Weak(er) Hands are Holding More Stock

By John Del Vecchio and Brad Lamensdorf

Buying climaxes continue to jump, just hitting the highest level in year. A buying climax is when a stock makes a 52-week high but then closes down for the week.

This is a sign of distribution.

As the market inches higher, more and more distribution is occurring. Investors and speculators are selling off the moves higher in an increasing number of stocks. Ideally, we would like to see strong buying power as the indexes push higher.

The trend in buying climaxes is a warning sign of weakness under the market.

According to research from InvestorsIntelligence, traders selling off buying climaxes are correct 80% of the time over the next four weeks.

Given the increase in buying climaxes it would not be a surprise to see some market weakness in the coming weeks. Shares have exchanged hands from the strong to the weak in greater and greater proportion.

Weak(er) Hands are Holding More Stock
Weak(er) Hands are Holding More Stock (Chart provided by chartcraft, chartcraft is a division of https://www.investorsintelligence.com)

To learn more about how these indicators can help manage risk in your portfolio, book a call with Brad.

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Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

This report is not intended, and shall not constitute, and nothing herein should be construed as, an offer to sell or a solicitation of an offer to buy any securities referred to in this report, or a “buy” or “sell” recommendation. Rather, this research is intended to identify issues portfolio managers should be aware of for them to assess their own opinion of positive or negative potential. The LMTR newsletter is NOT affiliated with any ETF’s.  Active Alts  is affiliated with Lamensdorf Market Timing Report. While LMTR uses charts from SentimenTrader, they do not have a financial arrangement with SentimenTrader  Past performance is not indicative of future results.


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