OT: IBD: Uptrend under pressure

Investment Analysis Clubs Saul’s Investing Discussions
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After about a week of failing to move past resistance, the Naz spent the last two days going down on higher volume, finishing at its lows and also finishing below the 50dma. IBD declared that the uptrend was under pressure (which means be much more cautious buying growth stocks, cut losers and maybe take profits in some.)

This is OT and does not apply to the 1YPEF investment strategy, but some may like to trade around core positions and this may be another nugget of info.

Distribution days: Naz=4, S&P=6

IBD: Sellers were back in the stock market Monday as Wall Street continued to grapple with uncertainty across many fronts.

The session didn’t have the feel of decisive institutional selling, but volume rose on the Nasdaq, giving the tech index another distribution day and putting the market uptrend under pressure.

The Nasdaq pierced its 50-day moving average, falling 0.9%. The S&P lost 0.8% and the Dow dropped 0.7%. Small caps lagged, with the Russell 2000 down 1.1%

The CBOE Volatility index soared nearly 23%, bringing its two-day gain to nearly 43%. A move like that means the market could be ready to bounce, but the put/call volume ratio was a tepid 0.97 Monday. Readings over 1.15 indicate significant fear in the market, which has been seen at bottoms in the past.

Sentiment?
A big merger failed to stir much excitement in the tech sector after Dow component Microsoft (MSFT) announced plans to buy LinkedIn (LNKD) for $26.2 billion, or $196 a share. Microsoft lost close to 3% while LinkedIn soared nearly 50% to 192.21

MF Calls it?
A couple days ago one of the bigger subscription services called for buying the VIX for some portfolio insurance. Look what happened…
The CBOE Volatility index soared nearly 23%, bringing its two-day gain to nearly 43%. A move like that means the market could be ready to bounce, but the put/call volume ratio was a tepid 0.97 Monday. Readings over 1.15 indicate significant fear in the market, which has been seen at bottoms in the past.

Nice!

I will add to this thread on occasion for the couple of people that like to check it.

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6/14/16:

The Nasdaq, which had been down as much as 0.8%, closed with a minimal loss of 0.1%. The S&P 500 also ended down less than 0.2%. Volume rose on both major exchanges. Losers led winners by nearly 2 to 1 on the NYSE and by 3 to 2 on the Nasdaq.

The positive reversals suggested that the wave of selling is abating. The reversals were all the more noteworthy (if not encouraging) because the Nasdaq bounced right around its 200-day moving average. To chart readers, such behavior indicates the end of a price trend…

But the broad indexes remained below their 50-day moving averages Tuesday, a reminder that the market’s fabric is not silky smooth but more like worn fleece. The rapid four-day descent wiped away at least two weeks of index gains and left many leading stocks below or back near buy points.

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6/16/16

At Thursday’s opening bell, the Nasdaq had four things on its to-do list for the day.

The four were: Stay above the 200-day moving average; end a five-session losing streak; notch a price gain in strong volume; and retake the 50-day line.

The Nasdaq’s report card had only one red mark – it failed to retake the 50-day line. If the stock market were trying to get off the probationary status of “Uptrend under pressure,” those grades still weren’t good enough. The market needs a bolder move to convert its tentative bullishness into true conviction.

For the day, the Nasdaq staged a positive reversal to end up 0.2% after being down 1.2%. The S&P 500 advanced 0.3%. The IBD 50 inched up 0.1%.

Volume rose across the board, but Nasdaq trade remained below average for the 11th day in a row.

Still, the technical picture improved a bit. The May 11 distribution day on the S&P 500 expired because of time. This cranked the count down to 4 on the S&P 500, matching the Nasdaq.

If the bulls were looking for encouragement, they might have found part of it in the put-call volume ratio. The ratio closed at 1.09, which is close to the 1.15 level often associated with a short-term bottom

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6/17/16:

Stock indexes gave up critical support levels Friday but did so narrowly enough to leave the battle of bulls and bears to another day.

The Nasdaq skidded 0.9%, while the S&P 500 tapped the brakes to a 0.3% loss. The IBD 50 had a 0.7% loss.

Technology-related stocks took hard hits, accounting for much of the Nasdaq’s underperformance.

Volume rose across the board. The Nasdaq ended a streak of 11 sessions in a row in below-average turnover. However, it took a quadruple witching day to do it. Quadruple witching involves the expiration of index futures, index options, stock options and single stock futures. Expirations often boost stock volume.

