Hap (Robert) Sneddon FCSI

Normally as we leave September, we come out on a bit of a weak foot. We're not doing that right now, but we'll be talking about some weakness underlying even a great day like today. A bit of volatility, expectation of volatility, and some divergence in some of the indices. Even though the indices are going up, some of the deep-down indicators are actually weakening.

With seasonality, there's usually a bit of a dip in early October. Then things go flat to up, ending with a dip at the end of October. In a 4-year US presidential cycle, where we have an incumbent president (even though he's stepped aside), markets tend to get much weaker as we head into an election. It's usually because promises are made, and the market's doubting whether they can be kept.

With all the weakness expected, the bond yield is ratcheting up. The Fed and business leaders are coming out saying rate cuts going forward should be less, not more.

In a normal pattern, we weaken from September to early October, and then there's another fall. But in an election year, we get a much deeper drawdown at the end of October, and then a market runup as normal afterwards. You want to look at long data, as anomalies in a 2-5 year range can easily happen. Even still, the data doesn't tell you how big these moves might be.

There are other indicators to look at besides the usual charts, such as moving averages and MACD and relative strength. It's these indicators that are showing weakness. That's what he means by divergence. The market's making new highs, but these indicators are trending downwards. You start to get more of the lifting done by smaller and smaller stocks.

In the last month, we've had a resurgence of the growth profile such as in the NVDA's of the world. So we're seeing divergence, but it doesn't mean that we're expecting a large correction. There's definitely a pause in place, which means there's probably a better time to make a large commitment to the market, sometime in the next month.

Right now, looks extended. Pushing up against resistance, but seeing a reverse double bottom pattern, projecting to about $180. That's longer term. On a weekly basis, just starting a breakout. 

For seasonal entry, look at equityclock.com, run by a portfolio manager who works for his firm. All the chips are coming into a buy season right about now. For new money, this is one area to pick away at.

He can't speak to fundamentals, but the chart is hitting the lower trendline. It's compressing into the right corner like a triangle, which is when you tend to get an upside move. Risk/reward is really good right now, even though it's down 9% in a really good market.

The thing that strikes him about the chart is that it's gone parabolic. With stocks in the $2 range, technicals sometimes go out the window as the market begins to understand it. Thinks it's sustainable. Lots of support right around $1.60. 

No reason to sell, but could have a really big swing due to the size of the company.

He clipped some profits. As a technician, he can easily tell when a stock's overbought or oversold. But when a stock becomes too big a position in a portfolio, that's the decision, not what the market or the company is doing. 

He expects his son to be holding this 20 years from now, as AI in this space is just becoming appreciated. However, there will be some profit-taking along the way.

Big downtrend, trying to break it. $124 is a critical level for this stock; if it can get above, suggests that the stock will take off afterwards. If you own, definitely don't sell. If looking to buy, watch over the next month.

He'd rather pay more for a stock on confirmation that it's working, than try to catch the bottom. So here, he'd rather pay $130, than pay $119 and watch it go down to $100.

He regrets not buying it, but can't dwell on that. Choppy, but on a pretty good trend. If you draw a linear regression line (in between the top and bottom), you can see the stock's going up. He got a fresh buy signal on this today. Could come back in the next month, but longer-term move looks quite positive. 

After 10 months, just now performing better than the S&P, and that's what you want.

A big buy signal (candle) came in in June, and a short-term one late September. Something big changes, and then it's reflected in the charts.

Looks good. He got a weekly buy on this 2 weeks ago, and a monthly buy would be more substantial (the more you go out, the better it is.) Short term, hitting resistance. Once it gets through $28.40, it will probably play out with what he sees in the longer-term charts, which look quite good.

Was a laggard in the space, which you don't want to chase in and of itself. Often you want to buy strength, best in breed. If you look at the dip in the chart right after he bought, it shows you the danger of going down the food chain in a sector that's doing quite well.

He's holding on and would buy today.

Also pays a big, fat dividend, which sometimes you need to be cautious on. Drawing a linear regression line helps the chart make more sense, especially with a volatile stock. Linear regression helps you see through all the peaks and valleys. Stockcharts.com is a good place to go for this, as well as most of the discount brokers.

Loves it. Getting closer to the upper range of the channel, but nothing to worry about. He clipped some profits, which he often does when a stock's really volatile -- it's more like housekeeping, tending the portfolio garden and being a good steward of your assets.

For new buyers, over the next month he'd look for a spot to add.

Fresh buy signal today that could go away tomorrow (if there's a bit of weakness), but it's trying to catch hold. Longer term looks really good. Looking at the big swings of volatility, could come back to the $37 range and it would still be good long term.