Investment Flow Chart Analysis - 11-17-2023

Once again, I am updating the Investment Flow Chart Analysis as of Friday, 11-17-2023.

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 daily, short-term or long-term trend of the investment market is. To make this determination, look at the 50- and 200-day simple moving averages on a weekly chart as shown below to determine if both the NASDAQ and the S&P 500 averages are either both positive, both 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 for both the NASDAQ and the S&P 500 was above the previous weekly close suggesting that the change in momentum continues.

Now, the question is ... will the positive trend prevail? Both the NASDAQ  and  the S&P 500 are above their 50- and 200-weekly lines.

So now the question is whether to:

1. Be long,

2. Be short, or

3. Be on the sidelines.

Remember pigs get slaughtered.

The daily charts show recent action in both the NASDAQ and the S&P 500 using the Elder impulse system. Recent action suggests that the upward trend has lost momentum.

The IBD market call has returned to "Uptrend Under Pressure."

The Accumulation/Distribution chart is shown below. The number of “A” rated stocks according to IBD has risen above the red line.   The methodology which I use states that when the "A" line moves above  the red line, trading positions should be initiated in high-quality stocks with tight 3% initial stops.  More importantly, until the "A" line has created a bottom, trading should be very careful.

The Strategic Investing Portfolio has started to invest in special situations. In running the various screens in both the IBD stock screener and StockCharts, we have found few positions in which to recently invest. We would maintain very tight selling points on any new positions.

We continue to run the various IBD and StockCharts screens each day but the current political and economic conditions suggest that prudence is justified.

Nothing is new …. Just a new group of sheep to be shorn.  Based upon the economic fundamentals, the recent week reminds me of the tulip craze markets of bygone time ... crypto anyone?  As Minsky said ... it only takes one grain of sand to destroy ....

Fred Richards

17 November 2023 p.m.