WALL STREET CRAPS MARKET OBSERVATIONS FOR NOVEMBER 29, 2012
MARKET OBSERVATIONS FOR NOVEMBER 29, 2012: The stock market has rallied from its deeply oversold condition after the election. The threat of the “fiscal cliff” makes the near-term market one for swing trading purposes only. The market rallied Wednesday on good news concerning compromises for solving this so-called “fiscal cliff,” but it is more likely that a sharp retreat will occur during December to retest its mid-November low instead. With the market short-term overbought, be looking for weakness into the December 12-18 time period to take trading positions for a run into the New Year.
Key market indicators show the following:
- Investor Sentiment – is mid-ranged in the short-term and long-term giving no signals
- NYSE Breadth Oscillator – Ultimate Indicator reading of 73 which is a sell signal.
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 80 which is a sell signal.
- Stock vs. Bond Indicator – Ultimate Indicator reading of 70 which is a sell signal.
- Risk On/Risk Off Indicator -Ultimate Indicator reading of 60 with more room to the upside before generating a sell signal.
- Put-Call Ratio – Shows an intermediate buy signal at the mid-November bottom
- Fear & Greed Index – Shows a neutral mid-range position
For now, the best advice is to remain on the sidelines getting ready for a short-term top in this general area. I would expect some sort of bottom to occur in mid-December with a possible “Santa Claus Rally” going into the New Year. With clear sell signals in the NYMO, NAMO & Stock vs. Bond Indicator, the upside looks limited with news being the only generator of strength in the market.
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