Trading Places Live! December 12, 2022
Tom Bowley: Good morning. Excuse me. Tom Bowley: and welcome Tom Bowley: to this Monday, December twelfth, 2022 edition of trading places live at EarningsBeats.com. Tom Bowley: I'm Tom Bowley, Chief Market Strategist here at EarningsBeats.com and I'll be your host for the next 30 min. Tom Bowley: featuring everything you need to know as you prepare for the trading day ahead. Tom Bowley: Well, we're starting off a new week, and so far it looks like we'll get off to a decent start down features currently up 107 points S. And P. 500 futures up 15
Tom Bowley: Nasdaq features, up 46 crude oil prices up about 70 cents a little over 71 actually almost $72 a barrel. Tom Bowley: and the Us. 10 year treasury yield down about 4 basis points to 3.5, 3, the 10 year Treasury yield has been Tom Bowley: moving quite a bit lower here over the last month or 2. Tom Bowley: it seems like the bond market. Yeah, a lot of times we'll see the yields move down Tom Bowley: and folks getting into bonds before one of these meetings the Fed meeting. Of course i'm talking about coming out on 2 or coming up Tuesday and Wednesday. Tom Bowley: because there's a lot of shorting that takes place sending yields higher. And then, as the the meeting approaches it's okay, sell on the rumor, and then buy on the news. And so I kind of feel like. Maybe there's been a little bit of this movement to the upside in the yield, anticipating
Tom Bowley: some inflationary news. Tom Bowley: But this seems like a little bit more than just some profit taking right before Tom Bowley: the Fed meeting. I mean, we've seen the shield now moving lower, for Tom Bowley: well, I think we topped back in October. So it's been close to 2 months now. Tom Bowley: where we've gone back down, and we did this Tom Bowley: back in June, through the early part of August. We went down for almost 2 months then. Tom Bowley: and then came roaring back. And of course we know what happened. After that August. We, the yield broke back out again. Tom Bowley: and September was a horrible month for equities.
Tom Bowley: So we've got to remain on our toes. Tom Bowley: but we're starting to hear a little bit more dovish talk from some of the Fed officials. Tom Bowley: we've gotten one pretty big Tom Bowley: disinflationary report Tom Bowley: from Tom Bowley: the from last month's Cpi.
Tom Bowley: and so, and we've got this month. Cpi the November Cpi coming out Tuesday morning. So there's a lot going on right now Tom Bowley: as we head into this meeting. I think Tom Bowley: you know I've been bullish since mid June. It it's not that i'm Tom Bowley: that I think the market has to go straight up. It's just that I I evaluate risk in the market.
Tom Bowley: and at the beginning of the year I thought it was too risky to be long, and I thought by mid-june. It was too risky to be short. Tom Bowley: That was the key takeaways for me. It's about managing risk, and we've seen the S. And P. 500 struggled to go lower. Tom Bowley: I mean, you know you can take the bearish argument. Say, well, it really hasn't taken off to the upside. Tom Bowley: but neither has it gone much lower. There's been a lot of bad news, and the market seems to be handling it really well. Tom Bowley: So I kind of feel like this is the Tom Bowley: week where the bears are going to have a chance Tom Bowley: if they're going to to have a chance to take this thing lower. I think it needs to happen now. Tom Bowley: History turns on the side of the bowl, starting next week Tom Bowley: really later this week is when it, you know, begins to kick in Tom Bowley: second half of December, as I've pointed out on several occasions recently.
Tom Bowley: We've seen the S. And P. 500 since 1,950 Tom Bowley: have a annualized return in the second half of December Tom Bowley: of more than 35%. First half of December is just a little over 2%. Tom Bowley: So even though December is a great month, there's no doubt that it's the second half of the month that tends to carry the month. So Tom Bowley: you know, if we're not if the if the bears can't get things going to the Downside here with a key inflation report and another fed meeting. Tom Bowley: i'm just not sure what the catalyst is Tom Bowley: over the next couple of weeks. I see the market going higher, if it can hang on here. Tom Bowley: So it is December twelfth. We're almost at the halfway point of the month. Let's see what happens here over the next couple of days.
Tom Bowley: anyway. I haven't put your screen up yet. I know, probably some of your questioning why my screen is not a Tom Bowley: let me Tom Bowley: first take you over to earnings, beats. Tom Bowley: and Tom Bowley: big thing. I want to point out here is that we have. We are Well, we've announced now that we are having our market vision 2,023 event.
