OT: IBD Follow Thru Day (again)

Investment Analysis Clubs Saul’s Investing Discussions
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Well, here we go again. It was a follow-through on the fourth day of a rally attempt, not Day 3: IBD Market School rules point to the Feb. 11 session as the start of the new rally. While the Nasdaq fell 0.4% that day, it bounced sharply off the day’s low and finished well in the upper half of its intraday range. Such unusual action can count as the start of a new market rally attempt. That’s significant, because a follow-through should occur starting with the fourth day of a rally attempt, no sooner.

The S&P 500 rallied nearly 1.7% in heavier turnover. It too staged a follow-through of its own, although it did not see as vigorous a rebound during its decline on Feb. 11.

Pros: a follow thru day
Cons: it failed last time

Pros: we got the required stronger volume than previous days
Cons: barely

Pros: a nice up day in price: 1.59% to 2.21% (Naz). 2% + is what we really want on a market FTD.
Cons: it was less than that last attempt (I believe) and it was barely above average volume on the Naz
http://stockcharts.com/freecharts/gallery.html?$Compq

Pros: some oil producing countries are talking about reducing production
Cons: they always lie.

Pros: commodity companies are trying to reduce debt. Freeport sold $1B of assets today
Cons: Freeport has $19B in debt!

Pros: Mortgage apps were up according to the MBA
Cons: I think it was mostly refis

Pros: Mortgage rates are low
Cons: Because the economy sucks.

Pros: the Dollar is off the highs
Cons: other countries will try to fix that.

Pros: S&P and DOW successfully tested the double bottom of Jan 19/20
Cons: some people are worried we did not get a capitulation day, like 5% down on huge volume where everyone pukes it up like March 9, 2009.

Pros: At the same time, the Federal Reserve hinted it would be highly cautious about making any future hikes in short-term borrowing rates. In the minutes released from the Jan. 26-27 meeting on interest rates, the U.S. central bank noted that domestic financial conditions had “tightened” during the start of the new year and judged the vulnerability of the U.S. financial system as “moderate on balance.”
Cons: they are out of bullets if they need them.

Pros: we will get a new president
Cons: It is probably one of the current candidates :wink:

Priceline major gap up on major volume, so clearly not everyone is scared senseless.
http://stockcharts.com/freecharts/gallery.html?pcln

Pros: some of our stocks were up nice, MITK had great volume on a 10% move.
Cons: most were up on lower than previous volume and Casey General Stores had a general disaster. Down 10% at end of day, then I saw it up 11% after hours then back down to the close by the end of AH trading.

http://stockcharts.com/freecharts/candleglance.html?$INDU,$C…

as always Careful readers of this column know that over the past two years, numerous follow-through days did not lead to long-lasting uptrends. The poor action that followed the Jan. 26 session and a rare Day 3 follow-through on Dec. 16 testify to the challenges of making money lately. The S&P 500’s follow-through on Oct. 2 lasted much longer

Pros: there were a few chart break outs:
http://stockcharts.com/freecharts/gallery.html?ew
http://stockcharts.com/freecharts/gallery.html?vlrs
Cons: not really strong volume

Priceline Group (PCLN) helped the cause, gapping up 11% in triple normal trade and grabbing hold of its 200-day moving average. But the longtime leader is nowhere close to completing a decent base. IBD 50 names Ellie Mae (ELLI), Ryanair (RYAAY) and Five Below (FIVE) as well as IBD Global Leaders standout Genpact (G) are acting right as they build the right side of their respective bases.

So what’s my take?

  1. don’t listen to a guy called PuddinHead.
  2. I like this better than the last attempt. We have tested a double bottom. We failed before but the world did not end. This FTD takes us to the high of the last FTD that failed, so if we surpass that in a day or so charty people will feel better. The transports did not fade with the market after the failed FTD.
  3. if you have been hoarding cash, maybe it is time to spend a little on some good 1YPEG stocks, but spread it out. If we are to go back to old highs, there is plenty of time. I have nibbled, but now I will take some bigger bites. I will “trade” back into my 401k funds since I can’t buy individual stocks.
  4. totally ignore charts and volume and buy companies that you expect to do great.

Pete

We all have opinions on the value of this, no need to draw out the thread too much.

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I am always surprised that the market takes OPEC pledges to cut production seriously.
Because at least one member immediately starts to cheat, followed by the others. Always. And today there is nothing to hold these countries together, many of them hate each other.
But they are often willing to sign a deal, each producer hoping they will be the first to cheat and the last to be found out.

