30 Sep 2023

THE WEEK AHEAD: Starting 10/2/23

By |2023-09-30T10:49:06-04:00Saturday|

"There is no way around the hard work. Embrace it." - Roger Federer Monthly Suspense: With everyone on edge over a possible government shutdown this weekend, let us relax and take a look at the MONTHLY technical picture for the most widely followed benchmark. If bullish seasonality kicks in to start Q4, these current back-to-back MONTHLY losses could be considered a cup with handle pattern. In my opinion then the lows of 4200, a bullish ascending triangle breakout on the WEEKLY chart need to hold. Below one can see how rare 3 month losing streaks are, and the last 2 Octobers rose robustly by 8 and 7% respectively in 2022 and 2021. For the less sanguine outlook, if that 4200 level does not hold a move back toward the rising 50 MONTH SMA comes into play, which could be near the very round 4000 number as PRICE catches down. One aspect of the chart below that is concerning is the possible false signal on the MONTHLY bullish MACD crossover that just happened recently. If that were to break back below it looks very similar to the rocky behavior during COVID. That could be the catalyst for a 7% plunge lower.

29 Sep 2023

Technology Sector Review: 10/2/23

By |2023-09-29T16:13:44-04:00Friday|

"Old Tech" Shortcomings: The mature, "old tech" stocks once totally in vogue are suddenly becoming shunned. They were not too long ago clamored for their defensive nature and dividend yields, but not any longer as the overall market has been shaken out too. HPQ can not blame the recent market fragilities for its softness. Its weakness began with a bearish dark cloud cover candle on 7/12 and has now shaved one-quarter off its value during a current 7-week losing streak. The stock pays a dividend yield of 4%. ORCL slumped 13% after an ill-received earnings reaction on 9/12 and it looks like it is on a collision course with the very round par number near its 200-day SMA. IBM slumped nearly 5% this week after the prior week recorded a double top just above the 150 level and it is on a 7-session losing streak. Below is the chart of CSCO and on 9/21 it completed a bearish island reversal (following the gap up on 8/17) after announcing it was purchasing SPLK. I prefer to act on these events on more mundane, generic news but this is starting to take on the look of a bear flag as well.

24 Sep 2023

Dreaded Doji Candle

By |2023-09-24T15:47:36-04:00Sunday|

Dangerous Doji: As the market feels heavy currently, I thought I may share in retrospect how I look for potential topping formations in stocks. There is a variety of ways to do it, and sure it is easy to Monday morning quarterback. But this in the future could help to look for certain candlesticks that should put one on alert to at the very least trim positions, if not sell completely. I share 6 examples here of the doji candle and circled each one so everyone could visualize what it looks like. These candles are often adept at signaling possible changes in the prevailing direction. All of them were preceded by uptrends, so they were a clue to minimize holdings and wait one a better future entry. These work in both up and downtrends (NVDA is a possible example as Friday recorded a doji candle after a 100 handle decline. These are very rare and indicate uncertainty and have the same opening and CLOSING PRICES. Let's take a look at several illustrations.

23 Sep 2023

THE WEEK AHEAD: Starting 9/25/23

By |2023-09-23T14:42:29-04:00Saturday|

"It's the basics that make you brilliant." - Darren Cahill Rates Matter: The S&P 500 broke below the 8/18 lows last week and the rough 4350 level, which everyone ad nauseam has been talking about as the bearish head and shoulders breakdown. I see it as the symmetrical triangle break, and interestingly both patterns would have a measured move to the 4150 area. The 10-year rate, which is the solid black line on the chart below, is starting to diverge in PRICE from the S&P 500 which until late August climbed in tandem basically. The 7/27 session reversed hard right at the very round 4600 number when the 10-year yield first hit the very round 4% number, and it has felt heavy ever since. Last week fell almost 3% its largest WEEKLY loss since the week ending 3/10 and notice how the widely watched benchmark has fallen 6 of the last 8 weeks, with all six CLOSING at the lows for the WEEKLY range beginning with the bearish engulfing candle the week ending 8/4. Its 50-day SMA is curling lower for the first time since last November and with rates on the ascent, this pullback could be ready to pick up some steam.

16 Sep 2023

THE WEEK AHEAD: Starting 9/18/23

By |2023-09-16T15:24:07-04:00Saturday|

"The stuff you own ends up owning you." Brad Pitt Advisors Exposed? When prior correlations break down could that be a sign of a major market event? Of course, no one can predict that but the chart below looking at the NAAIM Exposure Index to the S&P 500 shows a glaring disparity. As the NAAIM fell out of bed recently, the S&P 500 maintained its lofty altitude. Is that a sign that the S&P 500 is about to undergo a sizable correction? The last time that NAAIM reached the very round par number in late 2021 we all know what happened to the S&P 500. From the end of 2021 to October 2022 the widely followed benchmark traded from 4800 to 3500. I am not saying this will occur again but it does give another notch in the belt of bears. For those blaming triple witching on the big index declines Friday, the last two examples on 8/18 and 7/21 were precisely UNCH and just one since April fell more than .4%. I still think we are in wait-and-see mode, and no need to take large positions here until a clear direction is seen with markets. After all the S&P 500 has traded the last 2 weeks inside the strong week ending 9/1 that rose 2.5%.