STOCK MARKET STRATEGY FOR JANUARY 31, 2016: The stock market had a successful test of the previous bottom resulting in a rally on Thursday and Friday. But with the internal indicators at or near “overbought” levels, it would not be surprising to see a short-term top this week and another leg down into mid-February. So it may be wise to lighten up on long positions into strength over the short-term with the intention of buying back on the next oversold bottom later in the month.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: A short-term top may occur this coming week with the next low and buying opportunity coming in the following week to 10 days. When the next bottom comes, it would probably be smart to avoid stock-picking and just buy a mix of broad-based Exchange-Traded Funds such as DIA, SPY, and QQQ. It seems like getting too clever with stock choices is not worth complicating your trading strategy or risking any negative reactions to earnings news associated with individual stocks.
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STOCK MARKET STRATEGY FOR JANUARY 24, 2016: The stock market had an intraday panic low on Wednesday followed by a sharp rally the past two days. From here, the market should either decline to a higher low around this coming Wednesday or continue higher into an overbought condition around the same time. Continue to be cautious as the market can make big swings in either direction probably coinciding with good news from the FED or bad news centered around oil or China.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: Be ready to add to long positions on a decline to retest the previous lows. At the same time, be ready to light up your long positions in the event the rally continues into an overbought condition. This is a time of high volatility which will naturally cause emotionally-charged, news-driven investors to buy high and sell low. The wisest thing to do may be to sell the rallies and move to cash until things settle down (a successful retest of the previous lows). You’ll just have to control your fear of missing out in the meantime.
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STOCK MARKET STRATEGY FOR JANUARY 17, 2016: The stock market experienced another severe down move this past week putting it in position to challenge last August’s lows. Those who were looking for a short-term bounce to trade were hurt badly by quick reversals and large gaps down. Look for a test of Dow 15700 and a bounce from that level. Or it might take one more failed rally and plunge before the masses finally throw in the towel – marking the bottom of this cycle.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: Be careful here. The climate right now is ripe for a crash to happen. While sentiment is largely negative and all short-term breadth indicators are severely oversold, there is still room to the downside in terms of price. If you’re going to bet on a quick bounce, look to trade on weakness below Dow 15666. But overall, it feels like the bearish sentiment needs more time to ferment into genuine “blood on the street” for public investors. One more downwards zig-zag may do the trick.
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STOCK MARKET STRATEGY FOR JANUARY 10, 2016: The stock market’s strong down move last week puts it in position to rally this coming week. Keep in mind that the markets are severely oversold and that bottoms are supposed to be tricky to buy into. For many people, a short-term trade here just isn’t worth the risk and stress of trying to time this bounce perfectly. A quieter, safer bottom is probably a few weeks away, but for nimble traders a sharp short-term reversal may occur in the next 1 or 2 sessions.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: With all 5 internal indicators at historically low readings, you can expect a short, sharp bounce early in the coming week. But this kind of action may only serve as a pause in the decline before a safer bottom is formed towards the end of the month closer to last August’s lows. If you want to play for a quick rally, consider buying the QQQ, DIA , SSO and/or SPY Exchange-Traded Funds on weakness. Don’t expect to buy the exact bottom with the knowing that timewise, a rally is close at hand. Otherwise, stay in cash and wait for a better opportunity to buy later.
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STOCK MARKET STRATEGY FOR JANUARY 3, 2016: The stock market displayed a lot of volatility during the last week of 2015. That sets up the market for even more volatility during the first week of 2016. Expect the market to fool the public by making them fearful right when it’s time to buy. With the key internal indicators trending down, a good buying opportunity by the end of the coming week is a realistic possibility. But in order for that to happen, the market must continue to go down from here.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: With all 5 internal indicators that I follow with neutral reading that are trending down, I would expect a good trading bottom to occur towards the end of next week. Since the first week of the new year is often tricky, don’t be surprised if the general stock market closes down sharply on Friday with a gap up the following Monday. That way, the public will miss out on the bottom and end up chasing prices later. So this may turn out to be a case when it may pay to be early in taking your positions even if it requires you to go against conventional wisdom by trying to “catch a falling knife.”
Categories: Stock Market Strategy Tags: investing, investing tips, investments, money, QQQ, SPY, stock action, stock market, stock trading, stock trading tips, stocks, tony robbins, trading, trading tips, wall street