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WALL STREET CRAPS MARKET OBSERVATIONS FOR SEPTEMBER 30, 2012

September 30th, 2012 Comments off

MARKET OBSERVATIONS FOR SEPTEMBER 30, 2012: The stock market is still going through a very shallow correction in terms of price. I expect the old highs to be tested soon. The stock market may need to back and fill for another week before taking off again for the upside. While an argument can be made that the direction should be down, the current oversold condition of the market in terms of breadth makes me think that there is more to this rally. So don’t get complacent!

Key market indicators show the following:

  • McClellan Summation Index – has started trending downwards. It is a warning that market breadth is going south.
  • Investor Sentiment – is now mid-ranged in the short-term and long-term. The market can go either way.
  • NYSE Breadth Oscillator – Ultimate Indicator reading of 33 is slightly above its mid-week reading of being oversold. I would expect another move down to retest the correction lows before heading back up.
  • Nasdaq Breadth Oscillator – Ultimate Indicator reading of 34 after being in oversold range for most of last week. This confirms the NYSE Breadth Oscillator and it is expected to head back up shortly…perhaps after one more attempt to the downside.
  • Risk On/Risk Off Indicator -Ultimate Indicator reading of 38 after barely touching oversold reading. This also confirms the breadth indicators of an oversold market.

For now, the best advice is to wait for a retest of either last week’s lows or the previous week’s highs within days. The market could surprise a lot of people by continuing it rally against the backdrop of a classic “wall of worry.”

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In regards to Apple (AAPL), the stock has had its typical 50 point correction this past couple of weeks. It may go up from here to challenge its recent high at 705 or go down to its 200-day moving average around 570. Near-term the stock is close to its first oversold reading in the Full Stochastics Indicator. That oversold reading would be the first place to start accumulating this stock for a trade.

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WALL STREET CRAPS MARKET OBSERVATIONS FOR SEPTEMBER 25, 2012

September 25th, 2012 Comments off

MARKET OBSERVATIONS FOR SEPTEMBER 25, 2012: The stock market is going through a very shallow correction in terms of price. I would expect the market to begin a short rally any day now as part of institutional window dressing. That rally should take the Dow to a new closing high. But the early part of October could bring the long-awaited swing to the downside in order to counter-balance the excessive euphoria and complacency in the market. That move down could end up being steep and swift as well. So be prepared!

Key market indicators show the following:

For now, the best advice is to remain on the sidelines getting ready for a retest of last week’s highs. For nimble traders, a short-term buy signal could come around Wednesday with further weakness in the market. That buy signal would be for a very short ride up to new highs. Be ready to sell out quickly if the new high does not have strength in other areas to confirm.

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In regards to Apple (AAPL), the stock may be finally making a case for weakness. A Wall Street Craps trading tool called “The Apple/Google Trading Indicator” has just flashed a sell signal on Apple. This indicator shows the relative strength of Apple vs. Google/Android in terms of leadership. I use it as an early sign of strength or weakness in the world’s most popular company, Apple. And today, it says “sell.”

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WALL STREET CRAPS MARKET OBSERVATIONS FOR SEPTEMBER 20, 2012

September 20th, 2012 Comments off

MARKET OBSERVATIONS FOR SEPTEMBER 20, 2012: The stock market has blown above its trading range with a successful test of the old highs. And while this move seems to have been triggered by obvious good fundamental news, a wise investor would be smart to go with the trend which is up. There’s nothing worse then being too clever in your analysis so that you end up fighting against a strong bullish trend with risky short-selling strategies. Remember that a market doesn’t change direction until it reaches a clear point of exhaustion which is not necessarily the most extreme price.

The McClellan Summation Index is consolidating its gains as shown by the cluster of dots on the chart. It may be regrouping for another charge to the upside.

