Market at the top, will history repeat?

Current market participation : unfortunately because of 12 hours time difference between bali (I am currently in Bali Indonesia ) and NY, I am currently not participating in the market. Timing is critical during breakouts and It is sleeping time here when market opens in NYC! If COMP moves up by 100 points than that is added to the risk if the breakout is missed.

This below info is for the readers.

Nasdaq hit all time high. March 12th week and April 2nd week crash stabilized the next 4 weeks. April 30th it retook the 9 week Moving average

From May 7th to yesterday the hole which was dug the market came out

Look at this chart below FFTY the top 50 growth stocks in the entire market

It just topping and topping

NYSE’s advance-decline line has now risen for five weeks in a row.

S&P 500 spent four solid weeks above its 50-day moving average. That’s the longest period of time since January. Technically speaking, that’s good. It means the rally is accelerating.

Accumulation/Distribution Rating the Nasdaq scored a B-, much improved from a D since May 10th uptrend start

And finally 65% of all stocks in S&P 500 are above their 50 day simple moving average

So Market hit a top. It is very likely to go up further

Happy trading !

Looking into the looking glass

Market analysis weekend of May 12 2018

The way employed here is always reactive not predictive. We do not forecast we just react to the market. For 6 weeks it indicated to us to be out in the sidelines. We look at the major indexes at the end of the day for 10-25 mins and based on price and volume we see if we enter or exit.

Price is the only true North Star. Volume indicates the commitment by 100s of institutional buyers with total of billions of dollars to buy.

#1 and only priority is preserving our capital at all costs check our method how and why

Market is in rally and things are looking good but I will explain why we should still wait 1 more week or less

53.4% of stocks in S&P 500 are above their 100 day SMA (say there are 100 stocks in entire market 53 stocks are above their price averaged over their last 100 days) 1st chart

This week delta market sentiment turned bullish after 6 weeks of bearishness

The Nasdaq closed above its 50-day moving average for a sixth session in a row. The S&P 500 did the same for a third session in a row.

The Nasdaq needs only a 1.3% advance to bump up against the 7500 price level. But the S&P 500 needs a 2.7% gain to test the 2800 level.

Dow 25000 is quite nearby

Accumulation distribution (A rating is top and E ratings is bottom ) for S&P is still D

NYSE advance decline line has made a new high. Above chart 2 . But you see, only on May 9th on above average volume with solid volume increase did S&P clear the 50 day Simple moving average (SMA )

It’s good to be cautious and not jump in.. we need to let it play. All the indexes are close to the Previous all time high potential resistances. Things just began to look up and this coming week will let us know

Raising interest rates and the market

 

The Federal Reserve is implementing a multi-year interest rate increase plan as a way to manage inflation.  Many bull markets have ended as a result of the Federal Reserve raising rates too much.

As long as the 10-year U.S. treasury rate is below 5%, rising interest rates have a positive correlation with a rising S&P 500.  Said simply, rates go up and stocks go up.  Above 5%, rising rates have a negative correlation with the direction of the S&P 500.  Today, the 10-year treasury is about 2.9% — shown with vertical blue dashed line on chart below.

The Federal Reserve attempts to manage inflation (Fed target rate of inflation is 2% year-over-year) through interest rates.  By raising interest rates, the Fed can slow economic activity.  Borrowing (e.g., for a home or any other purpose) becomes more expensive.  Saving and earning interest becomes more attractive.  Consumption moderates relieving upward pressure on prices (inflation).
The Fed Funds rate is currently about 1.4%.  The Fed says it plans to raise the Fed Funds rate to about 2.7% in 2019.  The current spread between the Fed Funds rate and the 10-year treasury rate is about 1.5%.  If we assume the spread remains constant going forward, the 2019 10-year treasury rate using the Federal Reserve’s projection of the Fed Funds rate is 4.2%.  Based on market relationships dating back 55 years to 1963, interest rates rising should not be a major threat to the bull trend this year.

The 17 consecutive month of positive Leading Economic Index (LEI) percent change month over month was reported this week at plus 1% for January.  The LEI continues to signal growth through the first half of 2018.

Source of the entire article is delta market sentiment news

 

Hello Readers from shanghai!

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I would like to thank Helga Sweeney and Alex for their observations on “pesky charts”

what about supply and demand for NASDAQ? or for that matter DOW and S&P ?

Before i answer that – lets look at some basic fundamental traits in the charts for 2017 and till now 2018

what did the pundits say – This is a valid dictum – Do opposite what the pundits say and you will be alright !!

look at what IBD said  “Since 1963, the S&P 500 delivered 19 years in which it rallied more than 15%. But each year following those big gains averaged a more modest 7.5% advance.”  and “investment strategists and fund managers expect more modest stock price gains in 2018.”

I respect IBD a lot; In fact the big picture column is fantastic and is a daily read for me to gauge the “Big Money flow”- which is nothing but this : How is the price performing wrt the volume on a daily basis. How are leading stocks like YY, AMZN  and others performing? For we know that with first signs of big selling the leading stocks lose first and then the volume increases to overall stock market as it falls.

NASDAQ’s number of distributions days (high volume selling) is just 1 in the last 30 days and It is up 7.3 % till Jan 22nd 2018! we haven’t even finished one month yet!

The S&P 500’s 2017 return was more than double the big-cap bogey’s 8.50% average annual gain over the past 10 years. The Nasdaq composite index shot up 29.64% and the DOW jones gained 25.08%!

Only once in the lasts 25 YEARS the S&P is up more than 6 % in Jan (1997 – 6.7%). the S&P just hit 6.00 % just yesterday !!

the delta market sentiment indicator is approaching 74% (74 % of around 2500 stocks are above they mid term moving average)

the leading economic indicators (LEI) is healthily positive last one year

the stock market is healthy and going strong with no head winds at all

 

 

Trend outlook 2018

YTD NASDAQ

For the first time since almost 30 years – the entire world is seeing +positive grown for 12 months!

Of the top ten largest corporations in the world in 2009, only one was a technology company – Microsoft.  Today, seven of the ten largest companies worldwide are technology companies including Apple, Google/Alphabet, Microsoft, Facebook, Amazon, Alibaba and Tencent.  The shift to a technology dominated economy provides a boost to earnings growth rates.

Over a fifth of the S&P 500 is represented by the technology sector.  Consensus revenue growth for the technology sector in 2018 is 9.4% which should drive 35% earnings growth.  In the past month, the revenue growth forecast was revised up from 8.7% to the current 9.4%.

The earnings per share for the MSCI AC World Index (ACWI) is above $30.  In the U.S., the S&P 500 consensus earnings estimate is expected to advance by about 11% year-over-year on revenue growth of about 5% off of record levels reached in 2017.

If the P/E remains constant as it has for the past two years, the S&P 500 should be up in-line with earnings or about 11%.

Source : Delta market sentiment