Tom Bowley: It is on Saturday, January seventh. It is a free, virtual event. Anyone can attend no credit card required. Tom Bowley: This is part of our give back. We're trying to educate folks last 3 Tom Bowley: market vision events, I mean. Tom Bowley: I don't want to say I've been right on the money, but I've been pretty much right on the money the last 3 years.
Tom Bowley: I think we take a little different approach than most in looking at the market. I've got the fundamental background, of course, got the historical background. Tom Bowley: But I've also been doing technical analysis for 40 years. Tom Bowley: and so I think the combination of those 3, and just studying the history of the market, and understanding what Tom Bowley: what causes bare markets, and how long they tend to last, and all those things I think, really helps, and I try to to get that across in these events, so I think you'll find it to be an extremely valuable session. Tom Bowley: If you don't get your money's worth for this $0. then I guess we've done something really horribly wrong, but I think you'll enjoy it. So make sure you mark your calendar Saturday, January seventh, and in addition to market, your calendar, you need to register. We're going to reach capacity in this event. Tom Bowley: especially after the last 3 years. The success of the last 3 years. Make sure you are registered. Tom Bowley: All right. Let's move on.
Tom Bowley: So what happened on a Friday to close out the week. Well, the Dow Jones industrial average lost 305, the S. And P. Lost 29. Then, as that was 77 mid caps down 26 small caps down 13 on a percentage basis, all of them down anywhere from 7 tenths of one to slightly above 1%. Tom Bowley: So it was kind of an across the board sell off, and if you were watching the action, a lot of that selling took place right at the end of the day. Tom Bowley: I think it was a lot of folks just said, hey, I don't want to hold over the weekend. We got some big reports coming up next week. I think that is probably what went into it. We do like, I said a little bit ago. We see futures up fractionally this morning. We'll see whether or not that that holds Tom Bowley: it's hard to take. It's hard to get excited right before the report. I mean. Tom Bowley: We have seen Tom Bowley: big big drops and also big big advances Tom Bowley: when the Cpi report comes out, and quite honestly, i'm not sure which way it goes tomorrow.
Tom Bowley: Tell me what the news is, and I can tell you I give you a much better idea. Tom Bowley: but I don't know what the news is. Tom Bowley: so I think if the news is. Tom Bowley: you know, if the Cpi is higher than expected. I would expect to see a pretty significant drop Tom Bowley: at the open.
Tom Bowley: Whether or not it stays down is another story, because you got the fed coming up as well. Tom Bowley: but I would expect the initial reaction to be poor if that Tom Bowley: if the numbers are Tom Bowley: are hotter than expected, however. Tom Bowley: if we get a second Cpi number in a row Tom Bowley: that is below expectations, and is showing that there are signs that inflation is moderating, maybe even declining. Tom Bowley: Then we got a whole different ball game. Tom Bowley: We saw that 7% advance last month Tom Bowley: up 4% at the open. Tom Bowley: That's what can happen if the reports good.
Tom Bowley: I had a member right in and say, Well, what do we do. Tom Bowley: you know? Should we be in the market? Should we be out? Should we be in the juice, you know. Leverage Dtf to double the triple Tom Bowley: Nasdaq. S. And P. What what should we do?
Tom Bowley: Listen. I'm. Not a registered investment adviser. I can't tell anyone what to do. Also, I can tell you, is what I'm seeing in the market, and I can tell you that I believe the next couple of days are going to be volatile Tom Bowley: could be in either direction. Tom Bowley: and it just comes down to risk. How much risk are you willing to take
Tom Bowley: these next 2 days. Tom Bowley: not going to be the difference between whether you retire comfortably or whether you don't Tom Bowley: so in the short term, Does it matter to you? Tom Bowley: Does it matter if your account takes a hit? If you want to be in long for the long term? Tom Bowley: Does it matter whether you go down 3 or 4% on Tuesday or up 3 or 4. Obviously that wouldn't be a problem. Tom Bowley: I can't answer those questions for every member out there. I you know that's something that everybody has to decide for themselves. I believe the bottom is in. I said that back in June Yes, we did go down a little bit lower on most of our major indices back in late September early October. Tom Bowley: but it didn't last long. We've traded mostly above that June low Tom Bowley: since then.
