5/9/2023T UPTREND Day 29 under PRESSURE Lower volume saved the Nasdaq from a distribution day, but the S&P500 took that hit.

5/9/2023T UPTREND Day 29 under PRESSURE  Lower volume saved the Nasdaq from adistribution day, but the S&P500 took that hit.

THE MARKET’S MESSAGE:  Market volume mixed Tuesday after Federal Reserve’s announcements

Sorry for no newsletter Monday night.  Too many other commitments. I haven’t had a day off in 9 months!

 The 3 major market indexes fell less than 1% Tuesday and only the S&P500 had higher volume for a distribution day.

>>> The major indexes continue sideways. Note the Nasdaq continues to bump its head on 12,260 – 12,270.  That has been the cap since the beginning of February this year for the Nasdaq.  The S&P500’s cap is just under 4,200 for the same period.  The S&P500 found its resistance just under 4200.

Please do NOT think the indexes are returning similar gains just because their charts look similar. In 2023, the two indexes (and the DJIA) have returned very different gains:

·      Nasdaq gains,year-to- date:      16.4%

·      S&P500gains, year to date:        7.2%

·      DJIA gains,year to date:               1.5%

If you look at the Investors.com home page, you will see the above three indexes listed.  You can buy the S&P500 index and the DJIA, but you can’t buy the Nasdaq index.  It is calculated as something to compare against individual stocks. 

Since you cannot buy the Nasdaq index, please join me in the QQQ (Nasdaq 100 largest stocks without the slow-moving financials.) The Nasdaq almost always out-performs the Nasdaq as a whole AND outperforms the other two indexes as well.

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I have not found how to watch the talks by the Federal Reserve governors and bank presidents mentioned in the weekly calendar on the bottom of Investors.com pages except the homepage. This listing is never shown on the investors.com first page (and not included on specialty pages such as MarketSmith.)  Just click on most any other investors.com page and go down to the bottom of the page for the for the links to many interesting pages including

Here aresome talks that would be interesting to me.

·      May 11, 2023 (Thursday)  Federal Reserve Board Governor ChristopherWaller will speak on “Financial Stability and Climate Change”before the “Current Challenges in Economics & Finance” conference organizedby the Federal Reserve Bank of St. Louis, Banco de Espana, and IE University at10:15 a.m. EDT (1415 GMT).

·      May 12, 2023 (Friday) St. Louis Federal Reserve Bank President James Bullard willspeak on “Toward a Monetary Policy Strategy” in a panel discussion atthe Hoover Monetary Policy Conference: “How to Get Back on Track” hosted by theStanford University Hoover Institution at 7:45 p.m. EDT (2345 GMT).

If you know how to watch these talks either “live” or “recorded” I would appreciate your letting me know (214) 995-6702  I will pass that information on to readers in this newsletter.

I did not find anything too exciting in Tuesday’s market, but I am pleased that the market is continuing to hold most of the gains in the

major indexes this year..  

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

In the last 20 trading days, the Nasdaq had:

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·       4 accumulation (buying) days

·       4 distribution (selling ) days but 2 of those D-days happened in the last 3 days

·       Market strength can be seen in the 8 days that were “consistent with” an uptrend versus only 3 days that were “consistent with” a downtrend.  BUT note…. 3 of the Downtrend days were in the last 6 trading days.

·       BUT…..my concern is In the last 9 trading days:

o   4 days were consistent with a Downtrend

o   3 days were consistent with an Uptrend

o   Leaving 2 days that were neither consistent with an Uptrend or a Downtrend.

·       This is a fairly neutral market!

Please be aware that we are now diving into one of the most oblique concepts I teach about the stock market.  Please just hang with me.  Or save this for a later time when you have space to take this odd concept in.

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What is an ACCUMULATION DAY?:  When a stock RISES in price and has HIGHER VOLUME than the day before, you may already know that day is called is an ACCUMULTION day. It points to heavy buying of the stock.

Most investors understand that idea...... If the big money is buying a particular stock, its price will rise:  When all the cheaper shares are bought, new investors must pay a higher price.  An Accumulation day is a day when the PRICE AND VOLUME BOTH RISE for a stock or an index.

The opposite of an accumulation day is the DISTRIBUTION DAY:  When a stock’s price FALLS  and its TOTAL VOLUME is higher than that day before, that day is called a DISTRIBUTION day. (Heavy selling of the stock.)

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So how can the day when stock drops in price be “consistent with” an uptrend?

When the price falls AND so does the volume,the market is saying it does NOT agree with the price movement, The market is waiting for something different! Perhaps some sort of good news to give investors a reason to buy the discounted stock. When that news happens, the volume of share bought will rise. If the stock is now coveted, the increase in shares purchased will push the price higher.

More on “consistent with” signals soon. (It’s the oddes (and hardest to explain) concept I teach….. but stay tuned. It is an important concept to understand.

In reviewing the MARKET FACTORS, COUNTS & RATINGS table below, note there is GOOD NEWS !!!

·       The market is on the 26th day of this Uptrend, that’s one day short of 5 weeks..  

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

·       The RISING/FALLING RATIO OF LEADER STOCKS remains slightly above  neutral (which would be 1.0) at 1.2..

·       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 (S&P500, DJIA, and others), I hope it’s not too much. I don't hold them and suggest you rethink that strategy if you do. Some of the “old safe indexes” are commonly losing money or making a lot less than they have in the past.

The ACCUMULATION/DISTRIBUTION TABLE

The As and Bs have been almost FLAT over the last 5 weeks with a high of 47% and a low of 43%.  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 by the 4 Federal Reserve executives will encourage new buyers.

>>>>> Are you registered on the current www.ArmchairInvestor.com site? (You do not have to register to get the newsletter.BUT…..If you are registered....

>>>>  you will receive a BRIEF email from me after I post this newsletter each night to tell you, as soon as possible, when it is available for your review. If you don’t get that message, just click www.ArmchairInvestor.com website to get the list of all recent Armchair Investor newsletters.

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

Editor2023@armchairinvestor.com

Wishing you, “Many Happy Returns.”

Charlotte Hudgin, The Armchair Investor,  

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

2023 ACI NEWSLETTER sent via WEBFLOW

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