5/12/2023F UPTREND Day 32 Friday was Nasdaq’s second lower price & volume day after Wednesday’s Major Accumulation Day! What’s wrong??

5/12/2023F UPTREND Day 32  Friday was Nasdaq’s second lower price & volume day after Wednesday’s MajorAccumulation Day! What’s wrong??

Questionof the Day:  When is lower volume a good thing?  

(The answer is near the end of this newsletter – but please don’t look until you have you’ve decided on your answer.).

What was wrong with the Nasdaq and S&P500 on Thursday and Friday?  

If you don’t already know, look at their daily charts below to figure it out why I am concerned. Note their charts do look much alike but that is not the answer I am looking for.

Look closer at the price action during the last 2 weeks on both charts.

Ah ha! The Nasdaq is rising, hitting new highs (on this chart’s timeframe) but the S&P500 came close to its January 4195 high and dropped lower since that day while the Nasdaq kept rising.

The RS lines are a little misleading since they are both compared to the NYSE. The RS lines are both rising indicating the indexes are doing better than the NYSE (not a surprise.)

To identify the strong market moves, I look for accumulation days - when price rises with higher volume than the day before. The last week had only one day that qualified.  (Look at the table of the last 20 Nasdaq days below to confirm

A bad (down) day may put me on alert, but I want to play with an investment that usually outperforms the major indexes.

‍As I watched the Nasdaq rise in price on Wednesday, I also noticed the volume hit just “average” volume on Wednesday and then fell to10% below average volume on Thursday. So the Thursday rise did not have higher volume support for the Nasdaq or S&P500 raising a question of the market’s support for those days, (even these accumulation days.)

‍Please note that one lower volume day does not kill a stock’s rise. The Nasdaq hit a new high for 2023 this week!  I am not complaining! The S&p500 has not topped its February 3 high of this year. The Nasdaq is still outperforming the other major indexes (S&P500 and DJIA.)

 Now for some fun!  Let’s also compare the major indexes growth this year to QQQ. Wow!  Do you see why I put my market tracking investment in the QQQ?

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As you look over the MARKET ACTION (Nasdaq) OVER LAST 20 DAYS table below, note that I have boxed the last 10 days unter the TYPE OF DAY column.

Note there is only 1 day in the last 10 trading days that was an accumulation day as shown in the table above.  (Price AND volume rose on May 10.)

Note there is only 1 day in the last 10 trading days that had an accumulation day (as shown in the table above...  Price AND volume rose on May 10.

Reviewing the MARKET FACTORS, COUNTS & RATINGS table below, note there is GOOD NEWS >>>>> (Updated 5/12):

·       The RISING/FALLING RATIO OF LEADER STOCKS has slowly risen to 1.3, above neutral (which would be 1.0).

·       The Nasdaq's Accumulation rating is a solid B+ (sorry about that C- for the S&P500 and  D- for the DJIA indicating they have more sellers than buyers.).

·       If you hold some of those lagging indexes (S&P500, DJIA, and others), I hope your position is not too large. I don't hold them and suggest you rethink that strategy if you do. Some of the “old safe indexes” are now losing money or making a lot less than they have in the past. YES,,,, the price moves on 5/5 (+2.2%) and on yesterday, 5/10 (+1.0%) were pleasant rises. But without a consistent strong volume statement like the +19.2% on Wednesday, I’m not convinced the new Uptrend isn’t tenuous. I don’t need 19% but a few +5% volume moves or more on days with higher prices more would give me comfort.

·       Thus, Iam NOT heavily jumping into this market…..yet! But I AM BUILDING MY WATCH LIST to invest in when I am convinced the new Uptrend is not only here, but strong enough to keep going.

·       I’d rather be a couple of days late to get into a new Uptrend, than jump into anuncertain market.

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The ACCUMULATION/DISTRIBUTION TABLE

The As and Bs have been falling slowly over the last 3 weeks. It sounds like the market makers are uncertain what to do with this market.   That means I will wait cautiously and watch what they do. Perhaps the talks this week by the 4 Federal Reserve executives’ talks will encourage new buyers.

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Question of the Day: When is lower volume a good thing?   Did you come up with an snswer? Here's mine.....

When you are looking for a market Uptrend indication and a major indicator (like the day’s price-volume action) shows a down day – but on lower volume --- that lower volume takes away the sting. There will always be occasional down days in every market.

>>>>>I appreciate any feedback you have for me. Please send comments and ideas to:

Editor2023@armchairinvestor.com

Wishing you, “Many Happy Returns.”

CharlotteHudgin, The Armchair Investor,  

www.ArmchairInvestor.com   (214)995-6702   editor2023@armchairinvestor.com  

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