Tom Bowley: and I think the market is just accepting. Whoever wants to sell go ahead sell. Tom Bowley: I think it's finding plenty of buyers on Wall Street, and I think. Eventually we turn back to the upside. I've said all along. I believe this is a cyclical bear market. Tom Bowley: If you know one thing about me, it's that I typically am pretty convicted. Tom Bowley: I have conviction. Tom Bowley: I was Tom Bowley: parish at the beginning of the year. Cautious, maybe, is a better word to put. Tom Bowley: you know, throw out there.
Tom Bowley: extremely cautious at the beginning of the year, and once the market started to roll over, it was Tom Bowley: that was all she wrote. Tom Bowley: There's just too many warning signs. Tom Bowley: By June Tom Bowley: a lot of those warning signs had been resolved.
Tom Bowley: Your sentiment is no longer an issue. Tom Bowley: We started to see signs of positive rotation. Some of that's weaned a little bit, some of it's continued. Tom Bowley: but Tom Bowley: the huge.
Tom Bowley: you know rate of change that we had seen over 2 years going into 2,022 is unsustainable. I wrote about that yesterday at Stock charts. Tom Bowley: Make sure you check that out. If you haven't already. Tom Bowley: There were a lot of issues coming into the year. Those issues have been resolved.
Tom Bowley: Now everybody is looking at the news. Tom Bowley: you know. Everybody was excited back at the beginning of the year we were set all time highs. Tom Bowley: You gotta look Tom Bowley: behind Tom Bowley: the numbers. You got to look under the hood. Tom Bowley: Yeah, back in June we were Tom Bowley: you know, down 25%. Tom Bowley: But a lot of signals had changed. I remain bullish that's Tom Bowley: i'm gonna i'm sticking to that.
Tom Bowley: We'll see whether or not I'm. Right? S. And P. Is up 8% since mid-june. Tom Bowley: I I believe markets going higher. Tom Bowley: Could we go to a new low? Sure. Tom Bowley: mark you can do anything at once Tom Bowley: and trust me if it does go to New lows. I'm going to be looking at many signals trying to evaluate. Is it something that's sustainable to the downside, or is it just another head fake before we shoot higher? Tom Bowley: I just don't think we're going lower? Tom Bowley: History says this is not the time of the year. The market goes lower
Tom Bowley: late. October through mid January tends to be extremely bullish. Tom Bowley: I think again, these 2 days are going to be critical when we go from there. Tom Bowley: As far as these sectors go. From last week communication services with the only sector in the green on Friday
Tom Bowley: 10 of the 11 sectors were down, led by energy, crude oil prices, just getting hammered Tom Bowley: health care down one and a quarter roughly materials down about 1% industrial down. Tom Bowley: also, close to 1 8 tenth of one. Tom Bowley: Looking across these, though. Tom Bowley: I don't see technology, and I don't see discretionary. And you could see communication services was leading, and it was actually up.
Tom Bowley: So you know, and I try not to take too much from one day here. One day there, one week here, one week there it's really about the big picture. Tom Bowley: but anytime the market goes down, especially the sell off like we had right at the end of the day. Tom Bowley: I do feel a little bit better about it. If I don't see discretionary and technology and communication services leading
Tom Bowley: to the downside, and they did not. On Friday 10 year treasury yield. Tom Bowley: Well, we've got obviously. I talked about some big reports coming out this week right now i'll give you an update. 10 year treasury over is pretty flat Tom Bowley: actually down 4 basis points. So it's not that flat Tom Bowley: down to 3.5, 2 Tom Bowley: As I mentioned Tuesday. That's the day tomorrow where we're going to get the this. Excuse me. November Cpi Tom Bowley: and the expectation there Tom Bowley: going to go in and see if it's changed. Total in 1 s
Tom Bowley: the expectation for tomorrow is that the headline Cpi number will rise 3 tenths of one. Tom Bowley: The October number, which was released on November tenth. Tom Bowley: was a rise of 4 over 10 to 1%. Tom Bowley: So we're looking for that number to come back, you know. Come down a little bit.
