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The Triumphant Core Four

NYSE Internals
Moving Averages
Professional Selling
Investor Sentiment

Special Bulletin: November 18, 2021


Buyer Beware

Are stocks on your Christmas shopping list? Or those of your loved ones? It is possible as excessive enthusiasm is becoming rampant again on Wall Street. Froth is beginning to show up like the Christmas lights in our neighbors’ yards.

Is a black Monday likely to follow this year’s black Friday?

There are many seasonal tendencies to be aware of in the stock market during November and December. Primary among them is the tendency for the stock market to go up during those months. Perhaps it’s based on people’s joyous attitudes and warm (bullish) feelings. Or maybe it’s portfolio managers wanting to make things look rosy at the end of the year to impact their bonuses. Whatever the reason, often a “Christmas rally” develops.

Other positives to keep in mind are the first day of the month inflows (for 401k’s, etc. on Wednesday, December 1st), the traditionally upward-biased trend in the days leading up to a holiday (Thanksgiving and then Christmas) which tend to feature less selling and are usually fruitful.

Having said all of that, it is important to recognize that there are certain other internal indicators currently working under the surface that are suggesting a growing deterioration. In fact, one tried and true old-fashioned technical indicator we know of actually issued a sell signal just this week.

While no single indicator dictates our traffic light signal at TPM, it is worthy to note that as of this week two of our “Core Four” indicators turned red. (See more below)

We fully recognize that the main indexes are just a stone’s throw away from hitting all-time highs, and that is normally bullish. However, one particular indicator we follow closely has negatively caught our attention right now: the NYSE 52 week new-low list.

The number of stocks on the NYSE (and the Nasdaq as well) hitting their lowest price point in the past 52 weeks has been increasing over the past several days- and even pushed over 100 today! This is concerning. However, investors must keep in mind that near the end of a year one of those previously mentioned tendencies is tax-loss selling. It is not uncommon to see new lows expand between mid-November to mid-December.

But what is even more unwelcome this year is that at the same time the new lows are growing there have been more declining stocks than advancing stocks each day on both the NASDAQ and S&P 500. Worse, we’ve just witnessed more decliners than advancers even on up days!
Add it all up and the net result of these conflicting indicators, among others, is our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light. Our “Core Four” stands with 2 green and 2 red lights (see top of page) keeping our light yellow.
One important area to watch in the weeks ahead is if the small-cap indexes begin to decline while the big-cap indexes (loaded with the technology media elite stocks) continue to advance. This type of divergence would be even more concerning. Especially since January tends to be the “month of the small cap.”

What to do now? Count your blessings and enjoy the Thanksgiving holiday. Keep an eye on the key 21 & 50-day mav’s on the main indexes. Be on the lookout for a cluster of Distribution Days (aka. professional selling). Keep an eye on the US 10-year note rate as an inflation tell in response to the changing Fed policy.

Have a Triumphant day! ® 

The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice. ©2021 Triumphant Portfolio Management, LLC.

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