US - Market Direction 41 (Mar 18 - May 19)

Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 28, 2019 8:48 am

THE CHARTS

After 2 to 3 days down following the prior Friday upside gap, downside that did not look very upside positive after Tuesday, stocks resumed the third bounce.

There were clearly leaders, e.g. SOX, while others more or less followed along. SOX is on the run upside while the others are up, but of course face more upside resistance challenges as they resume the climb higher.

Nonetheless, the indices are doing exactly what they need to do and they have some leadership from semiconductors, financials coming back, and of course, software.

SOX clearly led upside, surging Thursday to a new recovery high and Friday as well.

NASDAQ was pulled along by SOX' performance, moving Friday to a new closing high on the recovery -- by a slim margin.

DJ30 moved to a new recovery high as well, just eclipsing the prior recovery high a week prior. DJ30 did fall well off the Friday intraday day high to close, taking some of the luster off the move to near the 200 day SMA at 25,000, the next resistance point to take on and overcome.

SP500 gapped and rallied off the 3-day test, moving intraday past the prior week's closing and recovery high. SP500 faded to close just below that prior high. Volume was up but still below average. The move was upside positive but not definitive, a good rebound off a test of the attempt at a new leg. Now it just needs banks to continue and lead the way higher.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 04, 2019 9:51 am

MONDAY

This week more earnings while the economic data slows a bit. The market could use a bit slower news feed.

Good breaks higher that stuck for the indices and of course many stocks making up the indices. The key will be if new blood joins the upside.

Semiconductors have come back into leadership after a long absence, a huge addition upside. China stocks are stirring with some breaking higher, others looking to do the same. Financials are still recovering, trying to make the next move.

We have positions on many of the current leaders in software, FAANG, etc. Indeed, we are looking at AAPL for a new position this week. Still, the other areas need to set up more and make moves, and we do like some of these groups. If they can make the moves that would provide the market a lot more support for the move higher.

Recall way, way back when we talked about the sentiment indicators being leading indicators, and the initial leaders moving, and while they did their thing, over time other stocks would build bases and set up?

That is occurring, e.g. the semiconductors, and others are setting up. Thus far it is a slow process but it is working for the upside.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 04, 2019 10:54 am

CHARTS

SOX led the Friday move, moving close to the 200 day MA, ready to join the Dow that made the move Wednesday. Chips are still leading nicely higher. Again, 1300 is next resistance, and just 13 points away.

DJ30: Gapped upside and rallied to the 200 day SMA Wednesday, held that position through Friday. Oh, that is 25,000, the next resistance, right in the middle of the October/December trading range. Dow 25,000 hats were out starting Wednesday, a questionable practice. Still, a good move higher with next resistance at 26K, though 25K is not a done deal.

SP500: Excellent break higher starting Wednesday, bouncing up off the 50 day MA second test. Doji Friday, 45 points off the 200 day SMA. 2750 to 2800 is next serious resistance.

NASDAQ: FAANG helped break NASDAQ higher from the second 50 day MA test. Rallied Wednesday and Friday, hitting some resistance at 7265, pausing Friday. Of course, the move higher was gratis AAPL, GOOG, AMZN and strong software stocks. Friday the modest loss was due to AMZN gapping lower after earnings results, but the rest of the stocks performed quite decently to keep the losses quite minimal. Next serious resistance at the top of the October/December range from 7485 to 7575 along with the 200 day SMA at 7453.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby iam802 » Thu Feb 07, 2019 11:30 pm

A $2 trillion strategist is bracing for 3 years of pain for stocks. Here's how she says investors can fight back and keep squeezing out returns.

https://www.businessinsider.com/how-to- ... 19-2/?IR=T

[*]Investors are headed into a period where the stock-market returns they have become accustomed to will be hard to find, according to Alicia Levine, the chief strategist at BNY Mellon Investment Management.
[*]In an interview with Business Insider, she laid out where investors should be building hedges, and areas of the market she sees as positioned to benefit in a period of lower returns.

Investing in stocks would be much easier if bull markets lasted forever.

Since that's not the reality, the twilight era of strong market uptrends always raises the need to position defensively for flat or down periods.

Investors are now faced with such a task, according to Alicia Levine, the chief strategist at BNY Mellon Investment Management, which oversees $1.7 trillion in assets.

