THE MARKET’s MESSAGE: Nasdaq and S&P500 prices are extending sideways action, showing indecision as market waits for Fed Chair announcement Tuesday.
>>>Be sure to see the IBD Invitation to a LIVE FREE webinar on March 8 (1:30 p.m. central), hosted by Amy Smith and Matt Galgani. Details at theend of this newsletter.
The market ended with barely a whisper of change Monday, as we wait for Federal Reserve Chair Jerome Powell to give his testimony to the Senate on Tuesday and the House on Wednesday (both at 10a.m. in Washington time.)
When the Fed Chair speaks,….. the stock market typically pauses. Thus, Monday’s lower volume day. The all-white (small moves) summary of Monday’s market action (or non-action if you prefer) is:
Since the market was quiet (as expected) before Powell's comments on Tuesday, her3e3 is a YEAR-TO-DATE ARMCHAIR INVESTOR RETURNS UPDATE.
In case you missed the weekend year-to-date summary, here is that recap:
(Spoiler: THE QQQ IS A GOOD PLACE TO BE (at the moment.) Note: Monday's quiet day did almost nothing to update the chart below.
The Nasdaq100 (ticker QQQ) is outperforming the major Indexes, including the Nasdaq index as usual in an Uptrend – see chart below. The QQQ is where I usually have my “Market Following” position. And I’m glad to be in the QQQ (See why below this table.)
See you tomorrow after chair Powell speaks. We’ll see if he spills and new “guidance.”
Overall, I am concerned about the health of this uptrend but am glad to see the major indexes all rose on Friday and held those gains on Monday.
On the MARKET ACTION table (above) and FACTOR, COUNTS & RATINGS table below note: (NO change as of Monday, 3/6/23)
· Of the 5 accumulation (buying) days in the last 20 days shown below, only 2 accumulation days in the last 11 trading days. The others are older (less relevant.) 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 1.0, showing weakness.
· Note the accumulation/distribution rating is at a D or E rating. (D& E ratings would indicate heavier selling as institutional investors sold out of uncertain position. NOT having Ds and Es is a good, uptrend sign.
Are you holding onto stocks that you like in spite of their chart action? Not me! Cash is always a safe alternative. But note with this broad rotation (past highly rated stocks being sold and under rated stocks being bought,) THERE MAY BE AN OPPORTUNITY TO IDENTIFY NEW RISING STARS!
When you look at the last 4 weeks of the ACCUMULATION/DISTRIBUTION RATINGS table BELOW, what do you see?
>>>>>You should notice the percent of top rated stocks (A or B rated stocks) has declined – ALMOST IN HALF while the D and E rated stocks have DOUBLED. That tells you there is a ROTATION going on.
NOTE: A long time ago, I learned (after paying forthis lesson multiple times…..) I learned two important lessons:
1. I am NOT smarter than the market. And,
2. The market does not care about my “fine” opinion.
NOTE: Join me at a FREE IBDWebinar March 8 1:30 Central time
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IBD’s description: The stock market is off to a strong start in 2023. However,…
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- What’s happening in the market right now - Which stocks are at the top of our experts’ watchlists - A quick 3-step routine for staying profitable and protected