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WALL STREET CRAPS MARKET OBSERVATIONS FOR JANUARY 21, 2012

January 22nd, 2012

MARKET OBSERVATIONS FOR JANUARY 21, 2012: The master strategy for winning at Wall Street Craps is to always play the game correctly by making only smart percentage bets at the optimal time period in the appropriate amounts relative to risk. Do these key tasks consistently as well as manage your overall bankroll wisely and “Know Thy Self” so that you can adjust your play according to your unique individual temperament.

  • Sentiment Signals = solidly optimistic both long and short term – still room for one more pop to the upside – signaling that we are very close to some sort of top
  • Breadth Signals = breadth indicators are moderately overbought – overdue for a swing to the downside but can still go in any direction short term
  • High Yield Bond Signals = topping out and due for a stock market move down

Comment: The stock market is at the top of its trading range. There were 4 consecutive new highs recorded last week making the market vulnerable to an “exhaustion high” early next week. This is definitely not a time to be buying as the risk is deemed as being too high. The market may not be ready to go down right now but it’s upside is limited. It’s debatable whether the market will hover at these levels or go immediately into a correction. We are likely to see a “buy on dips” mentality if we do go down from here – making the first correction a short one. That would lead to a retest of the highs in February.

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“Markets top not because of smart sellers it’s just an absence of buying. And conversely at markets bottom, markets bottom not because of smart buyers it’s an absence of selling. So that’s our whole thesis and that’s our approach to analysis.”

Tom DeMark ~ Investment Advisor and Market Timing Expert

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