Not bad for 74 days, eh?
the source for this article is delta market investment newsletter
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.”
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 !
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.
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
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
So all is well so far when it comes to non Computer sector/Software sector
i am still long on TQQQ and NQM19
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
Look at the chart below
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 !
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
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
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 !!
it is a big beast – there are big big players with billions of dollars trading the market every day
For Jan 30, 2019
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Now for small time folk like me, the deluge of money and trading will overwhelm me. that is why i will not day trade. 2.5 billion shares are traded and i am not capable of knowing what is going to happen because my position can be wiped out in a min.
also total dollar volume is 129 billion
that is why end of the day price is so very important . why ? Because after all the fighting and back and forth snd trying to decide on the tug of war and over and over again money and stocks trading hands. at last they come to a market agreed price.
this is the price market has agreed, P/E ratios or sales figures or Forward looking EPS etc all the knowledge is finally found in that price. All the billions of dollars of super computers and auto trading and algorithms and quants have come up with this price.
and i should respect it.
2700 was a strong century figure resistance for S&P 500 and then for NASDAQ it is 7000-7200.
On higher volume both crossed that number yesterday at the end of the month
i am long on QLD and AMZN call.
In the mind, as in life, it is always 20-20 looking back (hindsight is always clearer). In Trading the philosophy of this blog is always 20-20.
the closing price itself is the most significant. Why? yesterday (again 20-20) is a prime example. NASDAQ opened 106 points down – around 1.4 %. went down 124 points compared to the previous day’s close (1.73%) but then closed at 7085 about 12 points higher than it opened. Look at the following 5 min chart. It is range bound and closed at upper part of the range.
Now look at the chart below. It is S&P 500 Stocks Above 50-Day Average ($S5FI)
on 1/22/2018 this very reliable portent dropped by more than 11%. that was a good scare. Now on that day (Tuesday, right after MLK holiday) NASDAQ dropped by 136 points (1.9%)
Now look at the behavior – both days. the charts indicate the behavior. on 1/22 clear down trend and 136 point drop and $S5FI dropped 11 + % points. that is why IBD said on 1/23 day end – “Stock market bulls breathed a sigh of relief Wednesday as Wall Street endured another whipsaw session.”
Yesterday though the drop was significant. the volume was lower compared to 1/25 (Friday). it was a range bound day and closed at upper end of the range. and $S5FI dropped by only 1.6 % points.
and also both yesterday and on 1/22 the volume fell on both NASDAQ and NYSE exchanges.
another good sign for NASDAQ is that the candles are bouncing above their 10 days SMA.
as a side-note : NASDAQ volume is about 2.4 billion and the dollar volume is 120 Billion daily!! Now we let the Big dogs like pension funds, and mutual funds and Quant automatic computerized trading, ETF managers, hedge funds play it out in the day.
We are concerned only with end of the day price and the behavior during the day and psychological important Moving averages like 50 Days and 200 days. Somehow this along with major support and resistances. It gives us great relief and mental rigor when we avoid the fight during the day.
I am continuing to be in the market. Long QLD.
Happy trading !
It will not escape your attention ladies and gentlemen that for the last 8 trading days in NASDAQ since Jan 15th, it has closed above its 50 day SMA.
on 1/22 there was a drop and high to low difference of 130 points but still it bounced neatly above 50 day SMA and closed above the century figure of 7000, a good 20 points above it.
similarly on 1/23 a nice push up/buying pressure from low to close of 75 points, a good bounce above 50 days SMA can most importantly a close of 7025.5 points above the previous day’s close.
Closing price is critical and a close above 50 days SMA, a good bounce above it; and then above the century figure of 7025 and then above the previous day’s close…these all scream about one thing. The market is refusing to let go it’s gains. this is so unlike the previous 3 attempts to rally.
its good to see another good gains on 1/24 and 1/25.
IBD has this point “The interesting part is that the leadership is shared and broad, so far. Nine sectors are up about 7% this year, including electronics, energy, banks, software, finance, transportation, chips, S&Ls and retail.
Admittedly this is early to be identifying leaders. But if the trend holds and grows, the stock market could be looking at a rally with many players. What bull wouldn’t like that?”
For me i like this and am already long on QLD.