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From 2/22/16…

Judging by the action in recent breakouts, plus the fact that some potential leaders are still early in the base-building process, the market’s message is pretty clear right now for growth investors. Buy candidates are still sparse. If the market is truly strengthening, the breakouts will come in due time. Be patient for now

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From 2/24/16 after the big swing caused by oil…

The number of stocks rising to new highs is still pitifully low. (See the latest list on Page B5.) After a monster run from the March 2009 lows, the market still appears in need of more rest. Yet the recent market action suggests that institutional investors do not want to completely abandon equities.

What are the clues?

One, the breadth of the advance is slowly expanding. On the NYSE, winners pounded losers nearly 2-to-1. The NYSE advance-decline line (on the S&P 500 chart on Page B2) is on pace to rise a second straight week. It’s already pushed past a short-term peak in early February.

Two, the market was able to deflect the disappointing miss in January new home sales and an unexpected drop in the PMI private sector services index for February.

Three, while breakouts are still puny in size, fewer stocks are sinking so fast that investors must cut their losses at 7%-8% or less. Instead, pullbacks to or just below their precise buy points are more common. When such action lasts for weeks, expect base-on-base patterns to proliferate. That’s not a bad thing, given looming uncertainty over the EU (will Great Britain leave?), China (is its market chaos subsiding?), crude oil (will it avoid a drop to 1990s levels?) and the U.S. presidential election (will it be “The Donald”?)

One disappointment in 2016 so far is the terrible performance of money center banks. In Wednesday’s IBD, the group ranked an awful No. 173 out of 197 industry groups for six-month price performance. A healthy banking system is the backbone of long-term economic prosperity

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http://www.barchart.com/stocks/newhilo.php

http://www.barchart.com/stocks/high.php

http://www.barchart.com/stocks/athigh.php

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Quill,

You post these links to charts and tables, but with no commentary.

I don’t know what the heck I’m supposed to be looking for. Is it something good for the stocks discussed here? Bad?

If it’s supposed to be obvious, I guess I’m not bright enough to catch whatever it is you’re trying to say. Your message is lost on me.

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What he “foodles” said.

Still learning…

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for 2/29/16

stocks marked a weak close Monday, reversing lower in higher volume, as Wall Street weighed more stimulus news out of China alongside weaker-than-expected economic data on the home front.

In the final trading day of February, the S&P 500 lost 0.8%, while the Dow and Nasdaq gave up 0.7%.

The IBD 50 held up better than the broad market, falling just 0.3%, as names like Universal Display (OLED), TAL Education (XRS), Smith & Wesson (SWHC) and Sprouts Farmers Market (SFM) outperformed.

After the Nasdaq stalled Friday (heavy volume with little price progress), the index marked its second distribution day in a row. The S&P 500’s higher-volume decline was its first since the Nasdaq’s Feb. 17 follow-through.

After two straight closes above its 50-day moving average, the S&P 500 closed below the level Tuesday. The Nasdaq, meanwhile, crossed above its 10-week moving average Tuesday but ended below it. Both levels are important resistance areas to watch.

News of additional stimulus measures out of China to spur more lending by banks didn’t do much to help U.S. markets. But weaker-than-expected economic data might have.

Pending home sales unexpectedly fell in January while the Chicago PMI, a gauge of manufacturing activity, came in at 47.6, below the consensus estimate of 52.9.

The market might still have a defensive tone, but non-defensive areas of the market have been perking up. For example, as of Friday’s close, three semiconductor-related industry groups ranked inside the top 25 of IBD’s 197 industry group rankings.

Nvidia (NVDA), with a Composite Rating of 99, is back above its 10-week moving average as it works on a cup-shaped base. It’s only 7% off its 52-week high. The graphics-chip company shows three straight quarters of accelerating sales growth.

Meanwhile, Stamps.com (STMP) followed through after Friday’s bullish gap-up. Share rose nearly 2% in heavy volume. It’s still in a buy range from a 114.36 buy point.

Top-rated growth stocks are acting better than they have for some time, but many still are spinning their wheels, not able to make much progress. Some exposure to stocks is warranted, but a 100% bullish stance is not.