Tom Bowley: The consensus range that i'm seeing is anywhere from 2 tenths to 5 tenths of 1%. Tom Bowley: So I think if it comes in a 2 or 4, you know, close to that 3. I'm not sure. We're going to see a huge reaction. Tom Bowley: But I think if you start getting much further away from that, that's where I think we could get big numbers if we throw out food and energy. So we strip those out and simply look at the core. Tom Bowley: Inflation rate Core Cpi Tom Bowley: of October was a rise of 3 over 10 of 1%. We're expecting that to rise to 4 over 10 of 1%
Tom Bowley: tomorrow morning. That's what we're looking for. Headline Tom Bowley: plus 0 point, 3% Tom Bowley: core plus 0 point, 4%, Tom Bowley: and the consensus on the core. Cpi is anywhere from 3 Tom Bowley: tenth to 5 tenths Tom Bowley: for is a consensus. Tom Bowley: so we'll see what happens tomorrow. I again. I wish I could tell you which way it was going to go. Tom Bowley: There's no way to avoid the risk that I know of. I mean. Obviously, you can do some things to hedge. If you're long you could sell some calls against your position just to make sure that you know you don't get hammered to the downside
Tom Bowley: or, you know, just take flat out, Take. Tom Bowley: you know, by puts to protect your Tom Bowley: long position. Tom Bowley: and you can do similar if you're on the short side. If you believe this market's going lower, and you think this is a secular bear market, you think this rally that we've seen Tom Bowley: since the October low is just, you know, smoke and mirrors. Tom Bowley: and you're in on the short side. Tom Bowley: I don't know you might want to buy a call just to protect yourself.
Tom Bowley: There are ways to hedge. Tom Bowley: so you don't have to go into this blindly one side or the other. Tom Bowley: But again, I can't take those risks for everyone else. Tom Bowley: as far as what I'm going to do. I'm going to probably decide later today.
Tom Bowley: you know right now. I've said recently. I don't think that this is the time for leverage. I mean when you're going into a big report like this. Tom Bowley: Personally for me, I will not be heavily leveraged. Tom Bowley: I will probably won't be leveraged at all.
Tom Bowley: There's plenty of different times for that. Tom Bowley: I I really feel like if you're going in with 2 times or 3 times, and if that's your personality, that's what you believe go for it. Tom Bowley: But I think when you're going into a report like this, you have to treat it as though you're sitting at the roulette wheel Tom Bowley: or at the craps table, and you hope that Tom Bowley: you know the dice. Go your way.
Tom Bowley: I don't like to invest like that. Personally, I You know to me Tom Bowley: what we're gonna get today, and tomorrow, or excuse me tomorrow, and Wednesday is the equivalent of an individual stock getting learnings report. Tom Bowley: you know. If you're going to hold it as an individual stock into its earnings report you have to be willing to take on a lot more risk. You might. You might hit it.
Tom Bowley: you know it might be great. Tom Bowley: but you might take a big loss, too. Tom Bowley: So, looking at the next 2 days, that's the approach I'd be taking. It's an earnings report kind of for the market.
Tom Bowley: you know. Do you do you want to hold. Tom Bowley: Do you want to be in leverage? Do you just want to be in the spider or the Qqq. Do you want to individual stocks? Those are all personal questions. I can't answer for everyone else. Tom Bowley: All right, let's look at the S. And P. 500
Tom Bowley: Here's that Tom Bowley: a rebound that I was talking about coming off of that October low. Tom Bowley: There was the June low that I talked about where I called the bottom. I mean. You could see. We went down a little bit below. At the end of September we bounced, and then mid October. That was the bad. Tom Bowley: Excuse me, that was the bad Cpi report. Tom Bowley: September Cpi came in hotter than expected. We saw the huge gap down and then look at that rally Tom Bowley: big big buying after a bad report.
Tom Bowley: Then October Cpi was right. Here was was released on November tenth. Tom Bowley: and we had much lower Tom Bowley: Cpi than expected, and of course we gapped up 4%, Tom Bowley: maybe 3, 3 and a half percent on the S. And P. I'm. Not sure. I think it was 4 on the Nasdaq. Tom Bowley: And then we continued going higher, and I've said Tom Bowley: the number. One of the things to watch for me on the downside
Tom Bowley: is this support area? Tom Bowley: I mean 3,000. 904,000. Both were pretty key levels 3,900 especially because we've seen so many. Tom Bowley: you know. Key bounces off of support there, or breakdowns, and then failure at resistance, and then break back above, and then support on selling. Tom Bowley: and then break back down in resistance. That's where that 3,900 level comes in.
