We've just finished the first half of 2023 and I thought it might be a good time to take a look at how the market is doing. From a stage analysis perspective, we are in Stage 2 for the S&P and NASDAQ, the Dow however is in Stage 1.
We haven't looked at the CNN Fear and Greed indicator in awhile. We are currently in Extreme Greed.
Most of the Weinstein indicators are in or moving to Stage 1. This stage can be rough, but at the moment appear to be in a multi-week stage 1. Here is a look at the DOW. The S&P and NASDAQ look similar.
Corporate earning reports are underway.
Let's see what next week brings us.
This week the DOW moved beneath it's 30 week moving average and the SPY and NASDAQ's 30 meek moving average reversed and is pointing down. Any hopes of moving into Stage 1 is squashed as we are again in Stage 4 decline. See previous post for Stage Analysis.
In addition Indicator 5: NYSE Advance-Decline 200 day moving average is touching the moving average line as shown below in this StockChart's graph.
The only index still positive is the Global DOW.
Some are pointing to the Silicon Valley Bank (SVB) Collapse as the main reason for last week's market downturn. Investors are watching to see if a bailout will take care of investors with deposits above the FDIC’s $250,000 cap.
Never a dull moment.
Markets are performing a little better so far in 2023. The stage analysis indicators are moving into positive territory with the exception of the NASDAQ which has been affected by weakness in tech and the ups and downs of Tesla via Mr. Musk.
Let's take a look at some charts. The Dow may be entering into Stage 1 as shown below with the upturn of the 30 week moving average.
For the first time in over a year, Indicator #5 is positive. For this indicator, we look to see if the NYSE Advance-Decline (A-D) is above or below its 200 day moving average. The divergence between the advances and declines is plotted on a chart, and the 200 day moving average is also plotted.
At this point I am watching and gently buying shares of some stock that I think may be in for an upward climb.
The year has been quite the ride! The entire year down. Here are the numbers according to this Market Watch article by William Watts.
Pretty painful year.
I love this chart published by Jill Mislinski over at Advisor Perspectives.
Cheers!
Stocks are starting to look a little bit better with some of the indicators getting poised for positivity. We're not there yet but at least there is some improvement. It's been a about a year for this market's downturn.
Green represents a glimmer of hope but doesn't make the indicator positive until the moving average line slopes up.
Indicators:
The last couple of weeks are showing some signs of hope for stocks. October had a big gain. I am hopeful we are beginning to see a turn around and then even better if we start to climb the wall of worry.
CNN's Fear and Greed Indicator is at Greed
And finally, the Dow poked about its 30 week moving average line.
A cat can hope!
Another bad week for stocks. One of the indicators I like to use is the Gold vs. Dow chart. At the moment, gold is approaching the Dow's moving average line.
Looking at the Stan Weinstein indicators, we are in a Bear Market. All indicators except for the Global Dow are negative.
COVID cases are down and hopefully life returns to normal in 2022. So what is the problem? Inflation, Ukraine/Russia tension according to this Wall Street Journal article.
Tech, led by Facebook is taken a beating. FANG stocks are not looking too good. Apple is doing fine but the others are not. The Apple vs Facebook battle over our data is an interesting one.
Let's look at the charts. At this point, just a minor correction. We will have to wait and see if it stays minor or gets larger.
My indicators are mixed this week. Nothing too horrible, mostly minor showing of weakness in some indicators. The NASDAQ is below its 30 week moving average just a little bit, the NYSE had more lows than highs, and the NYSE/DJIA were both down.
One of my favorite charts, the Dow vs GLD, shows the Dow outperforming gold. I view this as a good sign.
What's the problem? A chip shortage. The US is looking to boost more manufacturing here.
How about groceries? Tried to buy any of those lately? Around here the veggies shelves are empty. My plan? Go to the local farmer's market. A good idea anyway. Lots of fresh veggies and not pesticides to boot!
2021 was a good year for the market! In general up 20%. Not bad. Who would have thought a pandemic would be good for the stock market?
Here's how the major indexes performed:
A few visuals to show the year.
S&P
NASDAQ
DOW
BitCoin to US Dollar
It appears we may be headed for a correction. All of the indicators are red or about to turn red.
Let's look at the indicators.
From a stage analysis viewpoint, we are in Stage 2 Accumulation (see stage analysis overview here) with the market continuing to go up.
One of the gauges I like to look at is the Dow vs NYSE Advance-Decline. (Barron's used to produce it but stopped so I make my own chart.) It's a bad sign for the market when the Dow is advancing more than the NYSE, which we see in March of 2020 when COVID hit. Likewise, it's a positive sign when the NYSE is above the Dow. That's where we are now. It's one of the biggest divergences I've seen in a while.
Stories of interest:
Here is a quick breakdown of how 2020 fared for stocks.
Not a good year for the DOW in comparison to the other indexes. Great year otherwise.
This week saw a little pull back however from a long view of weekly and monthly charts, the major indexes are still above their 30 week moving averages. Gold continues to be above it's moving average as well, but could be entering into Stage 3.
The DOW shuffled the companies. Out are ExxonMobile, Raytheon and Pfiezer. In are Salesforce, Amgen and Honeywell. Also impacting the DOW is the Apple 4 for 1 stock split.
Holding steady for now.
The market continues to move up. CNN's Fear and Greed indicator is reading greed.
I find this chart I came up with to be interesting. The Gold ETF, GLD, compared to the DOW price action. If you notice, gold went up prior to the big market decline in 2009. I circled the cross overs however you can see the price action diverged between the two when there was a change in the market. At the moment both are on an uptrend. In my opinion, if a COVID-19 vaccine comes out, then gold will probably drop, at least temporarily. It could continue to hold steady though as governments around the world print money and the dollar keeps losing value.
The market remains mixed as posted last week.
This week I want to look at a chart from Stan's book that used to be available on the Barron's site but they have since retired it so I make my own. It is the Dow vs. the NYSE Advance-Decline ratio. We are looking for changes in trend. If both the Dow and NYSE A-D are going in the same direction or are they diverging?
In January they diverted and it turned out to be a signal of the drop. This week we see a potential divergence. What is important to note is that defensive stocks are in favor when the Dow moves up but the NYSE A-D moves down. We need to see if this continues as one week does not make a trend.
This indicator should not be used on its own.
