A bull case for 3500 in S&P plus weekly review

Screen Shot 2019-04-13 at 11.11.16 AM

Not bad for 74 days, eh?

the source for this article is delta market investment newsletter Screen Shot 2019-04-13 at 11.10.57 AM

Delta continue : “For the market to return to its previous high, it will advance about 1.7% from current levels.  This is hardly a compelling upside story.  Is there a case to be made for the S&P 500 index to run materially higher than 2,940 in the next year?  The bullish price action of the stock market year-to-date suggests there is upside to consensus earnings and growth estimates.

One simple, time-tested rule of investing is the Rule of 20.  The Rule of 20 says the S&P 500 Price/Earnings (P/E) multiple equals 20 minus inflation.  The Federal Reserve currently measures inflation at 1.4%.  20 less 1.4 equals 18.6.  If we apply the 18.6 P/E multiple derived from the Rule of 20 to the consensus S&P 500 2020 earnings forecast of $187.42, we arrive at a price target of roughly 3,500 on the S&P 500 about one year from now.  That is 21% upside from current levels.”

IBD says this : “Leadership in the stock market is still centered on software, electronics, computer and chip sectors. They are showing no signs of weakness.”

Fidelity Weekly Ending Friday April 12th 2019barchart weekly Ending Friday April 12th

even for this week, except for health care and energy sector, all other sectors ended the week at the top of the trading range

Happy trading !

 

Bears just can’t catch a break.

IBD says this “For the seventh day in the past eight sessions, the Nasdaq and S&P 500 closed near session highs Monday. Bears just can’t catch a break.”

It continues “The Nasdaq composite rose 0.2% after wiping away an early loss of 0.6%. The composite has been rising smartly since it made a six-month high on April 1. At that time, the index put away the latest of several hiccups in which indexes have sold-off sharply, only to get back on their feet quickly.”

just a word of caution – The century figures! NASDAQ is at 8000 level, and S&P is at 2900 level.

But having said that – nothing beats this

Screen Shot 2019-04-09 at 10.53.41 AM

Else where in India – the Nifty 50 which is akin to NASDAQ-100 hit all time high

from Deccan chronicle : Foreign portfolio investors (FPIs) pumped in Rs 33,980 crore in March—the largest monthly inflow in the market’s history. And in the first five trading sessions of April, they have pumped in Rs 8,634 crore more into the markets. Indian stock market is at all time high.

1 year ago in April 2018 EUR USD was 1.2280 , Now it is at 1.1267 a drop of 1000 PIPs or 10, 000 dollars!

It has nicely bonded back and made a 10 day high yesterday. But it is in a fantastic down trend. Shorting opportunity.

the strongest group in the current rally

Since December 26th 2018 the boom in Software sector has been fantastic. The software sector and industry groups have been fantastic so far.

Let’s look at the following chart.

Screen Shot 2019-04-05 at 1.10.30 PM

So till wednesday it grew around 32 % !

they have been sell offs on March 4th and March 22nd and then yesterday April 4th 2019. But yesterday’s sell off was different.

On March 4th and 22nd there was market wide sell off. But yesterday there was just unloading of the top performing software stocks by Institutions for other pastures.!

lets look at 3 months performance of the sectors

Screen Shot 2019-04-05 at 1.16.03 PM

Information technology sector – went up 28.3% in three months – the next nearest one Industrials was about 6 % points below it. The sector went down by 0.44 %. an insignificant amount.

look at yesterday’s performance of Industry groups within Information technology Sector

Screen Shot 2019-04-05 at 2.00.38 PM

So all is well so far when it comes to non Computer sector/Software sector

Happy trading

i am still long on TQQQ and NQM19

 

what a bang to start the 2nd Quarter in the market!

Screen Shot 2019-04-02 at 12.31.11 PMScreen Shot 2019-04-02 at 12.33.33 PM

IBD 50 index  is an index of 50 top performing growth stocks in the world with high spectacular momentum and top line (top 1%) of fundamentals.

As the market is picking up steam growth stocks lead it – and IBD 50 Index has been picking up. it just cleared its 200 days SMA and has been going up steadily last 3 days.

One positive yesterday is the OBV for TQQQ

Screen Shot 2019-04-02 at 12.59.25 PM

Look at the chart below

Screen Shot 2019-04-02 at 1.15.15 PM

the OBV is approaching very close to the the march 2019 high – and this is just 1st day of trading for 2nd quarter of 2019 !

I am long on NQ and TQQQ!

happy trading !

happy traveling also !

 

Weekly review of the stock market, for the week ending Friday, March 29th 2019

wow travelers and traders, wow. what a 1st calendar year quarter it has been!

Major stock indexes closed out the first quarter with good gains Friday, capping a strong quarter that saw the Nasdaq composite rise 16.5%. The S&P rose 13.1% in the first quarter, its best quarterly performance since the third quarter of 2009. (source : IBD)

IBD says this “While the market remains under pressure and investors must remain cautious, the market showed some improvement the past few days. Indexes closed near the week’s highs, and some buying is reappearing.”

That is a good sign!

Back in October 9th 2018 NASDAQ closed at 7738. The next day, 10/10/2018, which was a Wednesday, the floor fell of and NASDAQ dropped 316 points and then it fell 1550 points till December 24th 2018 !

last friday the market closed at 7730. So we are right there. Now at this current time about 2 am EST, the futures are up 76 points or little more than 1 %. It appears we are going to start off the week with a bang!

Screen Shot 2019-03-30 at 8.00.22 AM

last week from the above table industrials, materials and Consumer discretionary have taken a lead. which is good because the participation is very broad in this market rally!