Tom Bowley: So we're still trading above that we're at 39, 34, so we haven't lost that yet. Tom Bowley: we did move back down below 4,000, though that's a psychological level. But we've done it so many times. I don't know there really is that meaningful anymore. It's not a new level. It's a level that we've been at many times Tom Bowley: over the past couple of years, so I don't know. I think, 4,000 Tom Bowley: that it really doesn't take on the significance that say 5,000 will when we get up to that level. Tom Bowley: But here this, I think, is 38, 50, or 38, 60 wherever that open was right there. I'd be watching that. And then you've got the 50 day moving average coming up from underneath the 38 40. Tom Bowley: This is. These are going to be some key levels
Tom Bowley: to watch Tom Bowley: 3,938. I think that's 3,860, Tom Bowley: pretty sure that's 38, 60, and then the 50 to 38, 40. Tom Bowley: That's a lot of different support in a fairly narrow area. Tom Bowley: So if we get through these next 2 days, and we're still above all of that Tom Bowley: i'm going to be much. I'm going to be a little bit more bullish
Tom Bowley: at that point. Tom Bowley: and that might be when I decide to take a shot with leverage. Tom Bowley: Now, if we get a low Cpi report, we get this huge gap up. Tom Bowley: I don't like chasing with leverage. I i'll just happily if i'm. In the Qqq. Or the spider, or something like that. I would just happily ride it Tom Bowley: back to the upside. There'll be other times. There are moments when Leverage becomes, I think, a better option.
Tom Bowley: not after you have a big gap up. I don't like to chase Tom Bowley: All right. Let's take a look at the Nasdaq 100 Tom Bowley: very similar chart Tom Bowley: here's your support. Your gap support here. That was at 11,350.
Tom Bowley: You can see a lot of support at, or just beneath 11,500. Tom Bowley: The 50 day moving average is at 1,482, Tom Bowley: which is slightly above this 11,350. Tom Bowley: So to me. The biggest level on this chart is 1,450, Tom Bowley: because if you can't hold there. Tom Bowley: you will have lost 1,600. You lost the 50 day, and you will have Lost Gap support. Tom Bowley: So if the number tomorrow is bad and we gap down, and we get below 1,450 on the ndx.
Tom Bowley: I would expect to see more selling down to the Gap. Support the October low. Tom Bowley: you know, though, and maybe we just consolidate a little bit further and then take off. Maybe we consolidate, we break down. Tom Bowley: Maybe the secular bears are right. Tom Bowley: I don't have a crystal ball. I don't know for sure. Tom Bowley: I just don't believe that's the case. I think we go higher.
Tom Bowley: and i'll be talking a lot about the market, and things can change, too. By the way, between now and market vision. Tom Bowley: I may change my opinion. Tom Bowley: I mean I was really really bullish. Going into the Jackson whole meeting Tom Bowley: and speech Jackson whole speech that fed Chief Powell gave back. I think it was August the 20 Sixth. Tom Bowley: and right here I mean, we we had moved up. We yeah, we pulled back a little bit.
Tom Bowley: but and this was the home home builders. Let me go over here to the ndx. Let me show you the ndx. So here was the move. We were in an up trend. We'd gone just below the 20, and I remember writing an article as we were turning back up. I think we had Tom Bowley: 60 min positive divergences on semiconductors. I think the overall market had us had a positive divergence on the 60 min chart. I remember writing a chart or writing an article saying. Tom Bowley: we're about to explode to the upside, and very next day we saw this reversal and move up, and I was like, okay. Here we go. Tom Bowley: and then fed. Chief PAL said more pain ahead. That was his more pain ahead, speech. Tom Bowley: and look what it did. Tom Bowley: So we can't just rest on our laurels and say, hey, we're going higher, and let's just stay long and let's ignore everything going on around us. I don't think that's a very good strategy.
Tom Bowley: and if Wednesday Tom Bowley: fed, Chief PAL comes out and says, you know Tom Bowley: we were talking it over, and we still think there's a lot of problems here, and we're going to continue raising Tom Bowley: market might take that and just have a massive sell off Tom Bowley: and Tom Bowley: depending on what leads on that sell off, and all. We can't just sit back and say, oh, the markets going up. Tom Bowley: hey? If it turns lower Tom Bowley: we'll react to it Tom Bowley: right now. I'm very cautiously Bullish. Tom Bowley: All right, home builders.
