OT: IBD Underpressure

Investment Analysis Clubs Saul’s Investing Discussions
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Distribution days increase as some top stocks suffer sharp losses

looks like it started 4/21…

THE BIG PICTURE

S&P 500 Gags On Utility Battering; Starbucks, Alphabet Dive Late
PAUL WHITFIELD4/21/2016

Stocks struggled Thursday with unexpectedly bad economic data and the second day of an aggressive sell-off in utility stocks.

The Nasdaq fell fractionally, while the S&P 500 and Dow Jones industrial average dropped 0.5% and 0.6%, respectively. The IBD 50 retreated 0.5%.

Volume slipped on both major exchanges, though barely on the NYSE.

The action was bad enough to bring the uptrend under pressure, even if it wasn’t quite bad enough to slap the indexes with a distribution day.

Recent distribution has had an odd tilt. For instance, the stalling form of distribution suffered Wednesday on the S&P 500 probably would’ve been avoided if not for utility stocks. All 29 utilities in the S&P 500 dived in the past two sessions, with many suffering sharp losses.

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Frankly I am surprised today didn’t “Officially” set us over the edge. NAZ down 1.19% on increased volume - that despite the big up move in FB. IBD says a old distribution day dropped off the timeline, but for me this was it. I sold out of my QQQ switch trade initiated at the last market follow thru day. (Sold 50% of it when the market went “under pressure” recently ). Sold some of my breakout spec trades at a small loss. Still holding all my 1YPEG, but there are a couple I am not thrilled with and should sell.

So if you have cash and are eyeing some 1YPEG deals, don’t spend it all on today’s drop, the probability is that more are coming.

Pete

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Well another distribution day and no declaration of a “correction”. But it has been good enough for me. I have been selling out of more trading positions and stinkers. Still standing pat on the 1YPEG list.

Here is what they say
Sellers crowded into the stock market Tuesday, as their presence grew more and more uncomfortable for the bulls.

The Nasdaq led with a loss of 1.1%, while the S&P 500 shed 0.9%. Small caps fared particularly badly. The Russell 2000 tumbled 1.7%, its steepest loss since March 23.

MP050316The Nasdaq closed back below its 50-day moving average, dashing hopes that the index would get a footing at that key level. On Monday, the Nasdaq retook the 50-day line.

Dist days: Naz=8, S&P=7. How many more do they want. Ugly.

others say
To be fair, an advance going 11 weeks without at least a 3%-5% reaction certainly deserves one. At the same time, speculators will want to keep an eye on the price/volume behavior of the averages to see how extensive this selling may become.

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Thought I would be starting a new thread with “market correction”, but despite the blood, volume was lower on all 3 exchanges, so not a distribution day. At least that is how I see the volume on the charts, but IBD says this

Trouble persisted in the stock market Wednesday, as the Nasdaq’s pullback reached 5% since its April high and a test shaped up for the S&P 500.

The Nasdaq chopped off 0.8%, while the S&P 500 and the Dow Jones industrial average each lost 0.6%. The IBD 50 fell 0.6% as well. Volume fell on the NYSE but rose on the Nasdaq. That gave the Nasdaq a ninth distribution day in the past few weeks — a worrisome number.

Here is what it looks like
http://stockcharts.com/h-sc/ui?s=%24COMPQ

Odd.

and this
The Nasdaq remains stuck under its 200-day and 50-day moving averages. That battle to hold above those levels appears lost for now, but the individual investor should watch to see if the Nasdaq can retake the lines.

In a more immediate sense, the S&P 500 is the index to watch. The S&P 500 is testing its 10-week line now and is coming close to the 50-day line. If the S&P 500 can bounce off those lines, then there’s a chance the rest of the market will follow. If support collapses, things could get ugly.

Another item to keep an eye on is the put-call volume ratio. On Wednesday, the put-call ratio closed at 1.11, the highest since March 8’s 1.21 reading. The put-call is a fear gauge with a contrarian bent. A high reading is considered bullish. After hitting 1.21 in March, the indexes rose about 7%.

I have good cash now and don’t mind getting back in “late” after we get a follow thru day, but that seems a ways off. Sell in May?

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Another (slightly) down day (Naz) without distribution because volume was lower than yesterday - but not a confidence builder.

http://stockcharts.com/h-sc/ui?s=%24COMPQ

Look at all those red bars on the Naz. 10 of last 11 trading days down on Nax. Since April 1, . 17 down and 7 up.