Look at the table below for 3 months sectors performance

Screen Shot 2019-04-01 at 11.18.34 AM

everything except financials are closing at the top in the first quarter of 2019!

the information technology sector is on the tear. IBD’s enterprise software group rallied 31% in Q1, easily outperforming the major stock indexes

iShares Expanded Tech-Software Sector ETF (IGV)n grew by 30 %. TQQQ triple NASDAQ-100 grew by 72%.

I’m planning on getting back into the market on the first day of trading this week.

 

 

 

the stalling action in markets

If we look at the below chart we see the problem in the 2 and 1/2 month rally started in the first half hour on Friday March 22nd 2019., You see with

Screen Shot 2019-03-28 at 10.37.28 AM

the volume for 9:30 am half hour was about 3 times the average 50 Half hours volume.

TQQQ went down by -2.1 % compared to the previous days close !! that is – $ 1.25. i would have saved considerably money if i exited then. But alas, I did not.

Moreover look at the average trading range for 50 half hour periods. It is around 0.61. it lost double that during first half hour! Next on 3/25 Monday the volume grew even more to 5+ million and the price drop was close to 1 dollar!

Now look at the daily chart for TQQQ

Screen Shot 2019-03-28 at 10.43.01 AM

3 fantastic high volume declines in last 4 sessions!!

IBD says this “The market outlook was lowered a notch to uptrend under pressure last Friday, when the Nasdaq composite plunged 2.5% in higher volume. With the market uptrend under pressure, it’s perfectly fine to take some profits in some top performers, especially if a stock has rallied 20% or more after a breakout from a base.”

high volume selling or severe stalling is 6 on NASDAQ and 7 on S&P 500 in the last 25 sessions.

Happy waiting !!

 

 

Heikin- Ashi Candles – what are they saying about the market?

Heikin- Ashi Candles (H-A Candles) smooth out the rough edges and indicate if the patterns are continuing or they are just about to transition.

They are like regular candles but use averages. Something akin to the functioning of moving averages. I feel they are simple and effective. Why?

Let’s look at closing price on a H-A candle. It is average of high, low, open, close of the current time period. Isn’t that awesome! Why? because no matter what people say what they think, what the TV pundits think and say. No matter what – ALL INFORMATION IS IN THE PRICE. More so in the current world we live in – every information moves at speeds that was too much to even imagine for say Jesse Livermore – often quoted as the greatest speculator of all time.

Look what he says on page 11 of his own book under a pseudonym??

Screen Shot 2019-03-26 at 11.43.23 AM

So let’s smooth all all fluctuations and say what is the average closing price for today. How is it doing with respect with last few days.

let’s look at S&P 500 Stocks Above 50-Day Average ($S5FI). From 90 % of S&P 500 stocks above their 50 days moving averages it has fallen down to 60%. Basically the stocks are losing steam and falling off. This is invaluable information. Why? the best biggest companies are not being supported by biggest institutional monies and hedge funds and Pension funds like The California Public Employees’ Retirement System (CalPERS) which has 300 plus billions in assets. Individual traders and speculators like you and me cannot match their dollars. We do not move the markets. We just follow the price.

As Jesse said – the tape does not concern itself with why and wherefore!

So last 3 weeks the stocks composing S&P 500 are falling off. So we do not enter into newer positions and take our profits. That is what i did in TQQQ and NQ yesterday. I closed all my positions and am sitting in cash now.

Screen Shot 2019-03-26 at 11.07.17 AM

Now let us look at TQQQ – the triple NASDAQ 100. It went up 94.6 % since the start of the rally low on December 26th 2018 till close of the market price of Thursday March 21st. it gave up 14 % last two days. So we exited to preserve our profits. (all regular candle prices not smoothened H-A candle)

Now why is this last two days different from say March 7th and 8th 2019  when they were similar declines?Screen Shot 2019-03-26 at 12.04.21 PM

March 7th and 8th – the price decline was 5.3 % or 2.77 dollars. on 6th the volume is well below the 50 days SMA of the volume and on 7th the decline in price was accompanied with just about average volume. IBD still had market in confirmed uptrend.

From 8th to 21st of march the market was going up BUT S&P 500 Stocks Above 50-Day Average ($S5FI) BARELY BUDGED it held at 71 %!! TQQQ went up by 20 % but the best stocks did not move up!

On 21st March at the climatic top the volume was just above average in TQQQ – around 19 million. the 50 days Average volume was 17.8 million.

the 7.1 % decline in the last 2 days. were in volume of 33 and 26 millions! which is to say 83% more volume than average on Friday 22nd March 2019 and then 30 % more yesterday. IBD changed its market outlook on Friday to market under pressure.

Number 1 : price in the only true north star

Number 2 : Preserve your capital at all costs

Number 3 : Preserve your profits.

Market climbs the wall of worry going up in an escalator or slowing trudging up. It falls down like a rock or a free fall elevator.

lets look at the 5 min intraday chart.

Screen Shot 2019-03-26 at 12.38.48 PM

7600 price seems to be a support. lets just wait and see.

Finally lets look at 5 days 60 Min H-A Candle chart of TQQQ.

Screen Shot 2019-03-26 at 12.43.08 PM

look at the bottom pane the big green volume candle bar and the values for that particular hour. Volume was 300 % more from 2-3 pm the day of Wednesday March 20th 2019 price change was 56 to 59.66 – 6.5 % But then look at all the high volume red candles  that followed the price decline.

So i am staying out of the market for now. Right from 3/22 and 3/25 10:00 am high volume price declines. So i get out of the way.

Happy patience and staying put for now!