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I have found these to be useful at market bottoms before. He creates a checklist of items that need to happen to give him confidence in a move up. He started in mid Jan and here it is…

  1. Fed narrative changes: check
  2. Political uncertainty resolves itself: check (Clinton/Trump)
  3. China cleans up its act: 1/2 check
  4. All commodities bottom: Check
  5. Oil stabilizes: Check. Oil up today even though inventory increases. Feels crude bottomed at $26.
  6. Geopolitical situation improves: Check. Syria ceasefire, NKorea quiet.
  7. Zombie companies put to death: Check. Some oil companies able to do equity offerings to stay alive and pay off debt.
    8)Relief from strong dollar: no check yest
  8. More M&A: 1/2 check
  9. hIPO market: fail
  10. peak in certain industries is realized: 1/2 check.
  11. stock sentiment gets worse: check we have recently seen peak fear for the cycle.
  12. stock leadership broadens beyond Fang: Check. Cloud stocks come back to life as do industrials. Banks and pharma not back yet, but still gets a check.
  13. list of favorite stocks expands: 1/2 check.

Summary: Enough to declare we are in better shape than when year began. Will may never get all 14 checked. So you can buy the dips more aggressively and don’t necessarily sell the rips as they may be the real deal this time.

Here is a summary of 3/2/15 IBD Big Picture…

A day after strong results for both presidential candidates during Super Tuesday’s primaries, stocks acted as they should during a confirmed market uptrend: Stumbling start. Strong finish.

The Nasdaq composite chipped away at a Wednesday morning loss that never topped 0.5% and closed up 0.3% in lighter trade. That’s impressive action in light of Tuesday’s 2.9% jump in heavier volume by the tech-heavy index.

The S&P 500 rose 0.4%. Small caps prevailed; the S&P 600 rallied 0.8%.

Perhaps even more impressive than these gains? Sector rotation is expanding…

THE BIG PICTURE

A day after strong results for both presidential candidates during Super Tuesday’s primaries, stocks acted as they should during a confirmed market uptrend: Stumbling start. Strong finish.

The Nasdaq composite chipped away at a Wednesday morning loss that never topped 0.5% and closed up 0.3% in lighter trade. That’s impressive action in light of Tuesday’s 2.9% jump in heavier volume by the tech-heavy index.

The S&P 500 rose 0.4%. Small caps prevailed; the S&P 600 rallied 0.8%.

Perhaps even more impressive than these gains? Sector rotation is expanding.

It’s true that on Wednesday, the Dow utility average beat the majors, rising 0.7%. Yet consider these new developments:

— Last Friday, the medical and consumer sectors shared the top spot in IBD’s new high list, not utilities. On Monday and Tuesday, the electronics sector grabbed the crown.

— Among the top 40 IBD industry groups, a fistful of nondefensive groups have climbed sharply over the past six weeks, from No. 19 industrial machinery and No. 21 wood products (see today’s Sector Leaders column) to No. 30 computer hardware and No. 40 wireless telecom services.

— The Dow transports are now fractionally higher year-to-date.

— The NYSE advance-decline line continues to pump higher, following a more than 2-to-1 winners-to-losers ratio on that exchange Wednesday. As seen on the S&P 500 chart on Page B2, the line looks poised to take out its late-December peak.

With mild distribution so far on the books since the market’s Feb. 17 follow-through, the overall action should boost the confidence of alert investors aiming to profit from strong breakouts out of good bases. Keep in mind that the wild gyrations of December and January have led to a few double-bottom bases, from Kroger (KR) to IBD 50 names such as AMN Healthcare (AHS) and Citrix Systems (CTXS).

Yet others, notably small caps in the building, materials, consumer and retail sectors, are also working on cup-style bases.

A strong February private-sector jobs report from ADP and news that China is restructuring its glut-producing steel industry helped the U.S. stock market advance. Oil, steel and mining groups flooded the top of the day’s best-performing industry groups as crude oil jumped 1%.

Investor psychology, meanwhile, is not overly bullish. The weekly Investors Intelligence survey found that roughly a third of pundits polled still do not believe that we are in a bull market. Worrying is good; major uptrends always climb a wall of worry.

Still looking good, probabilities are better.

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Big strong day for the averages, look at that volume with the market up over 0.40 - 0.69%.

http://stockcharts.com/freecharts/candleglance.html?$INDU,$C…

Some people would find the LGIH chart in a significant pattern. It was up over 5% today on volume that was about 115% higher than yesterday. It has been challenging the 200dma all month so if it breaks through convincingly, some people will be happy and jump on the bandwagon.
http://stockcharts.com/freecharts/gallery.html?lgih

Here are some good looking charts with high IBD ratings, but most have already broken out or are extended a bit much to buy on “IBD rules”.
http://stockcharts.com/freecharts/candleglance.html?GIMO,NVD…

NVDA 1YPEG was 1.18, so not good for the board, have not checked the others.

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