Tom Bowley: So I've been talking about home builders recently. Tom Bowley: and if you look at the Tom Bowley: relative strength, this is the the key part of this chart, I mean, if we look at the absolute chart you just see a bottom Here we rally back up to about 1,300, and seems like we're kind of struggling right around 1,300. Tom Bowley: But Tom Bowley: there's another part of this chart, and this is really important, I think, relative strength. Tom Bowley: you know, if someone says, okay, what's the most important things When you look at a chart.
Tom Bowley: the first thing for me is price volume, the combination to price volume. Tom Bowley: the Candlesticks. I need my candlesticks. I need the volume bars. I just need to see Tom Bowley: what the market is doing, because Tom Bowley: Wall Street can't accumulate and cannot distribute without Tom Bowley: big volume. Tom Bowley: So volume is important. I don't care. There are others that disagree with me. They ignore volume technicians, many of them many that I respect have a tremendous amount of respect for ignore volume. Tom Bowley: I don't. Personally, I don't understand that. Tom Bowley: But.
Tom Bowley: hey, whatever you know, floats your boat in terms of. Tom Bowley: you know, analyzing the market. Go for it. Tom Bowley: I think volume is a big part, but anyway, relative strength and the Ppo are probably the next 2 things, and I don't maybe maybe relative strength. I used to think Ppo was my next, but I relative strength might be next Tom Bowley: probably be close. Tom Bowley: let me show you this chart.
Tom Bowley: So if you're looking here. Tom Bowley: the home builders relative to the S. And P. 500 Tom Bowley: bottomed in early April Tom Bowley: notice. Price action went down for the next 2 months. Tom Bowley: and then, you know, we've been going up, but we haven't really been going up much. Tom Bowley: But think about what the stock market's done. The stock market went in and put a new low in October.
Tom Bowley: right Tom Bowley: home. Builders didn't. Tom Bowley: and so you can see that this relative strength. Look at where we are right now. Tom Bowley: We are at the highest level that we have been since back in January. Tom Bowley: When you look at home builders relative to the S. And P. 500. Tom Bowley: Now.
Tom Bowley: when I see that. Tom Bowley: So I'm. Always looking at the market looking at charts Tom Bowley: and trying to understand the story that these charts are trying to tell.
Tom Bowley: You know I I Tom Bowley: have seen a couple of articles recently that have talked about. Well, you know home voters are starting to move higher because rates Tom Bowley: are going up or have been coming back down. Tom Bowley: And that's true. That's a true statement. Tom Bowley: but it it was before that it started before that. If I go down here. Tom Bowley: let's put in one more piece of this puzzle. Here Tom Bowley: it's put in the 10 year Treasury yield.
Hmm. Tom Bowley: And so down here on the bottom, actually, let me make this a little bit bigger. Tom Bowley: all right. Tom Bowley: So here's what we're talking about. So here's the home builders moving up your rates coming down. That's undeniable. Tom Bowley: I think that is definitely contributing rates coming down definitely contributing to a lot of buyers. But Tom Bowley: rates were going up Tom Bowley: throughout moat most this year, and home construction bottomed on a relative basis back in April. This is a group that's been outperforming the S. And P. 500 since April, while rates were going higher.
Tom Bowley: That's weird. Tom Bowley: I think that's telling us that's part of the story that we're being told Tom Bowley: when I see home voters going up with rates going up. Tom Bowley: it tells me rates probably Aren't going going to stay up. Tom Bowley: and sure enough, we're seeing them roll back over. Tom Bowley: If if you own a home builder Tom Bowley: or any company in home construction Tom Bowley: interest rates coming down in the future, you would have to say is Tom Bowley: a positive right. If you're expecting that in time rates are going to come back down, you would start to want to be
Tom Bowley: moving into those areas. You'd want to own those areas. Tom Bowley: because when the rates do come down Tom Bowley: that should increase their business. Tom Bowley: it makes housing more affordable. Tom Bowley: I mean, this is not Tom Bowley: me throwing out my opinion. I mean, this is somewhat factual, I would say. Tom Bowley: Rates come down. It makes housing more affordable. More people will buy homes
Tom Bowley: anyhow. Tom Bowley: Take from this what you want. Tom Bowley: But home voters have been rising since April Tom Bowley: on a relative basis, and I know there are some technicians at All they want to do is just look at the chart. Tom Bowley: and the fact that we're down trending wouldn't it. You know what we were down training in 2,009, and then we bottomed. The chart right now looks pretty similar to what it did at the bottom in 2,009 positive divergence on the weekly chart. Tom Bowley: and still in a down trend.