The Nasdaq closed under its 200-day line for the first time in about four weeks. The S&P 500 remains above its 200-day line but closed under the 50-day line for the third time in the past four days.

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The May 12 distribution day on the Nasdaq fell off the count because of time, but the Nasdaq picked up a fresh distribution day Friday. The S&P 500 also added distribution Friday. Distribution involves a loss in rising volume, which reflects institutional selling.

So far this month, many old distribution days have expired. However, new distribution has kept the count moderate. Seven distribution days – on one or both indexes – have fallen off in June, but six days in the same period involved fresh distribution.

This shift to younger distribution days is not a good thing. And the coming week will provide a slew of tests for the stock market.

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For the week, the Nasdaq chopped off 1.9%, its biggest weekly loss since late April. The S&P 500 sliced off 1.2%, also the biggest loss since the last week of April. The IBD 50 severed 1.5%, again the biggest loss since the last week of April.

Among IBD’s 197 industry groups, oil groups did best Friday and medical stocks dragged. Over the past four weeks, leaders include fiber optics, retail discounters and steel producers. Laggards include consumer electronics, meat, hospitals and super-regional banks

Lots of news coming next week.
Brexit vote, Durable Goods orders, more earnings, Tuesdays with the Fed, Thursday bank stress test results.

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6/20/16 Monday

Stocks jumped out of the gate Monday but closed with a whimper as major averages failed to keep pace with bullish gains for key European indexes overnight.

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The Nasdaq more than halved a 1.7% intraday gain, rising 0.8%. The Dow added 0.7% and the S&P 500 picked up 0.6%. Small caps hung in there, with the Russell 2000 up 1.1%.

Volume fell sharply from Friday’s levels. That’s not surprising because options and futures expired Friday, which resulted in unusually heavy volume.

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Breadth on the NYSE was decent as advancers topped decliners by more than 3-to-1. Nasdaq breadth was a bit weaker at slightly less than 3-to-1. The IBD 50 added 1%, helped by Gigamon (GIMO), which rose 4%. The networking firm followed through after Friday’s breakout and is now extended from a 34.24 buy point.

What Monday’s action showed is that institutional investors remain hesitant to put money to work. If they had been active buyers Monday, indexes would not have ceded early gains. Once the U.K’s status in the European Union is resolved with Thursday’s referendum, fund managers still must grapple with the question: How healthy is the U.S. economy? And that’s a difficult question, particularly for the Fed, which seems content to be more dovish than hawkish at this point.

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6/24/16

Yesterday pushed us back to confirmed uptrend but I was not buying it until the Brexit vote was over. Now we are back to under pressure

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The Nasdaq collapsed 4.1%, its biggest one-day dent in five years. The S&P 500 and the Dow Jones industrial average slumped 3.6% and 3.4%, respectively. The IBD 50 lost 3.4%.

Volume rose, boosted in part by the annual Russell index rebalancing.

The Nasdaq and the S&P 500 both slashed under their 50-day moving averages, and the Nasdaq took out the 200-day line…

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Relative strength: Domestic stocks generally did better Friday than those with international exposure. Also, U.S. indexes didn’t lose as much as key indexes in Europe and Japan. The Euro Stoxx 50, which reflects Europe’s largest and most liquid stocks, plunged 8.6%. Japan’s Nikkei 225 dived 7.9%.

– A boxed-in Fed? The Federal Reserve is expected to delay a rate hike in light of global uncertainty. If this is so, look for utilities to do well. Consolidated Edison (ED) jumped 2% Friday in heavy volume, clearing a consolidation. Southern Co. (SO) topped the 51.50 buy point of its base but closed under the entry.

– Is it almost over? The put/call volume ratio is signaling a bottom. The ratio closed at 1.17, above the 1.15 level often reached near a short-term bottom.

– Precedents for severe declines exist, but will the market follow them? In the past two years, the Nasdaq lost 3% to 3.8% six times. The Nasdaq often pegged a low one to seven sessions later. But Friday’s loss was 4.1%, a bit sharper.

The last time the Nasdaq sank at least 4% was August 2011: On Aug. 4, the Nasdaq slid 5.1%, then 6.9% on Aug. 8 and 5.2% on Aug. 18. Yet those losses were bigger than Friday’s fall.

The precedent of the past two years would suggest the market is near at least a short-term bottom. The precedent of 2011 would suggest this could get uglier.
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Fyi, it takes two years to close the Brexit deal, but we should definitely panic now. I am sure now one will buy tennis shoes again, so sell SKX :wink:

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