STOCK MARKET STRATEGY FOR JANUARY 24, 2021: The stock market rallied strongly on January 20th and has settled back while consolidating its gains the past two trading sessions. This suggests another rally attempt to new highs during the coming week. Be careful out there because this next new high may be an intermediate top worth selling into if you still have extended long positions. But if we have some selling early in the week, it would present a “buying the dip” opportunity worth taking since the short-term oscillators are not overextended.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This key trend indicator is hovering around its 15 day moving average. The data points have been “clustering” which suggests a strong move in either direction. This tells me that this new anticipated all-time high coming up this week may be a tricky one.
STOCK MARKET STRATEGY FOR JULY 31, 2018: The market has dropped quickly into a semi-oversold condition. This would suggest that a bounce could occur in the next day or two. But after the bounce should come another wave down into a better buying opportunity. Be ready in case the market presents the right conditions for a tradable rally at the end of this week or the beginning to next week.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The Fear/Greed Index is currently reading 64 or “Greed.” I’m still awaiting for a quick move into the “Extremely Fear” area in order to feel like the conditions are ripe for a more sustainable rally. So, we continue to wait for a better trading opportunity to the upside.
STOCK MARKET STRATEGY FOR MARCH 25, 2018: The stock market is setting itself up for a climatic bottom over the short-term. Breadth indicators are in “oversold” territory with the chance of become even more oversold if the market should sell-off on Monday-Tuesday. While a market panic is difficult to buy into, it may still be the proper strategy for buying low and selling high. But the proper to tactic would be to buy in smaller increments spread over 3-5 days during periods of weakness. This takes discipline that few amateurs possess.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The Fear/Greed Index is currently reading 7 or “Extreme Fear.” With any weakness on Monday, this indicator will have the lowest reading in several years indicating a potential intermediate term bottom. To spread the risk, a wise trader should buy a combination of diversified broad-based ETFs and strong Blue-Chip dividend-paying stocks (example: Exxon, Microsoft, Apple, Wells Fargo). The first step would be to buy on extreme weakness in small pilot positions and add gradually. If a market panic should occur, it may take a few days for the market to stabilize or bounce. And then there is the possibility of a final wave down which a trader must be anticipate when conditions become so extreme as they are now.
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STOCK MARKET STRATEGY FOR SEPTEMBER 5, 2016: The stock market reached a short-term low intraday on Wednesday. Since that time, the internal oscillators have been trending up. This has been a sideways correction with the Dow remaining in a 300-point trading range for 38 straight trading days. Another new closing high in the coming week is certainly possible. But overall, the market did not become oversold enough or create enough of a sentiment shift to fuel the market towards a big move upwards.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The internal indicators are all trending up after last Wednesday’s bottom. That gives the general market time to rally more and reach new high ground. But since the market did not become deeply oversold, I would be careful about being either long or short with any significant positions. A better risk/reward opportunity should present itself in the coming months which historically has been volatile. Keep your powder dry instead.
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“B
uying low-beta stocks is a common mistake investors make. Why would you ever want to own boring stocks? If the market goes down 40 percent for macro reasons, they’ll go down 20 percent. Wouldn’t you just rather own cash? And if the market goes up 50 percent, the boring stocks will go up only 10 percent. You have negatively asymmetric returns.”
Source: Schwager, Jack D. (2012-04-25). Hedge Fund Market Wizards. John Wiley and Sons. Kindle Edition.
MARKET BUY SIGNALS FOR JANUARY 8, 2012: The master strategy for winning at Wall Street Craps is to always play the game correctly by making only smart percentage bets at the optimal time period in the appropriate amounts relative to risk. Do these key tasks consistently as well as manage your overall bankroll wisely and “Know Thy Self” so that you can adjust your play according to your unique individual temperament.
- Sentiment Signals = moderately optimistic both long and short term
- Breadth Signals = breadth indicators are moderately overbought
- High Yield Bond Signals = topping out and headed for a potential stock market bottom
Comment: The stock market is at the top of its trading range. This past week’s action can be described as an “overshoot rally” (enthusiastic momentum) which can be a real fooler to investors. A tradable bottom looks to be more than a few weeks away in order to get the right amount of sentiment shift. But with the overall moderately overbought sentiment and technical readings, the stock market can still go in any direction. This looks like another week to sit on the sidelines letting the market set up for its next big move to participate in.
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“Winning big bets is the real key to investing success. The amateur typically dabbles in an assortment of small high risk long-shots in the effort to receive a big payout. On the other hand, the pro only makes a few big moves when there is low risk and good returns. Therefore, the secret for any savvy player is to wait for the market to set up for a major buy opportunity. That way, an investor can place an intelligent big bet on a well-diversified, deeply undervalued, dividend paying Blue Chip equity position with complete confidence.”
Steve Nakamoto ~ Author of Wall Street Craps
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This blog is dedicated to all the men and women who strive to be better investors so they can receive the benefits that come from ultimate financial freedom. And for many, this is something that they know deep inside is rightfully theirs.
May this blog provide you with the simple and powerful ideas to take you there.
I’m sure that your journey through this blog will stir up resistance from within. After all, you’ve been taught traditional methods that have been used by the masses for years. But on some level, you can sense that the investment environment is shifting and it’s time to adjust your approach.
This is a blog about trading and investing — savvy trading to take advantage of timely opportunities and wise investing for growth, income, and security. I’m not the only one to draw attention to this type of financial strategy — but I may be the first to introduce the valuable connection between “playing the market” and “playing casino craps.”
For those of you who are both ready and willing, this blog will reveal the ideas that you have been searching for in order to succeed in today’s hot and cold, high-risk/high-return stock market.
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“This is where we see people who pick up, not only the fact that they’re ready, but they’re really searching for the answer. A person could be searching in all outward appearance. They’re searching for an answer, but they’re not really searching. What they’re doing is searching and coming up against the wrong answer.”
David Neagle
The Hidden Secrets to Think And Grow Rich
