3/01/2023W Market indexes hold at their 200-day lines.Is this start of new Uptrend?
THE MARKET’s MESSAGE: Nasdaq & S&P500 50-day lines are holding close to their 200-day lines extending sideways action -showing indecision.
I suggest you read through tonight’s whole newsletter. It won’t take long, but I found some great lessons on reading the health of the market that I want to share with you……
Note how the S&P500 is “walking up the hill” achieving higher highs (red lines) and higher lows (blue lines.)
Think of the higher highs (tops) and higher lows (bottoms) echoing each other as the market rises. Failing to achieve the next step (a higher high) would be a warning that this upward run may be over.
Now you know one chart signal to watch for! It’s not the rising prices that shows the market is in a healthy rise. Every market will have ups and downs. It’s the “lunge higher” and achieving a new high (and the support of the rising lows) that allow me to see the constant market buying….. I know it won’t go on forever, but this is a nice ride while it continues. Please note,now that the highs have risen sell above both the 200-day and 50-day lines, I will carefully watch for a sideways period that could turn into a new top.
Overall, I am getting quite concerned about the health of this uptrend.
Look over the last 20 trading days listed on the following table. Can you see the hints of market weakness I see? (listed below) Don’t peak at the answers which are listed after the table. Take the opportunity to study the last 20 days of market action and draw your own conclusions.
Then compare your conclusions to mine after the MARKET FACTORS table below.
On the MARKET ACTION and FACTOR, COUNTS & RATINGS table above note:
· Of the 6 accumulation (buying) days in the last 20 days shown below, only one accumulation day is in the last 9 trading days. The others are older (less relevant) and all grouped in the older 11 days. THAT IS A SIGN OF AN UNFAVORABLE CHANGE IN MARKET PERSONALITY!
· A healthy ratio of rising leader stocks to falling leader stocks is 1.5 or higher. Today, it has fallen to 1.2, showing weakness.
· In the last 9 trading days, only one day rose significantly (more than 0.2%).
· Note the DJIA’s accumulation/distribution rating has fallen to a D (Ugh).
ANALYZING THE CHANGES IN THE ACCUMULATION/DISTRIBUTION table below, is one of my favorite ways of seeing the health of (or weakness of) the market.
Note the growth or decline of the percent of A and B stocks (under Accumulation.)
The serious drop in the last week – from 59% As+ Bs to 50% in just 1 week - a notable signal of broad selling the market
>>>>> BOTTOM LINE: Review your individual stocks for weakness. Consider selling losers. Stay tuned!
Please send your questions or interesting examples of chart action to me at:
Wishing you, “Many Happy Returns.”
Charlotte Hudgin, The Armchair Investor, (214)995-6702