NOT a very exciting state to note …. In fact rather boring.)

·      Note the poor,laggard DJIA has an “E” rating signaling many investors are selling it off.

o   IN FACT: The  DJIA is the only of the 3 major indexes that is below its 200-day line. (Someone call the paramedics!)

 

And this market continues lower. (After the big runup earlier this year,I am not surprised …. And am not poor from it – since I made a lot in the first half of the year.)

Just to give you “sweet dreams” tonight, here is the Nasdaq for all of 2023, so far:

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.

One additional “Word to the Wise”…

Wishing you, “ManyHappy Returns.”

Charlotte  Hudgin, The Armchair Investor,                                              

www.ArmchairInvestor.com   (214)995-6702   

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