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WALL STREET CRAPS STOCK MARKET STRATEGY JANUARY 8, 2022

January 8th, 2022 Comments off
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The stock market had a rocky start to 2022. With several non-confirmations during the last week of December, it is not surprising that there would be problems this week. With that being said, the general market could stay in this range without a major move in either direction. But with the large percentage losses in many of last year’s dynamic growth stocks, the background is set for a final plunge for these shares. However, there aren’t any signs of capitulation that would mark that final bottom. So for now, I would recommend keeping your powder dry and resist the temptation of going long until we see more signs of extreme behavior/sentiment.

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator has rallied from its December 20th low and is in the process of clustering at a peak before heading lower again. A tradable bottom usually isn’t signaled unless the clustering starts after a sustained move down. That point is still weeks away in time.

Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 52. At the December 2018 bottom, this indicator reached a reading of 3. So we are a long way away from a swing trade to the upside. A minimum reading of 25 is required to reach the “Extreme Fear” range.

WALL STREET CRAPS STOCK MARKET STRATEGY DECEMBER 5, 2021

December 5th, 2021 Comments off
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The stock market had a volatile week with large movements in both directions. But under the surface, many stocks experienced large retracements from their all-time highs. With the negative news backdrop of the new COVID strain and larger than expected inflation projections, the market is ripe for a crash and reversal this coming week. If you’ve been waiting for an opportunity to make some fast money, this week may be your week. But this next rally may be a narrow advance so I’d stick with large-cap stocks like those in the Dow Jones Industrial Average.

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator has broken down and has a current oversold reading of 15. It satisfies the requirement of a bottom condition, but usually needs a cluster of readings in the lower area before rallying for a new up leg.

Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 20. At the December 2018 bottom, this indicator reached a reading of 3. But overall, this indicator is sufficiently oversold to support a bounce upwards.

WALL STREET CRAPS STOCK MARKET STRATEGY NOVEMBER 27, 2021

November 27th, 2021 Comments off
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The stock market turned down sharply on Friday and is now heading towards a possible bounce around the SPY 89-day moving average at 448. With the negative news build-up over the long weekend, we could easily have a panic crash on Monday. In any case, a sharp short bounce worth trading to the upside can be expected early next week. But what happens over the intermediate term is anyone’s guess. Another problem is the widespread expectation of a Santa Claus Rally which may be a dangerous assumption. You need to remember the alternative case of December 2018.

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator has broken down and is one trading day away from a possible “oversold” condition. In the past, this indicator has shown the ability to stay oversold for many days, but recently the bottom of the market has occurred shortly after entering this oversold territory. So be ready to move soon if you’re willing to risk playing the trading game.

Fear/Greed Index: This popular indicator is in the “Fear” territory after having been in the “Greed” area for some time. Friday’s sharp down took this indicator down quickly from a reading of 64 to 31 which is the largest one-day drop that I can ever recall. One or two more negative days and this indicator will be in the “Extreme Fear” range which is a precondition for a bottom.

WALL STREET CRAPS STOCK MARKET STRATEGY NOVEMBER 20, 2021

November 19th, 2021 Comments off
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The stock market has been correcting and chewing up time since its recent move to all-time highs. In the meantime, three of the short-term oscillators have flashed “oversold” readings suggesting that a short-term bottom is here now. This may be setting the market up for one last rally into December before any major correction occurs. You could start taking positions on any weakness during the next few days or sell any remaining positions into strength as the market continues to climb the proverbial “wall of worry.”

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator has been clustering in the overbought range, but is now breaking down and headed across its Ultimate Indicator oscillator’s range towards the “oversold” area. According to the history of this indicator, it will need some clustering at a lower level before a sustainable rally can happen. What I’d expect instead would be a short, sharp rally to new all-time highs in December, but not one of duration.

Fear/Greed Index: This popular indicator is in the “Greed” territory after having been in the “Extreme Greed” area for some time.. One has to be very careful about taking long positions at this time even though the short-term oscillators are “oversold.” Bottoms usually don’t occur unless this indicator has a reading of 25 or less (Extreme Fear).

WALL STREET CRAPS STOCK MARKET STRATEGY OCTOBER 24, 2021

October 23rd, 2021 Comments off
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The stock market has been doing a great job of “climbing the wall of worry.” On Thursday of this past week, many short-term indicators topped out and the evaluation is whether it did so from: 1) exhaustion & a move down across the trading range or 2) just a pause before resuming its relentless climb. Unfortunately, no one really knows despite what they may claim with almost total certainty. I would look for either a decline and then a failed retest or a high volume reversal before making any bets to the downside. Sometimes it’s just better to watch from the sidelines and preserve your capital (chips).

