3/13/2023M Nasdaq hops up 0.5% but on lower volume. Other indexes slipped slightly lower. Downtrend worsens.
THE MARKET’S MESSAGE: Nasdaq &S&P500 50-day lines are holding close to 200-day lines extending sideways action and showing indecision.
The market signaled a new Downtrend (correction) at the close on Friday.
At the Monday morning open, all three major indexes gapped down. I was glad to have sold at the open as the major indexes stayed down for the first 20 minutes.
But then, the indexes rose, dropped, rose some more, continuing the most volatile day I have seen this year. But cooler heads soldoff as the market came close to the end of the day, leaving the Nasdaq up lessthan 1/2 percent.
Were the institutional investors just trying to squeeze a bit more out of the individual investors? (I am always suspicious of such wild days.)
Investors.com’s Big Picture column added some insight to the wild market:
“In the past few days, Wall Street has witnessed the second- and third-largest bank failures in U.S. history. Venture capital-focused Silicon Valley Bank was shut down Friday. Trading in its parent SVB Financial (SIVB) remains halted.Over the weekend, cryptocurrency specialist Silvergate Financial (SI) and Signature Bank (SIVB) also collapsed.Other banks are feared to be vulnerable.
SPDR S&P Bank ETF (KBE)lost 10% Monday, adding to last week's 14.7% demolition. SPDR S&P Regional Bank ETF (KRE)plummeted 12.3% following last week's 16% blowout.
Since the weekend, the Federal Reserve, Federal Deposit Insurance Corp. and Treasury Department have moved aggressively to contain the run on banks. The $250,000FDIC limit was quickly removed, erasing one of the big question marks for depositors.
Bank failures? Wow! Note: It was not just one bank! Not good! So far, the Federal Reserve is holding it together.
The Nasdaq ended Monday slightly up. The S&P500 moved slightly. The DJIA continued to be the underdog.
I wait in cash, watching for how the Nasdaq and S&P500 behave Tuesday.
NOTICE on the MARKET FACTORS, COUNTS & RATINGS table below, the only positive (green) box, other than the “% Above June ’22 Low” rating which will always be green, was the ”B” Nasdaq rating…..and NO “As.”
This is a fairly weak market. Will we see a deep dip next?
When you look at the last 4 weeks of the ACCUMULATION/DISTRIBUTION RATINGS table BELOW, what do you see happening?
Look at the change in percent of A-rated plus B-rated stocks (right most column) over the last 4 weeks! Wow.
>>>>>Be sure to always check the rightmost column - the summary column. You can see the selling has been going on as the As + Bs (the strongest ratings) has dropped from 60% of all stocks to 33%!..... Almost a 50% drop! Yikes!
Yes! The A and B rated stocks have dropped by 27% (from 60%to 33%.) That happens when the prior winners are being sold off to take the profits “off the table” and put them in the investors’ pockets.
>>>>>>>>>>>>> PLEASE READ THE FOLLOWING NOTE (if you missed it yesterday) >>>>>
>>>>One addition note: Last week was the first week where the “C”rated stocks also fell (SEE THIS IN THE TABLE ABOVE.) This change tells me the big boys (institutional investors) have sold off all of their weakest A and B stocks…. And they are still looking for a way to get cash OUT OF THE MARKET.
NOTE: A long time ago, I learned (after paying for this 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.
When I see the institutional investors selling hard (as shown by the drop of ”A” and “B” rated stocks, I am happy to step out of the market by selling my QQQ position.
NOTE: If you have individual stocks or ETFs that are holding up well, you certainly can hold them. But please keep a tight rein on them.
Remember: Stocks usually fall faster than they rise!
Wishing you, “Many Happy Returns.”
Charlotte Hudgin, The Armchair Investor, (214)995-6702