Tom Bowley: but 2,000 late, 2,009, and into early 2,010 was one of the best bull markets we ever had Tom Bowley: the weekly charts. Do Still, you know the long-term charts if we go back here Still. Tom Bowley: I mean, if this is the only thing I had to look at in the market. Tom Bowley: I would look at this, and I would say, Hmm. Tom Bowley: It looks like it's probably rolling back over. Tom Bowley: and maybe it is.
Tom Bowley: But Tom Bowley: here at the bottom, we did have a positive divergence. Tom Bowley: If you want to go back Tom Bowley: many, many years. Tom Bowley: that final low in 2,009. Tom Bowley: We had a slight, positive divergence. Tom Bowley: lower, low, slight, positive divergence. Tom Bowley: So you gotta be looking at other things, too.
Tom Bowley: This is what I would say if I was Tom Bowley: talking to a group of Tom Bowley: bears. Tom Bowley: If we break this down trend line, stop making excuses. Tom Bowley: That would be my words of wisdom. Tom Bowley: I mean, I think Tom Bowley: you know we're already 8% off the bottom. Tom Bowley: and I think we're going higher. But that's just me.
Tom Bowley: But if we break this down trend. Tom Bowley: I would not be thinking, shorting. Tom Bowley: not with everything else that's happened in the market this year.
Tom Bowley: and I don't think inflation was ever thought to be a long term problem. I think there's a lot of media Tom Bowley: that are saying it's a long term problem or trying to make it a case for it. Tom Bowley: because bad new sells my gosh inflation. The 1,900 seventys was horrible. Tom Bowley: you know. So if I can talk about this and make it seem like it's the 1,900 seventys all over again. I'll get lots of clicks. Tom Bowley: I don't trust the media because the media is full of opinions, a lot of opinions, and a lot of them. Aren't educated.
Tom Bowley: They're not educated opinions. Tom Bowley: They are biased opinions. They're trying to get clicks. They want you to come over to their website for whatever reason. Tom Bowley: probably, to buy something or to support. Tom Bowley: you know, show all the visitors They've got so many visitors, so they get had revenue from folks that are Tom Bowley: putting ads on their site. Tom Bowley: You have to know, and I've said this before. Tom Bowley: I know When I write a bearish article at stock charts i'll get triple. The views on my articles
Tom Bowley: triple minimum, sometimes 5 times as many. If I wrote an article tomorrow, and said. Tom Bowley: Next leg of the bear market has begun. Tom Bowley: I could get all kinds of folks reading my articles. Tom Bowley: but if I don't believe that that's the case. Is it ethical for me to write that? Tom Bowley: No. Tom Bowley: I'm going to write what I see? I don't care if it's bearish or bullish? I'm going to write what I see. I'm going to talk about what I see
Tom Bowley: feel free to disagree. Tom Bowley: Last thing we want to do here today. Tom Bowley: I do want to. I I've been pointing out some of these charts where you know the chart list that we provide to our members, giving you some of the the good performers and bad. Well, that's so much the bad performers, I guess we could Tom Bowley: in fact, I like sometimes buying the bad performers If they happen to be strong relative performers, they just happen to have a bad day or 2. Anyway, here are. Tom Bowley: This is what we do for the 3. You must see I know the market just opened. Let's look at the bi Alli Tom Bowley: as the first of the 3. You must see
Tom Bowley: obviously very over, bought at this point, made huge move to the upside key overhead. Resistance up closer to $30. Tom Bowley: Here's the deal with Tom Bowley: Bi alli. I I don't think it's a trade, because I think there's risk on either side. Tom Bowley: I think we've got about, you know, 5 or $6 to the upside to get near resistance, but I also think we have 5 or $6 to the downside to get to the 20 day moving average Tom Bowley: a one to one reward. To risk ratio to me is Tom Bowley: ignore past. Move on to the next stock.
