The stock market has turned sharply lower since its midweek highs of last week. There have been 3 strong moves down with only a temporary reprise on Monday. Momentum seems to be suggesting that buying this drop will be akin to “catching a falling knife.” However, the internal indicators are either approaching or are within the oversold range suggesting a bounce in the near term. The timing of that bounce could be either be this coming Friday or Monday for those interested in a quick high risk trade with tight stops to the upside.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator has a current reading of 39 but still needs a few more days before reaching the buying zone. But mostly, this indicator is showing that there has not been base building for any kind of sustained rally. Thus, it suggests that even a sharp bounce will be short-lived.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 26 which is one point away from “Extreme Fear.” The strength of this decline suggests to me that we may finally get a sub-10 reading in this indicator when the market finally bottoms. And if it does so, then there could be a low-risk rally worth participating in. But right now, I’d expect only short-term bounces with high risk upside trades.
Categories: Stock Market Strategy, Stock Market Timing Tags: Categories: Stock Market Strategy, investing, investing tips, investments, QQQ, retirement, SPY, stock action, stock market, Stock Market Strategy, stock market timing, Tags: APPL
The stock market has turned in a spectacular rally in the face of bad news climbing the proverbial “Wall of Worry.” With a few internal indicators getting in the “overbought” range, you could expect some downward or sideways action over the near term. But the intermediate term (next few months) is still anyone’s guess. The Elliott Wave followers are looking for continued higher prices, while other’s see a limit to the upside and plenty of economic reasons for it to go down. Personally, I am waiting for another good set up like we had two weeks ago in order to make a good bet with strong odds.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator had an “oversold” reading of 29 on March 12, just two days before the bottom. It had been in the oversold area for several weeks and the dots were “clumping” in a basing area. So when the market turned decisively to the upside these past two weeks, you could expect that move to be sustained. So buy the dips!
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 49. This means that the general market can go up or down with an even probability. So it is not an optimal time to go long or go short. Note: This indicator got an “Extreme Fear” reading of 17 in mid-March which at the time did not seem low enough to a climatic bottom. So instead we got an exhaustion to the downside with too much pessimism and negative news that created a decent trading bottom. Has this been a “Bear Market Rally” or the start of a new “Bull Market?” That’s the question for many.
Categories: Stock Market Strategy, Stock Market Timing Tags: APPL, investing, investing tips, investments, QQQ, retirement, SPY, stock action, stock market, Stock Market Strategy, stock market timing
