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WALL STREET CRAPS STOCK MARKET OBSERVATIONS FOR FEBRUARY 17,2014

February 16th, 2014 Comments off

craps front coverSTOCK MARKET OBSERVATIONS FOR February 17, 2014: The stock market quickly reached overbought levels by the end of last week. While this rally has been impressive by its straight-up action, it could still stall out in this current price range. The lagging performance of the Dow Jones Transportation Average is setting up a classic Dow Theory Sell Signal should the DJIA reach new highs while the Transports clearly don’t. It’s probably too early to short the market (I don’t recommend this as a wise strategy) but it certainly isn’t a time to go long the broad market.

Key underlying market indicators show the following

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My advice for traders and investors for this week is this: look for a chance to sell on any strength during the coming week. The majority of internal indicators are in overbought positions now. The optimal time to sell is when the majority of indicators have started to come down after reaching their highest points. That means that¬† some additional rallying could occur over the short-term. But selling into strength after an extended rally is usually a good strategy. If a small correction starts this week, then you may have another chance to hop on-board the long side in well-chosen individual stocks. Remember that “overbought” does not necessarily mean “sell.” It means “do not buy now.”

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WALL STREET CRAPS STOCK MARKET OBSERVATIONS FOR FEBRUARY 9, 2014

February 9th, 2014 Comments off

craps front coverSTOCK MARKET OBSERVATIONS FOR February 9, 2014: The stock market reached oversold levels last week and is now poised to rally further. While a retest of the lows could occur at the beginning of next week, it is certainly possible for the market to simply hesitate at this level to digest the recent gains. While the majority of indicators are in neutral positions, a little bit of weakness early this coming week may be your only opportunity to hop on board for what could be a big rally worth the risk.

Key underlying market indicators show the following

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My advice for traders and investors for this week is this: look for a chance to buy on any weakness in the beginning of the coming week. The majority of internal indicators are in neutral positions now. The optimal time to buy was last Wednesday so getting in on the absolute low doesn’t look likely in this next week. Things do change quickly is this current market environment so stay alert!

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WALL STREET CRAPS STOCK MARKET OBSERVATIONS FOR FEBRUARY 2, 2014

February 2nd, 2014 Comments off

craps front coverSTOCK MARKET OBSERVATIONS FOR February 2, 2014: The stock market has now reached oversold levels that are consistent with recent trading lows. However, the danger is that the closing high on December 31, 2013 may have been a major bear market top with much more to go on the downside. While many investors and traders are looking for a relief rally to occur, it may be smarter to wait for a retest of previously established lows. That scenario puts us at least a week or two away from a tradeable bottom at the earliest. In my opinion, this decline still needs more time and “bad news” in order for the sentiment to shift significantly towards the bearish side.

Key underlying market indicators show the following

Another way to look at the general market is to see if there are matching oversold “Full Stochastics” readings on the major ETF broad-based averages. You will notice that all major intermediate bottoms start after oversold reading. Current readings show that the market is oversold enough in terms of price.

  • DIA – Full Stochastic – 10 (Buy) on lagging red line
  • SPY – Full Stochastic – 17 (Buy) on lagging red line
  • QQQ – Full Stochastic – 19 (Buy) on lagging red line
  • IWM – Full Stochastic – 18 (Buy) on lagging red line

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My advice for traders and investors is exactly the same as last week’s:¬† remain on the sidelines and let the market set itself up for a possible bottom in the intermediate term. The majority of internal indicators have moved into buy readings but need more time in the misery zone. Expect a short-term bounce early next week and then a retest 5 to 10 days after those previous lows. The time to take a chance on the long side is when weakness occurs amid obvious bad news on the retest of previous lows. That could come in mid-February so be ready to act!

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Note: Stock that have moved into their buy range according to the Money Flow Indicator include the following: General Electric, Citigroup, Starbucks, and Wal-Mart.