Ian Woodward's Investing Blog

With Memorial Weekend upon us, I felt I should step back and recap what has transpired these last three weeks as we have moved from a Bactrian two humped Camel to a Dromedarian to the Bears winning to the Bulls and Canaries showing a new Spark of Life.  I will use many of the charts you are familiar with together with some new fodder to help us determine what to do going forward.  So let’s use four different Pictures interspersed with fodder to show us what we have endured these past few weeks:

…And this chart showed the Bifurcation and the Market in Stalemate at the time, with the Nasdaq and NDX the laggards!

Here was the picture of the eight Market Indexes we follow which show the S&P 500 and DJIA leading:

…And to round this week out, my favorite chart shows the Turmoil of a Wibbly Wobbly Market we endured:

The Theme Chart was obvious for the next week, where it signals that Type 3 & 4 Longer Term Players should hunker down:

…And true to form, the two humped Camel turned to one, with all Market Indexes headed down with a 2:1 ratio to the downside:

The Market Indexes Chart shows the dramatic drop back to support at the lower level, and concern that the Bears would win:

The Canaries were all Gasping except for AAPL and confirming that the Big Cap NDX stocks were in trouble:

By this stage the Russell 2000 (RUT) Small Cap stocks were behaving the poorest as shown by the chart below:

The underlying Accumulation vs Distribution chart was also showing that the Market was essentially in Stalemate:

It didn’t take much to indicate that the Bears were winning the tug-o-war that week with all Market Indexes down:

The Buckets chart showed that the Two Humps bifurcation had changed to one with all Markets dragged downwards:

You don’t have to read the numbers to see that the Market Indexes were in Turmoil, and it seemed inevitable we were going down:

I know that some of you do a lot of work with two key features we have in the HGSI Software using the Group Performance Analysis (GPA) and the Group Inclusion Report (GIR), and here is a winky-winky to use the recent base lows to spot rotation as shown:

Would you believe it, the Big Guns decided that we were oversold, and the Market Indexes have all risen where the Bulls are back:

Inside a matter of three days Grandma’s Pies have reversed themselves from 2:1 against to 2:1 for the Bulls:

Here’s another brainwave with a new chart…use the Composite Market Indexes Price and %B to get a feel for the overall Market:

Note how the Composite Index Price has been flat and tight for the best part of two months, and is finally hinting at a breakout.  Unlike the NASDAQ which took a beating but at long last is poking its head upwards with %B above the Upper Bollinger Band:

Would you believe it but the jolly old Canaries are perking up once again and confirming that the NDX is the leading Index:

Finally, let’s not forget to look at the VIX and it signals you have at least a two to four day cushion to the upside this coming week:

I hope you have enjoyed this long blog which gives you a flavor for how I put my blog notes together to keep you and me on the right side of the market.  Have a good Memorial Day Weekend!

Best Regards,

Ian.

It has been more than a while since I used Camels to depict the Behavior of the Market (I stand corrected as I used Dromedarian earlier and am correcting it per one of our supporters as a Bactrian has two humps and not a Dromedarian), but that is exactly where we stand after the behavior of the Market Indexes these past few weeks, and I am sure you get the point:

When a Market is essentially at Stalemate, and the chart pattern of Grandma’s Pies is double humped, it pays to see if there is a separation of Growth Stocks and Indexes vs Value.  Here is that picture:

The Market Indexes show the same problem with the NASDAQ and RUT lagging the rest:

This next chart shows the Rationale for watching the Composite %B which is currently at 0.55 to ensure we focus on more that one particular Index like the NASDAQ or the Small Cap RUT:

This is a New Chart which shows the relationship of the NASDAQ not to its %B, but that of the Composite %B.  We note that at least for today the DJIA, S&P 500, S&P 100 and NYSE pulled the other Laggards up a bit where the NASDAQ %B and RUT are as low as 0.34 and 0.15, respectively.

Now we wait to see which set of Market Indexes either pull the other set up or take the Market down.

Best Regards,

Ian.

Who knows where the Market goes from here, but for sure we are now in May and as we go Round and Round in Sunny Qatar, your guess is as good as mine.  Kevin and a few of his friends faithfully support my Blog, and even came out to Sunny Palos Verdes for one of our Seminars a few moons ago, so with tongue in cheek I give him a nod as I remind him of the joke on Nasal Catarhh!

I say Round and Round we go, but really the Market Indexes are once again in a tizzy as they go up and down:

Many would say “What more do we want?” Most Indexes are close to their highs…that’s true.  But it is the skittishness of the Indexes in the Yo-Yo moves they have endured particularly over the past two months that makes Intermediate Term Investing very difficult, and most must play glued to their screens for the continuous rotation we see:

The Canaries as a group are still struggling, but trying to find support just below the 200-dma.

…And here is the Canaries Index which shows it has dropped -33% from its high and struggling for support:

The Accumulation:Distribution Ratio is essentially struggling at Stalemate, i.e., 50:50, so again little enthusiasm:

Finally, I show you the S&P 1500 as it has meandered up and down over the past two months, is 16 days up from its recent low, and doesn’t seem to be able to push much higher.  Unless we see a major push in Grandma’s Pies to the upside, we are now at a day count of 16 days which suggests the bias is down before it trots up:

Best Regards,

Ian.

There comes a time when things get tough to turn to the Keep It Simple Stupid (KISS) approach and this is one of those occasions.   You will recall my earlier yardsticks when the market was headed up that I mentioned things always get difficult around round numbers.  On that occasion the hiccup occurred at 16,000, 4000, and 1800 on the DJIA, NASDAQ and S&P 500, respectively.  Now many moons later since those numbers were finally breached to the upside, we are once again sitting just above them as the support levels before the Market Indexes finally give up the ghost to the downside:

Here is the Current Status:

…And here using the -4% Benchmarks I always use to gauge the potential Targets is the NASDAQ:

Now you have it… the Rationale being that at these ROUND NUMBERS there is now plenty of Support and with all the shenanagins of the Big Guns they either mean business to hold the line at these levels or World News is too difficult to overcome.  If the Market Indexes stay above these round numbers, then play till the cows come home, if you can put up with the Turmoil.  Lesson learned…When in doubt, Keep it Pithy!

Best Regards,

Ian.

A very Happy Easter Wishes to all of you in this Shake and Bake Market, as I watch Matt Kucher and Luke Donald battle it out on the Golf Course at Hilton Head, South Carolina in the Heritage Classic.

At least the Stock Market Bounced for what has been the best week of the Year, and I suppose we mustn’t complain that it wasn’t better especially for the NASDAQ and the RUT, but Beggars can’t be choosers!

Sad to say that the Canaries are gasping in the Coalmine and their Index is down a whopping -31%.  Let’s hope that it is time for these to see some support from what is an oversold Index:

…And here is the Index to prove it:

The Russel 2000 (RUT) which has been a leading Index for so long has now turned to being the second poorest from its high at -6.2% and only just ahead of the NASDAQ which is at -6.3%:

With the rebound this week in the Market, the VIX is quiet once again and in the ENJOY area:

…And here is the “Enjoy”, if you dare to play:

Grandma’s Pies show that the S&P 1500 is essentially back to Stalemate:

Here is the Turmoil we have tolerated for the last three months:

Let’s be realistic about where this Market stands despite all the Wibbly-Wobbly we have tolerated;  Except for the NASDAQ, RUT and NDX, most Indexes are only -4% or far less from their Highs.

I am thinking of my buddy the Scotsman, Mike MacDonald, and hoping like him for a Highland Fling in the Market:

Good Luck to you all.  Best Regards.

Ian