Tom Bowley: I have no interest now. If the stock pulls back and it's at $20 or $19. Tom Bowley: yeah. Then I start and get, you know, starting to get my attention. Now, it is a fast mover, so you got to be willing to take on more risk because of that. Tom Bowley: But the reward to risk would set up much differently if the stocks trading at $20 Tom Bowley: the next one i'll show you is, tho which is for industries Tom Bowley: been trending down here but it did have a good day on Friday. That was a bullish in golfing candle off of a downtrend so short term, and we reclaim the 50 day moving average, so I would maybe expect to bounce off the 50, and maybe go back up. Challenge the 20 If we can get through the 20 here, I think 1,992 comes into play. Tom Bowley: and then the last one i'll show you Tom Bowley: is actually, let's go to the bottom. Take the worst performer.
Tom Bowley: and here was arct. Let's pull that one up that's in the Pharma area. Tom Bowley: it continues to sell off that. It's all on Friday back below the 50 I've marked support here right around 16. It's currently at 1,650. If I was even thinking about buying this stock, which i'm not. Tom Bowley: I'd hold off Tom Bowley: a lot of folks just find the stock they want to buy, and they just put in their order. Tom Bowley: I like to find a spot that I really feel is the spot where I want to see a reversal, so i'd be looking closer to $16. Personally. Again, I don't like the stock. I don't really see anything here.
Tom Bowley: We could probably go into, you know, looking at the relative strength. Tom Bowley: see what we there's just nothing here. The stock is trading Tom Bowley: close to a 52 week Low relative to its farm appears. Farm has been pretty good, but the stock just hasn't. Tom Bowley: So after this gap up, maybe eventually we'll go down, put in this double bottom and take off again. I don't know Tom Bowley: but recently we just haven't performed well. I would be a little careful with it. All right. Let's see what the market's doing, and we'll wrap up
Tom Bowley: Well, we are still up. We're seeing a little bit more strength on the down the S. And P. Versus the S. Versus the Nasdaq, the vix up 6% today. Tom Bowley: and i'm sure some of that has to do with the market getting a little bit more nervous ahead of the Tom Bowley: big moves tomorrow. Remember, volatility is based on the Tom Bowley: premium that's paid on the short term Tom Bowley: S. And P. Options. So when you're just looking out like 30 days. Tom Bowley: and Tom Bowley: so the Vix is telling you what the market is, anticipating the expected volatility.
Tom Bowley: Well, it's kind of makes sense to me that it would go up right before we have a Cpi report and a 2 day fed meeting. Tom Bowley: Do they cause volatility? Tom Bowley: You bet they do Tom Bowley: a lot of it. Tom Bowley: So, as a result, market makers are pricing options much higher. Tom Bowley: You have to pay higher premiums Tom Bowley: makes perfect sense. Tom Bowley: I believe, once we get past Wednesday, especially Tom Bowley: if we get past Wednesday and the markets higher than where it is right now Tom Bowley: I think you'll see this vix tumble again.
Tom Bowley: On the other hand, obviously, if the no news is bad, we get a big gap down. Then we could see the Vix become more of an issue back up into the upper twenties, maybe up to around 30. Tom Bowley: So the next 2 days are going to be big, and again how you play it completely up to you. I can't take that risk for you. I don't want to be responsible Tom Bowley: for your decisions. I mean. I hate to say that, but that's not my job.
Tom Bowley: I'm not a registered investment adviser. I'm not handling folks money. I'm giving you my opinion on the market. Tom Bowley: I've done this for a long time. Tom Bowley: I do think we're going higher, but I can't tell you what's going to happen the next 2 days. I wish I could.
Tom Bowley: All right. that is it for me. I appreciate everybody tuning in. I'll be back tomorrow over at stock charts TV again. I just want to mention Tom Bowley: market vision 2,023. I'm going to be mentioning this every day until we get there I think it's the biggest event register and make sure you get this on your calendar. Tom Bowley: A lot of great information Folks from stock charts are going to be joining me. They spend a lot of their time on a Saturday Tom Bowley: to give you great information. I'm going to hopefully give you some some more great information. Tom Bowley: Mark your calendar and register Have a great day. Everybody happy trading.