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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

Up 1/29/21

Up 5/29/20

Intermediate

Up 10/2/20

?+ 4/23/20

?+ 4/30/21

Sub-Intermediate

Up 3/29/21

? 4/5/21

?- 5/10/21

Short term

Up 4/1/21

Dn 5/10/21

Dn 5/4/21


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Wednesday, March 24, 2021

The market is looking heavy 3/24

In the last blog post I noted the market was acting poorly, but it could bounce.  It did and SPX made a new high, but internally the market appears to be getting weaker.

SPX closed below its 20 SMA today.  It only made a marginal new high on the last bounce.  It looks to me like it might want to test that last swing low which would take it down to the 100 EMA (white line).  The QQQ chart looks much weaker.

Usually QQQ tops after SPX, but as you can see it got nowhere near the high on the latest bounce.  This would seem to be a significant warning sign.  Check out IWM.

IWM also made a slight new high, but it is already below its 50 SMA.  

I noted a few times late last year there was very little selling pressure.  I figured people did not see an urgent need to take money off the table so they wanted to wait until this year.  When the new year came there still was very little selling pressure.  I did not mention this before, but that got me to wondering if they wanted to wait until after a year to get the lower capital gains tax rates.  That very could be and we just turned the corner on one year since the crash low.  There might be a little more selling pressure over the next few weeks.

May God bless you all with peace, good health, and happiness.

Bob



Friday, March 5, 2021

The market is acting poorly, but might bounce from here 3/5

Small cap stocks started the year on fire, but since 2/10 they have been struggling mightily.  In addition, most of the big tech names which have been leading the market for years are not acting very well.


SPX tested the lower channel line both yesterday and this morning before bouncing strongly.  Volume was strong today.  This looks like a good bounce setup providing there is follow through on Monday.  The VIX is acting very odd this year.  It has been over 30 twice already with only little pullbacks.  I don't know exactly what it means, but it is not quite normal.


The futures tested the 200 SMA pretty well the last two days.  This afternoon's bounce makes the chart look reasonably positive.

I believe some investors are selling overpriced stocks because of rising rates.  I also think other investors are busy buying the dip because the FED is printing money.  If rates continue to rise the market will probably continue to struggle.  On the plus side, the DC folks are talking about more stimulus.  Stimulus could help to keep a floor under the market for now.  We might be limited on the upside by interest rates and supported on the downside by fiscal stimulus.  Breaking the 1/29 SPX low (3694) would probably tip the scales to the bears.

The biggest risk to the market would be a pullback big enough to start another margin debt unwind.  We saw what happened last year when that happened.  As of Jan., the margin debt was about 42% higher than it was Jan. last year  Should it unwind again we could be in for a bigger drop than last year.  The trouble is unwinds are very unpredictable.  It will happen someday, but there is no telling when.

Have a great weekend,  May God bless you with peace, good health, and happiness.

Bob



Important

The information in this blog is provided for educational purposes only and is not to be construed as investment advice.