MARKET OBSERVATIONS FOR November 24, 2013: The stock market continues to push upwards without a hint of an extended correction. This past Friday marked the 10th consecutive new high of this current rally from its October 8th low. This pattern of new consecutive highs should continue until it reaches 13 which could occur in another week. About the only thing that could cause the change in momentum to the downside would be investor expectations of new Fed tapering. Otherwise, the lone prudent investment choice will continue to be the asset class of equities.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for short term buying opportunities in alternative oversold asset classes. Those would include real estate (IYR), long-term Treasury bonds (TLT), emerging markets (EEM), silver (SLV), and gold mining (GDX). I strongly discourage trading leveraged, inverse ETFs for downside action because of their tricky nature, limited history, and deceiving internal indicators. But for those who insist on dabbling in this dangerous area with small bets for short holding periods, my two choices would be (TZA) and (SDS) based on liquidity and volatility.
MARKET OBSERVATIONS FOR November 17, 2013: The stock market continues to push upwards without a hint of an extended correction. Last Friday marked the 7th consecutive new closing high in the Dow with still more room to go on the upside. When a series of new highs occurs around the 13th time, it often marks the point of upside exhaustion….but we are not there yet. Other underlying indicators (shown below with links) also imply that the stock market still can move upwards for a little longer (4-7 market days) without a correction.
Key underlying market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for the market to set itself up for its next big move. The balance of indicators have neutral readings despite the upwards movement in prices. While many chartists are jumping at the bit to call the next top, the internal readings of the market still allow for more room or time to the upside. But that being said, a market player should be ready for one good correction in December in order to set up the customary Santa Claus Rally. Be on the lookout for a tricky, but opportunity-filled stock market during Thanksgiving Week.
MARKET OBSERVATIONS FOR November 9, 2013: The stock market’s wild swings on Thursday and Friday suggest that we are entering a period of high volatility. This makes the game make trickier to play and being wrong can end up putting your emotions to the test. While Wednesday’s top looked like a classic non-confirmation, the strong rally on Friday ends the most recent simple price patterns of the market and puts the future in doubt. As the indicators will show, the overall market is a mixed bag of both buy and sell signals.
Key market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for clearer signals on the market. While the oscillators are close to buy signals, the price appears to be too high for a low-risk entry point. But a series of weak new closing highs in the Dow Jones Industrial Average could signal a sharp sell-off in the coming week.