5/19/2023F UPTREND Day 37 Nasdaq rose 3.0% for the week! Nice! But volume is lighter for second week in a row.

May 21, 2023

5/19/2023F  UPTREND Day 37  Nasdaq rose 3.0% for the week! Nice! But volume is lighter for second week in a row.

THE MARKET’S MESSAGE   The Nasdaq continues showing large weekly rises.

The question to answer today:  “After the Nasdaq’s 20.9% rise in the first 4 and 1/2 months of 2023, does the market have an additional rise in it?”

Evan though the Nasdaq rose 3.0% last  week, its volume was significantly lighter for the last 2 weeks which may indicate the it is ripe for a pause.  Before we try to answer the above question, let’s review the recent movement of the major indexes.

I know we have been looking at the comparison of the Nasdaq to the S&P500 and the DJIA.  But now add the QQQ to the mix and see what excites you.

A REMINDER:  IF YOU PICK A WINNING INDEX, ETF or STOCK TO MAKE AN INVESTMENT, “BUY & HOLD” CAN BE YOUR FRIEND.   And THE SMART INVESTOR will still watch that investment to be sure it is working as planned.

Here is a 20-year comparison of the:

·      QQQ (top 100 largest stocks in the Nasdaq without the slow growing financials.)

·      Nasdaq (there are over 3000 stocks included in the Nasdaq composite, weighted by total value of each. The Nasdaq is doing well because many of its largest holdings are technology.)

·      S&P500  (Note the last 2 indexes are waaaaay behind the top performing QQQ.

·       DJIA (even after being re-formulated to add more tech,the DJIA is just not even on my radar.)  Why do I even bother talking about it? Because some of you are still holding it. I know someone is!

Do you know the simple way to double your returns? Let’s step back to see what Father Time can do for us. Over the last 20 years (a period many of my readers have been investing), here are the “buy & hold” returns of the 3 major indexes I talk about the most plus the QQQ ETF.

Let me enlarge the 20-year returns table on the above chart:

And if you followed my instructions for the last 20 years on when to get into and out of the QQQ, you would have avoided many of the dips and, in total, done even better!

By the way, if your broker’s actively managed portfolio hasn’t done better than the “Buy & Hold” return above, you might ask what you have been paying for???  And consider changing advisors, or just do it yourself with this newsletter.

Whatever you think, you are probably questioning if there is any place for the sleepy DJIA and S&P500 in your long term portfolio.

I say, “You are asking the right question.”

>>> If you like the above comparison, DO NOT MISS the Armchair Investor newsletter on Monday night where I will show you another comparison that blew me away.

>> If you have some insights or hard lessons learned in stock trading, I would love to hear them.  You could either write me at ArmchairInvestor.com or call me at (214) 995-6702 to chat. Thanks!  

Friday was a day of rest for the market. Volume was light.  Both the Nasdaq and S&P500 had lower volume. Are we already getting into the summer duhldrums? Since the Nasdaq rose a very pleasant 3.0% last week, I am not concerned about Friday’s 0.2% pause.

We are only 4 ½ months into 2023, but it is easy to figure out which index has been outperforming the others. See the comparisons in the table above.  

Stay tuned and consider putting an investment in the QQQ as long as the market is in an Uptrend.  

Remember:  The stocks that rise the fastest frequently fall the fastest, too!  Please check in on this newsletter nightly.

 

Let’s look at the last 4 weeks of the Nasdaq to see the SERIOUS SHIFT in the market. Fromday 11 to day 1 (at the bottom of the table), there are 7 green highlighted closing prices. Each green highlighted price is a step the market took climbing out of its prior doldrums. The amount of green highlighting excited me in anticipation.

The price/volumeaction over the last 12 days has not one distribution day (see the boxed “Typeof Day” squares in the next to rightmost column in the following table.) If If you count them, you will find 9 days had “neither” designations and 3 were labeled (by me) as Major Accumulation days including 2 out of the last 3 days.

Reviewing the MARKET FACTORS, COUNTS & RATINGS table below, note there is GOOD NEWS >>>>>:

·       The RISING/FALLINGRATIO OF LEADER STOCKS has slowly risen to 1.5, which is above neutral rating of 1.0.

·       The Nasdaq’sAccumulation rating is a solid B+ (sorry about that C for the S&P500 and  C- for the DJIA indicating they have about equal sellers and buyers.)

·       If you hold some of those lagging indexes (S&P500, DJIA), I hope your position is not too large. I don't hold the S&P500 or the DJIA 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 consistently 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, I am NOT heavily jumping into this market…..yet! But I do hold the QQQ and 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 rising.

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

The ACCUMULATION/DISTRIBUTION TABLE

The number of stocks with A or  B ratings has risen a small amount over the last 3 weeks from 39% to 42% today showing the buying has quieted down.

 And you can see the almost unchanged ratings over the last 3 and 4 weeks. That iscalled a “stalling market.”  It will happen periodically in all markets. Sometimes all we can do is wait out the general market to start moving again in one direction or the other.

 

 

 

>>>>>I appreciate any feedback you have for me. Please send comments, ideas and requests 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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