Small caps underperformed the other indexes, with the S&P 600 dropping 0.6%. The IBD 50, a collection of the stocks with some of the best fundamentals and price action, dipped 0.1%

That is often our stocks

The distribution-day count improved a bit, as the S&P 500’s March 31 distribution day fell off because of time. After five weeks, a distribution day is no longer part of current conditions. Yet, both major indexes are still showing multiple signs of institutional selling, which is what distribution is…

On Friday, the market could react sharply when the Bureau of Labor Statistics releases its nonfarm payroll figures for April and unemployment data. The Street’s consensus number is 200,000 for nonfarm jobs, but the range swings from 175,000 to 245,000. The jobless rate is expected to edge down from 5% to 4.9%

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On Friday, the market could react sharply when the Bureau of Labor Statistics releases its nonfarm payroll figures for April and unemployment data. The Street’s consensus number is 200,000 for nonfarm jobs, but the range swings from 175,000 to 245,000. The jobless rate is expected to edge down from 5% to 4.9%

Bureau of Labor Statistics just posted 160,000 nonfarm jobs in April and jobless rate stayed at 5%. Teenagers have 16% unemployment.

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5/6/15:

Technically, Friday’s session was pivotal. Early on, it looked as though the S&P 500 would join the Nasdaq in slumping below the psychologically important 50-day moving average. After the market’s follow-through on Feb. 17, which signified a new uptrend in place and a good environment to buy stocks, the two indexes had quickly ascended over this intermediate-term trend line and stayed above it for months.

Yet today, the Market Pulse table shows the current outlook remaining at “Uptrend under pressure” for a 12th consecutive session. The market’s fast rebound off the February lows has stimulated plenty of eager selling by the institutional crowd. With nine distribution days still on the books for the Nasdaq and six for the S&P 500, these two facts alone should be enough to convince the regular reader of this column to be extra-cautious about making any new buys and to keep a healthy wad of cash in the portfolio.

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The stock markets demise may have been exaggerated, looking a bit better after today…

stock market skeptics who thought that this latest market uptrend lost its footing might want to reconsider their position.

Bullish buyers knocked down the bears on Tuesday as the Nasdaq composite regained some of its leadership composure, thanks in big part to one of its heavyweights, IBD Leaderboard member Amazon.com (AMZN).

Investors appeared to also like the morsels of better-than-expected data on the U.S. economy, including a rise in sentiment among small businesses surveyed by the NFIB, a jump in the Jolts survey of job openings, and a pickup in retail sales last week as tracked by the Redbook survey…
…
Volume was mixed. While NYSE trade fell, it rose sharply on the Nasdaq, which has sort of been a subtle trend since the start of the second quarter. Among the 11 up sessions since April 1, a surprising seven of those daily gains saw an increase in volume vs. the prior day
…
the April 5 distribution day, in which the Nasdaq composite dropped 1% in higher volume, expired on time. Make no mistake: The distribution-day count is still disturbingly high, with eight on the Nasdaq and six on the S&P 500. However, other factors seem to indicate that the market is not yet ready to roll over.

Oh, but LGIH had an ugly day on very strong volume.

First, the S&P 500 is acting just the way you’d want following Friday’s test of buying support at the 50-day moving average. The large-cap index continues to keep a nice air pocket above the longer-term 200-day line. The Nasdaq, meanwhile, at nearly 4810 finished within spitting distance of reclaiming its critical 50-day line.

Second, the NYSE advance-decline line, which plots the difference between rising stocks and falling ones, got a big boost on Tuesday as winners dwarfed losers by a more than 3-1 margin. Such positive action has kept this A-D line (see it on the General Market Indicators page via the link at the bottom of this column) on course for a 13-week-long uptrend, despite a flattening of the line in recent days.

On the Nasdaq, advancers beat decliners by an almost 2-1 ratio

We may yet pull out of this without a correction.

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another down day, but not an addition to the distribution count because it was on lower volume. Still, this is no market to be buying growth stocks. IBD investors will be high in case and waiting for a positive market to increase the odds of success. For me, I am very high in cash in my 401k that can only invest in mutual funds. For 1YEPG, I still hold many. I was luck with SEDG, selling before the big plunge.

My NVDA screamed higher today. It was very tempting to sell against this crappy market, but I do like it long term and finished at its highs as the market sold off at the end of the day. With volume at at least 5x normal and at the highest level in maybe forever, this gap is not going to close anytime soon. This is one to really take your chance on.

–Late Thursday, Nvidia reported a 38% jump in earnings per share minus one-time items and a 14% hike in revenue to $1.31 billion. Both figures topped analysts consensus.

Nvidia shares gapped up 15% Friday to an all-time high of 40.98, and ended the week up 16%.

However, IBD says this
http://www.investors.com/news/technology/why-you-should-be-t…

Nvidia received several upgrades and price target hikes from analysts after the report.

Shares gapped up 15.2% in giant volume, hitting a fresh high and clearing the 20% profit-taking zone. Nvidia initially cleared a cup-with-handle buy point of 33.16 about a month ago, and briefly pulled back to find support at the 50-day line ahead of the report.

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