5 days of stalling and no progress
2 days of high volume selling
100 points loss in 2 days in high volume
Top leaders down in high volume
( first photo source : trading view )
FFTY etf a proxy for top 50 beat stocks in the market down by 2%
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
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
Notice the top 4 sectors – account for 60% of S&P 500
From the above chart, A draw-down represents the peak-to-trough decline during a specific period of investment. In this case, the XLE dropped -29% in 2011 and -49% from mid-2014 to early 2016. XLE still remains -33% below previous peak levels. As oil prices have been halved, the energy sector and an investor of energy companies has been in a recession.
So look at for 4 sectors – technology, financials, healthcare, consumer discretionary
XLF – financials
XLV- health care
XLY – Consumer discretionary
dow for industrials and NDX for technology
source : delta market sentiment
this year there has been over 60 times that NASDAQ hit high.
this week begins with 6th week of record high.
It has to be of note Ladies and Gentlemen, fellow travelers that we have had 46 bullish weeks so far – NASDAQ has had 21+ %, DOW – 18.6 %, and S&P has had 15 % return
About 65% of market is moving above their 75 day Moving average!!
the famous DOJI occurred on June 12th 2017 – nothing but the the first candle in the first chart – then look at the trend!! Weekly is amazing
Now we know that price is the true north star. We react to the market – we let market show us in 2 charts what is going on. We don’t predict. We buy when the market is going up and sell when when market is going down. Period!
So i am on the long! there is a clear break to the upside occurred at the end of Sept 2017.
Happy trading and travelling
PS: i don’t give recomendations, and this is only my personal opnion.
For 38 weeks in a row – straight weeks, Since Donald Trump was elected the 45th U.S. President the market has been in a bullish trend. That is it has been around 269 days of relentless bull (a very, very mature bull market though).
Many people got left out, because they predicted the market collapse. The market is a leading indicator of the overall health of the economy of the USA
S@P gained around 18%
DOW gained around 21%
NASDAQ gained around 23%
41 times DOW hit new highs!! 41 times!
Monday August 21, 2017 is a coast to caost solar eclipse and some people as usual are predicting dire straits for USA. They may or may not be right. But as of today USA is doing great!!
But for the naysayers
Here is good news too
Electronics for Imaging – EFII, collapsed 41% in thousands of times more volume than average. This might be a time to time to buy Put Options. Remember Enron accounting irregularities! – Thursday was quarterly results and they failed to release it , citing issues over revenue recognition!!
Applied Optoelectronics – AAOI, plummeted 27%. The maker of optical-communications devices forecast current-quarter revenue that was well below estimates. Before Friday’s drop, Applied had best-possible IBD ratings. Its fiber optics industry group was ranked No. 1 of 197.
Trivago- TRVG, collapsed 18% to a three-month low after the travel-booking company reported loss in the quarter.
Impinj- PI, skidded 23% in more than seven times its usual volume. The tracking-chip company beat Q2 sales and earnings views, but gave a soft outlook.