MY JOURNAL FOR WEDNESDAY – JANUARY 11, 2023
NEWS, BREAKOUTS, MOMENTUM PLAYS & BOTTOMS
After a volatile 2022, it would appear that the warm wind of 2020 and 2021 are behind us. Investing strategies are important.
For a welcome to the trading of 2023, I did a presentation on Tuesday about investing strategies to approach the turbulent trading market of 2023. A Better Plan. We have two primary goals. Protect capital, ride uptrends.
In the presentation, I drew some specific content references that compared to a prior breakout as one example of different tools to support an investment strategy. If you struggled in 2022 or would like some other ideas, Osprey Strategic is a very affordable service starting at $7 to check it out.
The Canadian Technician
Stock Market Rallies: Is This Light Switch Turning On?
Greg Schnell | January 11, 2023 at 11:02 AM
2022 was a year with a market that made a series of lower highs and lower lows. We don’t have the euphoric investment from the Fed helping us form lows in the market. This backdrop of high interest rates will create a world of approaches and the buy and hold mantra of investing in technology will be challenged again. With that, let’s kick off 2023 with a bang using more modern investing strategies.
As a chartist, there are lots of charts to choose from to make a point. However, when you pick broad market charts, there is very little to argue a point. Composite exchange ( all the stocks in a group) charts reach a broad swath of the economy, and help us see a wider view, than a narrower selection of the Nasdaq 100, the $SPX, the Dow 30 or select ETF’s in a specific industry or sector.
The charts below are from the NYSE – New York Stock Exchange. The $NYA is the ticker symbol for the ‘stock exchange’ rather than a select group of America’s best charts.
NYSE COMPOSITE LINE CHART
This week, the NYSE composite chart sits at an important crossroad that it has not been at before. The junction of the top trend line since the 2007 high, the support trend line since 2010 and the 10 month moving average are all providing support under this chart after the frenzy of free government money for everybody in 2020. The chart exploded higher in 2020 through 2021 and slipped lower for most of 2022. This chart bottomed in October 2022.
The PPO on the chart above is trying to turn up, just above zero. That looks very bullish if we turn higher from here. We do not want to see the PPO start to fail and drop below zero.
Another interesting clue is that in the 2008-2009 crisis, volume accelerated above the average until the market lows of October 2008 were in. The current volume seems comfortable below the moving average, hinting that large investors are not too worried we don’t get through this.
NYSE COMPOSITE BAR CHART
When I look at the monthly bar chart rather than a line chart, a few other clues are in play.
Price sits at the monthly trend line. We have had four months of higher lows so far. We also seem to be holding above the 10 month moving average which was resistance in the middle of 2022. The PPO is the same as the chart above, and it tells us that this is a typical bounce point. The difference is, we are doing this bounce without the Fed’s help.
NYSE COMPOSITE WEEKLY CHART
When I move to the weekly chart below, a few more interesting things happen.
The chart is holding above the 10 WMA which is the blue line. This was support all the way through 2020 and most of 2021. It is also trending up and has clearly broken any downtrend drawn on the moving average. Price on a weekly chart looks much better and has broken a down trend line on the previous highs and has bounced off that line. The PPO is turning up very bullishly, right at zero.
As we continue to rally, this looks more and more like a bull market start. I have a variety of charts telling me to be more positive on the outlook. It seems each week in the newsletter to clients, the markets are improving their bullish outlook.
Greg Schnell, CMT, MFTA
Welcome to Osprey Strategic
Nearly a Decade of Experience in the Financial Markets
Greg Schnell, CMT, MFTA, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and recent winner of the CSTA’s Technical Analyst of the Year. He is an active member of both the CMT Association and the International Federation of Technical Analysts.
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BREAKOUTS, MOMENTUM PLAYS, & BOTTOMS
CRE.V – Critical Elements Lithium Corporation
SLF.TO – Sun Life Financial Services of Canada, Inc.
TECK/B.TO – Teck Resources Ltd.
TOT.TO – Total Energy Services Inc.
VNP.TO – 5N Plus Inc.
WJX.TO – Wajax Corp.
MOMENTUM ALERT SIGNALS
The main focus of the SetYourStop Slack workspace is the momentum scanner that was developed to trace abnormal volatility in the Canadian equity market.
Our proprietary momentum scan system searches for abnormal volatility which flags the urgency of buyers. It was designed to signal the potential of momentum coming into an underlying name or sector. The charts issued are to be used as indicators only, not a trigger to buy or sell.– Disclaimer
Once a chart is received, systematic rules are to be used, implemented by the individual (SetYourStop nor ospreystrategic.org holds No Responsibility for one’s actions as the charts given on SetYourStop and ospreystrategic.org are to be used as indicators only and not a trigger to buy or sell) to define and manage risk. Stop-loss orders are an important tool to negate any false signal. The goal is to let winners run while using trailing stop-loss orders to preserve gains.
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