5/3/2023W UPTREND Day 24 (under PRESSURE) Fed Reserve plans another rate increase.

5/3/2023W UPTREND Day 24 (under PRESSURE)  Fed Reserve plans another rate increase.

THE MARKET’S MESSAGE:  Market volume light waiting for Wednesday Federal Reserve’s announcements

NOTE: I will be traveling to Fort Worth tomorrow (Thursday) night. I may not get the newsletter out until the morning. And it may be shortened.

The market is not respond well to the Federal Reserve’s announcement of another 1/4% rise. I don’t think I will even notice 0.25%! But banks and other financials will.

We’ll see how the financial companies respond tomorrow.

The Nasdaq fell 0.5% with 7.0% higher volume which gave it a minor distribution day.

The S&P500 and DJIA also dropped (-0.7% and -0.5%, respectively) but avoided distribution days with Wednesday’s lower volume.

I expect the market to kick in gear tomorrow and tell us what it really thinks about the proporsed rate increases.

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Looking at the MARKET ACTION OVER THE LAST 20 DAYS table below, I start with the “Type of Day” column to see if there is more serious buying (accumulation  days) or more serious selling (distributiondays.)

In the last 15 trading days, the Nasdaq had:

·       4 accumulation (buying) days in the last 14 days

·       But ended with 2 distribution (selling ) days

·       8 days were “consistent with” an uptrend and only 3 days were “consistent with” a downtrend BUT …. That's 3 days out of the last 5 trading days.

If you are new to the Armchair Investor newsletter, please spend some time with the following idea.

It is important you understand how a rising day (like 4/48 shown on the MARKET ACTION table below) can be “consistent with”a downtrend. So here goes my explanation:

·       If a RISING day also has HIGHER VOLUME, we know the market makers jumped into the winning stocks that day and that day is “consistent with” a healthy Uptrend..

·       But if a RISINGday has LOWER VOLUME, then the market was not willing to play the “higher price” game today.

And THAT DAY (when price rose but the volume fell) is “inconsistent with” a healthy Uptrend. (Note: this “inconsistent with” a market directionis the hardest concept I teach.  Do not be surprised if you find it confusing. I did at first, before I defined it and started teaching it.)

You can get more practice with this “consistent with” idea by going through the MARKETACTION 20-day table that follows.

Every Uptrend has moments of hesitation.

Let’s let the market tell us if this will be a market top or if it  is just taking abreath.

Reviewingthe MARKET FACTORS, COUNTS & RATINGS table below, note there is GOOD NEWS HERE!

·       The market is on the 25th day of this Uptrend, that’s 4+ weeks!  

o  Note: I usually make more money in an Uptrending market. Don’t you?

·       The RISING/FALLING RATIO OF LEADER STOCKS remains a neutral 1.0.

·      The Nasdaq 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, I hope it’s not too much. I don't hold them and suggest you rethink that strategy if you do.

The ACCUMULATION/DISTRIBUTION TABLE

The As and Bs have dropped to only 39% of all the stocks – down from almost half (47% just 2 weeks ago.)  

That drop tells me to be cautious when buying “marginal” stocks. (Well, “YES” – I am always cautious when buying any stock, but the fact that the percent of “A” and “B” stocks is falling , tells me to be sure I am not picking up the stocks the big boys are dumping.

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Wishing you, “Many Happy Returns.”

CharlotteHudgin, The Armchair Investor,  

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

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