Ian Woodward's Investing Blog

We have a lot to be thankful for despite the difficult market that keeps confounding the gurus as they try to call the top in this overbought market.  We are only a week away from the start of the Santa Claus Rally and there are still few signs of a breakdown except for the Canaries which are long in the tooth and taking a breather.

The long march upwards continues with four of the eight Market Indexes into new high territory this week:

The Russell 2000 (RUT) is back in high gear and into new high territory as the small cap stocks take command once again:

In the past three weeks since the October Seminar, although there have been Knee Jerks, the Markets and the JIRM Index show that at this point in time there are no signs that the big guns want to throw in the towel and take this Market down:

…And here is the JIRM Index which again is still holding up, but must continue strong here to avoid a triple top.  Please note that the clusters around the 17-dma (green) have NOT collapsed, which is a good sign as it too reaches into New High Territory:

The Canaries are suggesting Danger ahead, but these have had a very long and envious run so it is to be expected that there would be profit taking, and these have fulfilled their role for us in being the first to signal a correction may be at hand.  Note the value of the Rainbow charts which quickly show that when a cluster around the 17-dma eats into the 50-dma cluster we have fair warning that a potential big fall is about to happen.

Now for a look at the Internals with regard to the abcde’s…the accumulation of A+B vs. D+E.  Having hit a high of 4418 three weeks ago we are back in the doldrums and heading for stalemate with a ratio of 1.4:1:

It goes without saying that the opportunities are primarily very short term…quick be nimble and nimble be quick action:

…And now for the So What?  Despite all the fru-frau of overbought and very extended, the NASDAQ has a BIG CUSHION before major damage can be done.  Unless we have a huge knee jerk down, we should have plenty of warning that a major correction of 12% or more  is underway.

Have a Happy Thanksgiving to you all!

Regards,

Ian.

We have a lot to be thankful for despite the difficult market that keeps confounding the gurus as they try to call the top in this overbought market.  We are only a week away from the start of the Santa Claus Rally and there are still few signs of a breakdown except for the Canaries which are long in the tooth and taking a breather.

The long march upwards continues with four of the eight Market Indexes into new high territory this week:

The Russell 2000 (RUT) is back in high gear and into new high territory as the small cap stocks take command once again:

In the past three weeks since the October Seminar, although there have been Knee Jerks, the Markets and the JIRM Index show that at this point in time there are no signs that the big guns want to throw in the towel and take this Market down:

…And here is the JIRM Index which again is still holding up, but must continue strong here to avoid a triple top.  Please note that the clusters around the 17-dma (green) have NOT collapsed, which is a good sign as it too reaches into New High Territory:

The Canaries are suggesting Danger ahead, but these have had a very long and envious run so it is to be expected that there would be profit taking, and these have fulfilled their role for us in being the first to signal a correction may be at hand.  Note the value of the Rainbow charts which quickly show that when a cluster around the 17-dma eats into the 50-dma cluster we have fair warning that a potential big fall is about to happen.

Now for a look at the Internals with regard to the abcde’s…the accumulation of A+B vs. D+E.  Having hit a high of 4418 three weeks ago we are back in the doldrums and heading for stalemate with a ratio of 1.4:1:

It goes without saying that the opportunities are primarily very short term…quick be nimble and nimble be quick action:

…And now for the So What?  Despite all the fru-frau of overbought and very extended, the NASDAQ has a BIG CUSHION before major damage can be done.  Unless we have a huge knee jerk down, we should have plenty of warning that a major correction of 12% or more  is underway.

Have a Happy Thanksgiving to you all!

Regards,

Ian.

Thank you for your patience…we had a great seminar and I am back with all sorts of goodies for you to digest and enjoy.  This chart says it all and the rest back it up:

Here is the picture of how the Major Market Indexes have behaved the last twenty days:

The Russell 2000 (RUT) keeps chugging along bouncing off a 4% Correction as it leads most of the other Indexes upwards:

That little trick of mine is working well…I’m sure you recall the Canaries I gave you to watch as being the first clue when the Market is extended.  They are at equal balance between a Head and Shoulders Top and a Double Bottom.  Next week should show the direction of a correction first before Thanksgiving and then up for the Santa Claus Rally into the New Year or a Bounce Play off a one day blip which continues up:

The Accumulation to Distribution Ratio hit a peak of 4.5:1 and in usual fashion has backed down these last nine days to a 2:1 ratio:

As the days roll by into months and years, I am more and more comfortable that Bucket Skips, i.e. Kahunas up and down coupled with 12 Drummers Drumming is the key to knowing the swings in the market, but you judge for yourself, where this picture says it all once again:

Of course the pattern changes over time, but one gets a sense of the pulse and rhythm of the market if you watch this inter-relationship.  We are now sitting at around stalemate on Grandma’s Pies and this week should define the direction until Thanksgiving.

…And here is the See-Saw, Marjorie Daw Market we are putting up with:

The calculations on the High Jump Chart says it all as to what to look out for to stay on the right side of the Market.  Despite the Gloom and Doom, the main message is that we still have a decent cushion before the real fear should set in so watch carefully with tight stops and be on guard:

Have a good week and Best Regards,

Ian.