STOCK MARKET OBSERVATIONS FOR March 23, 2014: The stock market rallied sharply in the beginning of last week which prevented a true “oversold” condition from developing. With weakness towards the end of the week, the stock market is currently showing “neutral” readings across the board. This means that the market has an equal chance of going in either direction. So be patient and wait for the market to set itself up for its next important move.
Key underlying market indicators show the following
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My advice for traders and investors is to be largely in cash while the market is in this indecision pattern. There are currently no stocks or Exchange-Traded Funds that are in the “oversold” area. Along with the “neutral” readings on all of the internal indicators, this is most likely a time to sit and wait for the next major move to take shape.
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STOCK MARKET OBSERVATIONS FOR March 16, 2014: The stock market declined last week to a point where it is moderately oversold. By early this coming week, it could be ready to bounce upwards. In the recent past, oversold readings in the NYSE and Nasdaq Breadth Oscillators have been the best indicators for timing tradeable short-term bottoms. That may be the case again if the market were to rally right back up to challenge its previous highs. However, I am inclined to wait another week and let the sentiment turn more negative in order to cause a “panic-selling” bottom.
Key underlying market indicators show the following
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My advice for traders and investors is to be ready to buy into the market for a quick ride back up to challenge the previous market highs. That exact moment may be hard to pin down so it would be wise to make even money bets on last hour declines or early morning weakness. This is done with the understanding that the bottom could be very tricky to trade with accuracy. My best guess is that a tradeable bottom is 2 to 8 trading days away. But I’d warn everyone to expect volatility in the next couple weeks as the market over-reacts to both positive and negative external news events.
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STOCK MARKET OBSERVATIONS FOR March 9, 2014: The stock market moved to only 120 points below its previous closing high recorded on December 31, 2013. Meanwhile, the Dow Jones Transportation Average moved to new highs this past week. This sets up a likely confirmation according to the classic interpretation of the Dow Theory. But this could become a trap for unsophisticated investors and throw off the majority by being a top instead. So be careful and avoid making new purchases here.
Key underlying market indicators show the following
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My advice for traders and investors is to remain of the sidelines and let the market set itself up for either a possible top on a new closing new in the DJIA or a short-term trading bottom on an oversold condition. With the majority of internal indicators in “neutral” positions, the stock market can go either way with equal odds.
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STOCK MARKET OBSERVATIONS FOR March 2, 2014: Last week, the stock market reached the upper end of its trading range. In fact, many people would argue that the market has broken out to new highs. But while several stocks and indices have advanced to new highs, many traditional sectors such as Industrial, Transportation, Retail, and Financial have lagged badly in this current rally. Unless strength rotates into these weaker core areas, I wouldn’t be surprised to see the DJIA make a new token closing high and then begin an immediate correction of major proportions.
Key underlying market indicators show the following
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My advice for traders and investors for this week is this: move to the sidelines and let the market correct into an oversold condition. Then add to long positions in strong sectors for a final ride to the top. The majority of internal indicators are mixed as of today. That means that the market has an equal chance to go in either direction. But the only prudent low-risk strategy to capitalize on this market is to buy on the next oversold condition. That may take another week or so to set up properly.
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