3/17/2023F Market DROPS 1.5% on More Banking Troubles

3/17/2023F  Market DROPS 1.5% on More Banking Troubles

Wow! Did Friday’s huge volume scare you ?  The high volume was NOT a surprise. It’s not that the day dropped so much, but the extraordinary volume that was a concern… until you realized that Friday was a “quadruple-witching” day when “index futures, stock futures, index options and stock options expire simultaneously.”(Investopedia.com)

Mark in your investing calendar for future third Fridays of the last month each quarter (in March,June, September and December.)  Note that you should expect high volume on those days as a high number of options and futures contract expire on those days.

The key to seeing what the market said to us on Friday is to look at what happened to the major indexes. If you didn’t look at the volume, Friday would like a disappointing day – but no one is jumping out of windows.

All the professional traders know these quarterly events happen. When options or futures expire “in the money,” their trades are executed.  When they are worthless, they are left to expire.

Step back and look at the Nasdaq chart below. Except for the volume, Friday looked like a usual day. Even after Friday’s dip, there were  some profits to take.

And the week ended with a win even though the market has had a diagnosis by me and Investors.com of Downtrend since last Friday.

Note the two charts above. Since the February 1st highs, the Nasdaq has under-performed compared to the Nasdaq.  

·       The Nasdaq is down 6.6%

·       The S&P500 is down 5.2%.

What does this difference tell you? It is simply a reminder that the Nasdaq typically “swings wider” than the S&P500.

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Refer to the next table, MARKET ACTION (Nasdaq) OVER LAST 20 DAYS

Why is the market diagnosis still DOWNTREND when the market rose 4 of the last 5 days? Theanswer is VOLUME!  In fact, in the last 11 trading days, only one day had price and volume that was “consistent” with an Uptrend.

Look at the rightmost column. In the last 11 days  …..there were 8 days “consistent with” a Downtrend but only 1 day was “consistent with” an Uptrend. YES, there were 5 days of those 11 days I am talking about that had rising prices. But how many of those rising days had higher volume? (look for yellow volume days.)

NOT A ONE!…. None…. Zero…..Zip..  

That tells you the market was not really interested in adding to their portfolios during the last week.

On the MARKET FACTORS, COUNTS & RATINGS table below, there are only 2 GREEN ”Type of Day” boxes. (rightmost column) of UPTREND and the  Nasdaq’s A” Accumulation rating and Nasdaq is the only index above its 50-day moving average line (by at least 2%).

>>>>> When you look at the last 4 weeks of the ACCUMULATION/DISTRIBUTION RATINGS table BELOW, what do you see happening to the number of “A” and “B” rated stocks? (the stocks that are being bought.)

Look at the rightmost column labeled “As + Bs.”

The rising stocks (with A or B ratings) continue to disappear dropping from an exciting 59% to a mediocre35%. That points at a lot of selling of the best rated stocks over the last month.

The four weeks of disappearance of the top rated stocks would only happen if the institutional investors wanted to slip out with recent profits in hand.

Why would the professional investors sell off their best stocks so consistently? It is likely they see bad news coming.

Are you holding onto stocks that you like in spite of their weak chart action? Not me!  Cash is always a safe alternative. But note this recent broad rotation (past highly rated stocks being sold and underrated stocks being bought,)

>>>>>>>>>>>>> PLEASE READ THE FOLLOWING NOTE >>>>>  

NOTE: A long time ago, (after paying for this lesson multiple times…..)  I finally 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!

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Wishing you, “Many Happy Returns.”

Charlotte Hudgin, The Armchair Investor,  (214)995-6702

www.ArmchairInvestor.com  

(214)995-6702   editor@armchairinvestor.com  

2023 ACI NEWSLETTER sent via WEBFLOW

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