Stock Market Update: End of August 2020

 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.

Stock Market Update Week Ending Aug 21, 2020 - NYSE vs Dow Trend Chart

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.

 

 

 

 

 

 

 

 

 

 

Stockcharts S&P shows the S&P began decline in February.

Stock Market Update: Week Ending August 14, 2020

 From a stage analysis view, markets are in mixed territory. I rate 4 of the indicators as neutral. The DOW, global DOW and S&P are above their 30 week moving average line, but the MA is sloping down or flat. Not exactly a sign of strength.

One of my favorite Stan Weinstein charts is the NYSE High Low Differential which looks at the difference between the number of stocks hitting their 52 week highs and 52 week lows.  Each week I look at the number of new 52 week highs and the number of new 52 week lows. For example, this week we had 44 stock reaching new highs and 7 stocks reaching new lows. Not much action at all. In a strong recovery the numbers are more like 389 to 30 respectively. So while this indicator is in the green, it's not by much and the highs versus lows is not that broad.

Here is my chart. I have found that this one chart can give a pretty decent indicator of the overall market, even though it's a very simple chart.

 

 

 

 

 

Also keep in mind we are heading into an election plus COVID is not over yet so the market can get pretty choppy yet.

Let's look at the Stan Weinstein indicators for the market as a whole.

Are the Indexes above their 30 week moving average?

1. DJIA - Yes but the MA slope is down
2. S&P - Yes with a flat MA
3. NASDAQ - Yes with an upward MA
4. GDOW - Yes but the MA slope is down

5. DJIA vs NYSE A-D Positive? Yes, the DOW is down while the NYSE is up.

6. DJIA vs NYSE 52 Wk High/Low? No, both are down

7. 200 Day MA NYSE A-D? Yes
8. NYSE 52 Week Highs vs Lows Differential? Yes

9. DOW price to dividend ratio? No, and personally I don't think this indicator works in our current market since the Fed stepped in after the 2009 market crash.

Essentially we have 6/8 positive, however 3 of the indexes are a very weak positive. The price might be above the moving average line, but the moving average is not on an uptrend for the DOW, S&P and Global DOW.

I am going to throw gold in as an contrarian indicator. It continues to be on a tear and that generally does not bode well for the overall market.

Stock Market Update as of July 24, 2020 - COVID Continues, Gold Rises, Dollar Falls

I keep thinking gold has hit a top, it must be, but then as things continue on, it appears it may still be in stage 2. The dollar is falling, COVID flareups and the ramifications for people and businesses continues, however, the overall market indexes are all still above their 30 week moving averages. What is a cat to think?

I bought some of the Gold ETF in 2017 as a hedge. Didn't think too much of it and let it sit there as a rainy day investment. The question for me now is do I buy more or wait it out? In reviewing the chart, it looks like there is room for more advancement before GLD enters into stage 3. A stop loss is in order at $160. Note the resistance to move past is the $179 high in 2011. This week can be key to see if it can plow through that resistance line.

A ChartMill chart below, confirms gold is in stage 3. (ChartMill has Weinstein indicators).

 

And then Greg Schnell posted an article comparing copper and gold to the dollar.

Stock Market Update: July 17, 2020 - Let's Look at Gold

Stocks are doing well from a Stage Analysis view, with the DOW joining the other major indexes when it finally move above its 30 week moving average. Let's see if it sticks.

Gold has been getting a lot of attention lately as it reaches highs lately and the US government printing money like crazy. See this interesting Barron's Article.

I thought it would be interesting to compare gold to the DOW and S&P. If the recent crossover is any indication and works like it did in the 2009 downturn, gold may continue to move upwards. The orange line in each chart represents GLD (ETF).

How about technology? It also is on an upward trend. Martin Pring has a great blog post on it. The next coming week's will help us see if the trend will continue or reverse.

Stock Market Update: July 11, 2020

The market continues to prove itself fairly resilient. Some say it is related to the fed policy. Technology has benefited from the work from home and stay at home mandates in reaction to the COVID pandemic. 

If the SDS ETF which is a hyper short vehicle is any indication, the markets are okay for now.  In the 2009 crisis, shorts were an indicator of how the market was doing. 

Here is a snapshot of how many COVID cases the US has as of this week.

and a comparison to the flu season:

We are living in interesting times indeed.