Investment Flow Chart Analysis - 3-22-2024
The methods described below borrow heavily upon the lessons learned from Ernie Zahn, Ralph Hansmann and William T. Golden at Cornell, Linder & Co. & Ben Graham during my time on Wall Street in the 1960’s utilizing fundamental research including Point & Figure charting.
Since then, I have incorporated ideas from William O’Neil’s CANSLIM methodology, Ian Woodard and High Growth Stocks as well as Stock Charts.
The first decision is to determine what the long-term trend of the investment market is. To make this determination, look at the 50- and 200-period simple moving average on a weekly chart as shown below to determine if both the NASDAQ and the S&P 500 averages are both either positive, negative and/or split.
As can be seen in the above charts of the NASDAQ and the S&P 500, the two indices are above both the 50- and 200-weekly simple moving average lines, so the presumption is that the market has positive momentum.
Friday's close as of 3/22/2024 for both the NASDAQ and the S&P 500 was above the previous weekly close suggesting that positive momentum continues. In fact, both indices are either at, or near, all-time high closes on Friday.
Of course, most investors fail to understand the loss of purchasing power has upon the market. The U.S. dollar has lost 18% of its value since 2020.
Now, the question is ... will the positive trend prevail? So now the question is whether to:
1. Be long,
2. Be short, or
3. Be on the sidelines.
Remember pigs get slaughtered.
The NASDAQ and S&P 500 daily chart for the last two years show recent action using the Elder impulse system.
The IBD market call remains "Market in Confirmed Uptrend."
As Minsky said ... it only takes one grain of sand to destroy ....