Other key market indicators show the following:

  • Investor Sentiment – is neutral in the short-term and overbought in the long-term
  • NYSE Breadth Oscillator – has a reading to 51 and may come down enough for a re-entry point in this rally.
  • Nasdaq Breadth Oscillator has a reading of 49 and may signal a new entry point with a short-term decline
  • Risk On/Risk Off Indicator – actually flashed an overbought sell signal on Friday.
  • Dow Theory/Dow Transportation Average – this index has not confirmed the strength in the other major averages. This is a concern for me as it signals that a top is being formed here. A new DJIA high in the short-term does not look like it will be confirmed by the Dow Jones Transportation Average. That would be a classic sell signal according to Dow Theory principles.

For now, the best advice is to remain on the sidelines getting ready for a chance to reenter the market on short-term weakness. That signal will be triggered by oversold breadth signals from the NYMO and confirmed by the NAMO. That could come in the next week so be ready. But if the weakness in the Transportation Average persists, I’d sell out and move to cash on the next DJIA high in all trading and speculative funds.

Quick Update: The Transportation Index fell sharply while the DJIA made a new high on Thursday’s close. This is a classic non-confirmation according to the Dow Theory. Expect market weakness at any time now.

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WALL STREET CRAPS MARKET OBSERVATIONS FOR SEPTEMBER 11, 2012

September 12th, 2012 Comments off

MARKET OBSERVATIONS FOR SEPTEMBER 11, 2012: The stock market is at the top of its trading range right now. It has made three new rally highs in the last four trading sessions. The question is whether these new highs are confirmed or not confirmed by strength across the board. There’s a good chance that today’s closing high is the high for the year especially if tomorrow’s early strength does not follow through.

The McClellan Summation Index has broken out into a new uptrend after going sideways for several weeks. It gives the indication that the rally has more to go on the upside in both time and price. This prevents me from being more certain about an immediate correction.

Other key market indicators show the following:

  • Investor Sentiment – is slightly negative over the long term but neutral near term
  • NYSE Breadth Oscillator – the Ultimate Indicator reading is 68 which is only two points away from a sell signal. This would be triggered by one or two up-days.
  • Nasdaq Breadth Oscillator – the Ultimate Indicator reading is 64 which is 6 points away from a sell signal.
  • Risk On/Risk Off Indicator – the Ultimate Indicator reading is 67 and is 3 points away from a sell signal. This would be triggered by one to two up-days.

For now, it would be prudent to move out of stocks and into cash. For those seeking a chance to speculate, a small bet on the downside can be made if Wednesday’s initial up move is not confirmed by strength in the Nasdaq and S&P 500.

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In regards to Apple (AAPL), the stock was hit hard today and could be setting itself up for a classic cover story top tomorrow September 12 with the unveiling of its new iPhone. Weakness in AAPL and other technology issues are a signal of subsurface weakness in the market. This is one of the main reasons why I think today’s close may be the top of this rally.

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WALL STREET CRAPS MARKET OBSERVATIONS FOR SEPTEMBER 4, 2012

September 4th, 2012 Comments off

MARKET OBSERVATIONS FOR SEPTEMBER 4, 2012: The stock market still has the possibility of retesting its high around August 17. It is not far from there in terms of price. Friday’s rally helped ease a short-term oversold condition in the market. This is one of those times when the market can go in either direction without a clear case for either.

Key market indicators show the following:

For now, the best advice is to remain on the sidelines getting ready for a retest of the August 17th highs. A successful test will give the rally more time on the upside. But an unsuccessful test may lead to a sharp shakeout and increased volatility to the downside. Otherwise, the market could down from here and needs more selling in order to generate a decent oversold condition to push the odds in favor of buying.

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In regards to Apple (AAPL), the “Money Flow Indicator” and the “Ultimate Indicator” show that the stock has topped out for now. It will take some time for the stock to return back to its 200 day-moving average just above today’s readout of 544. By the time that price of Apple’s stock hits the 200-day moving average, the moving average should be closer to 560-570 which is about 100 points lower than it is today.

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