Swing Buying and selling Inventory Market Outlook for the Week of September 19

The previous week the inventory market took successful with a giant drop on Tuesday after which some follow-through promoting into the tip of the week.

Well being indicators are again into poor well being. I’ll proceed to scan as situations can change shortly, though in the intervening time I’m not taking new positions.

I do have some positions from earlier than. Some received stopped out, some are doing effectively, and others are close to cease out ranges. Total, until we begin transferring up comparatively quickly, I might be again in money as present positions get trailed out (all present positions are TATR technique). However, if we do get a bounce, I’ll nonetheless have some publicity in shares which have been holding up very effectively regardless of the current market weak point.

Right here’s a 5-minute abstract video of the present state of the inventory market.

How the Market Indexes Are Doing

I have a look at 4 totally different US indices as a result of they every inform a special story about total inventory market well being. The inventory market is healthiest—and swing buying and selling shares on the lengthy aspect is most worthwhile—when all these indexes are in uptrends. Right here’s what every of the 4 indices represents:

  • Nasdaq 100 – Tech shares
  • S&P 500 – Giant US firms
  • NYSE Composite – A wide selection of shares, various in measurement and business
  • Russell 2000 – Smaller firms

2 Canadian inventory indices are additionally included. The Composite tracks bigger firms, whereas the Enterprise tracks very small firms.

Charts are offered by TradingView – the charts I personally use.

US and Canadian indices over the past couple months, as of Sept 16 2022

All of the indices had a tough week. From a worth motion perspective, the short-term downtrend (a part of a longer-term downtrend) that began in mid-August continues to be in full impact, dropping beneath the early September swing lows.

Downtrends are composed of decrease swing highs and decrease swing lows, and that’s what we’ve proper now within the US indices. The Canadian indices are in the identical boat, however they’re nonetheless above the sooner Sept lows in the intervening time.

We have to begin seeing some increased swing highs and lows to ensure that a bull case to be made.

State of the Market Well being Indicators

The next chart exhibits the market well being indicators I observe. They inform me the situation of the inventory market total, and whether or not it’s time to swing commerce particular person shares.

SP& 500 with market health indicators sept 16

The market well being indicators are poor.

  • 24% of S&P 500 shares are above their 50-day transferring common. 31% of all US shares are above their 50-day transferring common. It’s usually a lot simpler to swing commerce profitably (on the lengthy aspect) when extra shares are above their 50-day common. When this indicator is beneath 50% it tends to be sideways or a downtrend for many shares/indexes. Poor.
  • Quantity was related on June 24 when it elevated with the three% worth rise to create a Observe Via Day (FTD). Huge drops on excessive quantity on Aug. 26 and Sept. 13 are what I name Throw-up Days. This typically indicators an additional short-term decline…which already unfolded.
  • The darkish blue bars are the every day proportion motion of the S&P 500. Huge strikes are related to downtrends and turning factors. Small values are related to an uptrend. Values of -2 are a warning signal anytime they happen. A greater than 3% drop on Sept. 13. Poor.
  • The blue line is the cumulative NYSE Advance-Decline Line. It moved above its early April excessive earlier than the S&P 500 moved above its April excessive. That could be a bullish divergence and indicators that the S&P 500 is prone to attain the April excessive earlier than a brand new low. The indicator additionally stayed above its Sept 6 degree, whereas the S&P 500 not too long ago fell beneath its Sept 6 degree.  First rate.
  • The blue columns are NYSE up quantity divided by NYSE complete quantity. It tracks shopping for and promoting enthusiasm. There was a 90% upside day on Sept. 9 (manually calculated, the indicator simply gives an estimate). And a 93% draw back day on Sept. 6. Poor.
    • The previous means of making this indicator on TradingView not appears correct. I created an indicator known as UpVol/TVol NYSE Lowry Upside Days. You possibly can view it right here, or search “Lowry” beneath Indicator.
  • The last word indicator is what number of high quality setups there are and the way trades are working. I’ve continued to take trades over the past couple weeks with diminished place sizes. I didn’t take new trades after Tuesday’s decline. I’ve had a pair cease outs, some trades are doing fairly effectively, and others are flat or practically cease out. So mainly my outcomes are telling me the identical factor the market is: uneven and nonetheless a bit powerful. Higher to be extra cautious than aggressive.

My complete technique of swing buying and selling shares is roofed within the Full Methodology Inventory Swing Buying and selling Course. Now is a good time to evaluation the fabric and put together for the alternatives which are unfolding.

Sectors on the Transfer

Every little thing tumbled this previous week. Vitality has held up the very best over the past week and month.

Over the past three months, Client Cyclicals, Industrials, Healthcare, and Finance are the highest performing (non-defensive) sectors.

Sector efficiency offered by Finviz.

sector performance as of Sept 16 2022

Scan as standard, or run a scan with the added standards of solely in search of shares inside sure sectors to scale back the variety of shares in your checklist and scale back your scan time.

What I’m Doing Proper Now

I’m not including new lengthy swing buying and selling positions proper now. I’ll look ahead to situations to enhance.

JOIN ME FOR WEEKLY TRADING DISCUSSIONS. Mondays, Wednesdays, and Fridays. Ask buying and selling questions, get steerage, and talk about present market situations.

By Cory Mitchell, CMT

Disclaimer: Nothing on this article is private funding recommendation, or recommendation to purchase or promote something. Buying and selling is dangerous and can lead to substantial losses, much more than deposited if utilizing leverage.

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