As a former investor, Levine understands the importance of always having dry powder in the form of cash that's not vulnerable to the mood swings of the stock market. She's now advising other investors beef up their holdings, based on her assessment of what markets are likely to do during the next few years.

"If you look at the returns over the previous 10 years for most asset classes, we simply don't see those returns being maintained at that level," Levine told Business Insider in a recent interview.

Read more: MORGAN STANLEY: Stocks are barreling toward a long earnings recession, and an investing strategy to survive the drought is already crushing the market

The past decade of lofty returns for the stock market coincided with a period of zero interest rates and quantitative easing. Both stimulative policies from the Federal Reserve helped prop up the stock market, especially because the yields on less risky assets were so low and unappealing.

Policy is now turning in the direction of higher interest rates and tighter monetary conditions. The very prospect of this shift stopped the stocks in their tracks in 2018, and was a key reason why investors just endured the market's worst year since 2008.

In fact, some investors have never had a taste of this brave new world. They're a cohort Levine described as "ZIRP babies" — those who came into profession in the bygone era of the Fed's zero interest-rate policy.

"It's good to remind investors that the returns will be more moderate," Levine said.

"That doesn't mean you can't get positive returns, and we do see positive returns in equities and in emerging markets, for instance."

She flagged US financial stocks as a sector that's recently been beaten down even though its business fundamentals are strong. She also singled out industrials as a sector that should benefit for as long as the economy stays strong.

"We just think you have to start hedging, and you have to have an allocation to cash," Levine said.

She's advising that investors increase their cash holdings for the market environment that would prevail during the next 1-3 years. This dry powder serves as a hedge, and as an asset that can easily be put back in the market when needed.

"In a funny way, it's a better place to be for an investor because you stop lulling yourself into thinking everything's going to go up all the time, and you start introducing risk back into the system," she said.

1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 11, 2019 8:31 am

MONDAY

Earnings still to come but the market is at that point where earnings are not as big an overall impact; the gist of the season is well-quantified and of course investors are looking farther down the road.

Trade elevated its importance again late in the week, attributed with the weakness. Okay, sure. The markets were set to pullback, however, and trade was a good trigger for that pullback.

As noted, it was not heavy selling, just a normal pullback to near support by the indices and by most leadership stocks. Not all as some FAANG really struggled, e.g. AMZN, GOOG.

The action is certainly calm, but other selling in recent times started calm as well. With the indices at resistance after a third leg off the selling, it is not safe to assume anything.

Still many good-looking leaders and this fade is offering some good setups. More stocks and groups are trying to set up, always a good indication.

We have several new plays ready to go, we are keeping current positions that are showing good action. We banked a lot of solid gain the past couple of weeks as the indices and stocks approached resistance.

After this test, if they resume the move higher of course we will participate and watch for a fourth leg up off the December selling. May seem on borrowed time given the yearlong 2018 top, but we play what the market sets up when those setups move, taking what the market gives.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 11, 2019 11:04 am

CHARTS

Again, little damage to the index charts. Indeed, the action is more constructive than damaging as the stock indices post very orderly 1-2-3 pullbacks after a solid -- eventually -- third leg higher off that December selloff low.

The action is the same, but the orientation differs: DJ30 and SOX test from a position of strength over resistance, while SP500, NASDAQ et al never made it past the 200 day SMA.

I would note that NONE of the indices outside of SOX made it past the October/December trading range, and that still looms as the next big resistance.

Even so, as you can see, many of the patterns are similar, setting up potentially bullish moves but also just below key resistance. As stated last weekend, that makes this, as others noted in the following sessions, an important inflection point.

DJ30: Broke over the 200 day SMA, put some distance on it, then slid back to test Wednesday to Friday. That keeps DJ30 over the 25K level, over the 200 day SMA and showing a doji there Friday. Still ahead: the top of the Oct/Dec range from roughly 26K to 26,250.

SP500: Tested the 200 day SMA from below, faded to close at the 10 day EMA. 2800 is also resistance, but this is key for SP500 as so many are watching from here to 2800 with many predicting the same failure right now.