Key underlying short-term timing indicators show the following:

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Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 67 after being in the “Extreme Greed” zone for a day or so. This indicator gave a one-day buy signal in early October, but it is not a reliable timing tool for catching tops. Therefore, it’s not worth reading too much into its reading this coming week.

WALL STREET CRAPS STOCK MARKET STRATEGY SEPTEMBER 11, 2021

September 11th, 2021 Comments off
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The stock market appears to have topped out over the shorter-term on September 2nd. Since that time, the market has been trending downwards towards a possible bottom in mid-September. Recent bottoms have occurred on July 19th and August 19th which were 23 trading days apart. If that same pattern were to repeat itself, then the next bottom would be between September 19 and September 22. So be ready for a quick trade to the upside if the conditions for a bottom look worth risking.

Key underlying short-term timing indicators show the following:

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Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 34 after being in the “Neutral” and “Greed” zone for the past two weeks. The best buy signals on major corrections have occurred when the reading gets below 10. But a minimum reading of 25 would be required for a short-term bottom worth trading.

WALL STREET CRAPS STOCK MARKET STRATEGY AUGUST 21, 2021

August 21st, 2021 Comments off
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The stock market traded lower for most of the week that coincided with the turmoil in Afghanistan. With the rally on Friday, the Dow Jone Industrial Average is about 500 points below its August 16th high. I would expect a rally to new highs to be unconfirmed by the majority of other indicators. That would set up a Dow Theory Sell Signal as well as a Granville Sell Signal worth shorting or selling existing long positions. Such a scenario could take place in the next 3-7 trading sessions so be on your toes for this developing opportunity.

Key underlying short-term timing indicators show the following:

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Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 25 after being in the “Extreme Fear” zone with a reading of 22 on Thursday. The best buy signals on major corrections have occurred when the reading gets below 10, however.

Monday August 23rd Note: The Granville Sell Signal usually occurs when the new unconfirmed high in the Dow Jones Industrial Average coincides with an obvious public good news cover story. Could the Pfizer COVID vaccine FDA approval be that cover story?

WALL STREET CRAPS STOCK MARKET STRATEGY JULY 24, 2021

July 24th, 2021 Comments off
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The stock market spiked down on Monday and then rallied strongly the remaining 4 days of the week. I was looking for a trade set-up on Tuesday morning, the market did not present an opportunity to “fade” the trade . This has happened often in the past and it is often wisest to buy during the last half hour of trading instead of letting the futures market change course and ruin your trading plans. I missed a good trading opportunity by trying to be too perfect in a tricky market. In this case, it’s more important to determine a gradual betting strategy than trying to time a “hot and cold” market too closely.

Key underlying short-term timing indicators show the following:

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Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 32 after being in the “Extreme Fear” zone with a reading of 17 on Monday. So this indicator did flash a clear buy signal of Monday which I saw but didn’t act on.

Note: Friday July 23rd’s, new closing high in the Dow Jone Industrial Average was not confirmed by the Dow Jones Transportation Average. This sets up a classic Dow Theory Sell Signal. Mark this date as a possible intermediate term top.

WALL STREET CRAPS STOCK MARKET STRATEGY MAY 26, 2021

May 27th, 2021 Comments off
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The stock market is hovering near its all-time highs with no apparent reason to decline at this point in time. In fact, the market sentiment as measured by the “Fear/Greed Index” suggests that a short-term buy signal is close at hand. With the Memorial Day holiday quickly upon us, it doesn’t look like a trading opportunity of any kind is not likely until June. This is a time to let the market set itself up for its next big move. In the meantime, the odds still favor a market that continues to drift upwards.

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator is clustering in the oversold range. This is an indication that a breakout is eminent. But in which direction is not clear right now.

Fear/Greed Index: This popular indicator is in the “Fear” territory which is close to the “Extreme Fear” zone that often signals a buy. If the market were to have a short term decline, a buy signal from this indicator could be triggered.

WALL STREET CRAPS STOCK MARKET STRATEGY MAY 2, 2021

May 1st, 2021 Comments off
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The stock market bottomed in early March and has not retested that level since. Right now, all of the internal indicators are mid-range with no pressure to go in either direction. With recent new all-time highs, a correction can be expected especially with earning season having already passed. If a correction starts now, it could be finished by the end of the week or the beginning of next week at the earliest. Then one could expect another run to higher highs in all the major indices.

Key underlying short-term timing indicators show the following:

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NYSE McClellan Summation Index: This indicator ticked lower on Friday and could suggest the beginning of a downtrend. Overall, this indicator has held up well for the market.

Fear/Greed Index: This popular indicator is in the “Greed” territory which suggests that a bottom won’t materialize until it at least touches the “Extreme Fear” reading. That would take 5 to 7 trading days at the very least.