NASDAQ: Similar to SP500, tested the 200 day SMA from below though never made it there. NASDAQ's OCT/DEC range is closer at hand than the other indices, so a double layer of ice to break through. Closed out the week just as SP500, holding the 10 day EMA after gapping below it Friday and recovering. Trying to set up an inverted head and shoulders pattern from November to present, and this action would be working on the right shoulder. Makes this resistance point very interesting. If NASDAQ can finish out the pattern and break it, that is a strong upside indication.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 18, 2019 8:24 am

TUESDAY

The week ended with expiration Friday and some apparent reallocation of new money to the financial, industrial, home-centric, and perhaps energy stocks.

Other areas did not sell off, just continued to rest or took a breather.

If new money wants to come into new areas and drive them higher while staying in the others that are resting, that is perfect. That is the virtuous rotation that keeps the last round of leaders holding gains, resting for a new move once the money is deployed to the new areas.

Still, despite the impressive Dow and RUTX gains Friday, remember the resistance that is very near at hand.

New leaders can make their own way as they are not overextended. And once they make the initial move, you see if money flows into the earlier leaders that took a break, while the new group moved up. Back and forth rotation, pushing higher.

If that action continues, even with the approaching resistance, if there is no selling then the indices can continue to move higher, resistance or not. Nothing yet indicates a rollover, just looming resistance presents the possibility.

With that scenario we will still look for the best upside money making potential heading toward that resistance. Remember, all along we said this fourth leg can still make us money, and with the new names breaking higher we still see the potential.

As long as the money pushes into those areas we want to make the plays, following the money.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 18, 2019 8:33 am

CHARTS

Working higher, but the key is there are not new breakouts. The indices are moving upside in their fourth leg toward the tops of the OCT/DEC range.


DJ30: The Dow waffled some after clearing the 200 day SMA, spending about a week working laterally. Up early week, then put in a more definitive move Friday. What did Tin Cup say? When a defining moment comes, you define it or it defines you.

Whatever the heck that means though I believe Cup used it as an excuse for his many failures. Anyway, the Dow received quite a bit of backing from its component stocks (outside AAPL), particularly industrials, financial.


NASDAQ: NASDAQ gapped higher, just clearing the 200 day SMA, but then fading to close just below. It was not the larger techs' session. They have led and are now, in some cases, taking a breather.


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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 25, 2019 8:42 am

THE CHARTS

DJ30: Over the 26K level on the week, but hardly impressively so. The Dow rallied well two Fridays back then slid laterally this week just below resistance from the Oct/Dec range. Thus far not trying to break through the top of the range, but if stocks such as CAT, MMM continue higher and AAPL breaks higher once more, the Dow will have some potential to break through. As of yet, a low volume bumping at the top of the range.

SP500: Over the 200 day SMA on the week but still below the peaks of the trading range. 2800 was tested but remained unbroken. As noted last week, everyone and his brother is watching the 2800 - 2830 level as resistance.

NASDAQ: NASDAQ moved through the 200 day SMA as well with a more definitive Friday move, showing a solid price gain and a shot of very solid above average volume. Cleared the December peak on the move but is still below November and October at the top of the range. It is working and some big name techs that are not FAANG are working, e.g. MSFT, INTC, ORCL, CSCO.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Feb 25, 2019 8:44 am

LEADERSHIP

Software: Setting up well as noted previously. TEAM, NOW, NEWR, WDAY are all leaders that tested, held gains, and look strong once more.

FAANG: Still a laggard group. FB, GOOG, AMZN, AAPL all in lateral moves. NFLX is not bad at all.

Energy: Back and forth on the week but finished the week still holding good patterns. DVN, TELL, PTEN, CVX, COP -- many have promising patterns.

Machinery: CAT in a nice test of the move over the 200 day SMA. CMI worked mostly laterally on the week but still trended up the 10 day EMA. DE recovered very well off a 50 day MA drop on earnings.

Manufacturing: MMM, UTX still setting up quite nicely.

Home-related: HD is in a great flat flag test. LOW has enjoyed a super 2 weeks. DHI moved to a higher recovery high Friday. TOL working. TREX faded on the week but still a solid pattern.

Financials: V broke nicely higher Friday. Regional banks decent, e.g. STT, TCBI. C was upgraded but that didn't do anything for it or any of the other bank stocks for that matter.

Chips: Came back to life on the week. RMBS, SIMO, SMTC, INTC. Still like how NVDA is setting up.

Metals: Industrial metals still look decent, e.g. CLF, MUX. Steel making some good moves, e.g. SID.

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