MARKET OBSERVATIONS FOR November 9, 2013: The stock market’s wild swings on Thursday and Friday suggest that we are entering a period of high volatility. This makes the game make trickier to play and being wrong can end up putting your emotions to the test. While Wednesday’s top looked like a classic non-confirmation, the strong rally on Friday ends the most recent simple price patterns of the market and puts the future in doubt. As the indicators will show, the overall market is a mixed bag of both buy and sell signals.
Key market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for clearer signals on the market. While the oscillators are close to buy signals, the price appears to be too high for a low-risk entry point. But a series of weak new closing highs in the Dow Jones Industrial Average could signal a sharp sell-off in the coming week.
MARKET OBSERVATIONS FOR October 13, 2013: The stock market’s rallies and declines over the past few months have ranged between 14 and 17 trading days. The October 8th bottom comes exactly 14 days after the most recent closing high in the Dow Industrial Average. The current rhythm of the market suggests that the next top should come between 14 and 17 days after the October 8th bottom. Since we are only 3-4 days into the rally phase, there is still lots of time for the stock market to continue its current uptrend.
Key market indicators show the following:
For now, my advice for traders is to look for weakness early next week in which to take short-term “rental” positions in the QQQ, IWM, SPY, and DIA Exchange-Traded Funds. Expect to hold these positions into the end of the month. Otherwise, be ready to lighten up as the market’s rally runs out of time.
MARKET OBSERVATIONS FOR September 13, 2013: The stock market has rallied to a point where it is overbought and about to form the right shoulder of a “head and shoulders top.” While it is still entirely possible for the market to continue its upward march towards new highs, it also could be near its end in terms of time. After a 17 session decline, the current rally will match that time by the end of next week. Since I never recommend going short or buying inverse ETFs, this is a time to be out of the market and waiting for a deeply oversold condition to establish new long positions in the weeks ahead.
Key market indicators show the following:
For now, my advice for traders and investors to get out of the market and wait for a better risk/reward environment. The September/October period is usually a time of increased volatility which could produce a deeply oversold condition in which to take new positions.
MARKET OBSERVATIONS FOR August 6, 2013: The stock market has continued its march upwards despite any rest for over a month. Expect this winning streak to continue until we see some obvious non-confirmations to the downside. For now, it looks like any near-term correction could create a quick oversold condition for another ride to new highs. The last phase of this advance should see strength in the DOW and QQQ Indexes while breadth weakens. This has not happened yet.
Key market indicators show the following:
For now, my advice for traders is to buy into any dip that corresponds to an oversold reading. This current rally has its doubters and will continue to “climb a wall of worry” until the bears capitulate. The most recent highs appear to have been strongly confirmed which gives the market more weeks to the upside.
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The indicators for Apple (AAPL) read as follows:
- Current price: 469.45
- Relative Strength Indicator = 74 overbought
- Ultimate Indicator = 69 almost overbought
- Money Flow Indicator = 65 neutral
- 200-Day Moving Average = 465
The stock of Apple is finally broke decisively above its 50-Day Bear Market Moving Average. That means that this moving average no longer applies to the nature of the stock. A new “Bull Market Moving Average” will eventually form as the stock of Apple shifts to its new phase. But at this time, it cannot be determined what time frame the new moving average will get in sync with. But for now, a smart trader will be looking for a correction in the stock in order to ride this new phase upwards. That signal will probably come from an oversold condition in the Money Flow Indicator or Relative Strength Indicator.
MARKET OBSERVATIONS FOR July 10, 2013: The stock market continues to climb the proverbial “wall of worry” on the hope of reassuring news from the Fed. This current rally is in the position to challenge the market’s previous highs and may even surpass those May readings. But overall, this appears to be a time to wait for a pullback before it embarks on its challenge of the old highs.
Key market indicators show the following:
For now, my advice is to buy into any dip that is triggered by obvious bad news. Active broad-based exchange-traded funds to consider buying would include DIA, SPY, QQQ, SSO. The NYSE Summation Index shows that the market should be strong for several more weeks.
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The indicators for Apple (AAPL) read as follows:
- Relative Strength Indicator = 50 neutral
- Ultimate Indicator = 58 and heading higher
- Money Flow Indicator = 29 with lots of room to move to the upside
- 50-Day Bear Market Moving Average = 427
The stock of Apple is in a position to go in either direction but seems to have an upwards bias. I was hoping for a retest of the old lows but got surprised by a Wall Street analyst’s “strong buy” recommendation that moved the stock up sharply for several days. It has since retraced some of those gains, but may be ready to rally again shortly.
MARKET OBSERVATIONS FOR June 12, 2013: The stock market reached a short-term bottom last Thursday morning. That bottom is about to be tested one week later which coincides with tomorrow. With extreme readings in the NYSE Breadth Oscillator over the past week, it is entirely likely that tomorrow will present a buying opportunity before the next leg up to new highs.
Key market indicators show the following:
For now, my advice is to buy into weakness in oversold stocks or indexes with high positive correlations. Exchange-traded funds to buy would include DIA, SPY, QQQ, SSO. Oversold stocks to consider would include QCOM, BRCM, IYR.
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The indicators for Apple (AAPL) read as follows:
- Relative Strength Indicator = 42
- Ultimate Indicator = 38
- Money Flow Indicator = 44
This means that the stock of Apple is mid-ranged and can go in either direction. There isn’t any pressure on the stock to go in one direction verses the other. I’d personally stay away from this issue until one or more of its indicators show that it is oversold again.
MARKET OBSERVATIONS FOR MARCH 17, 2013: The stock market hit consecutive new highs for 10 trading sessions. That remarkable string was broken on Friday with the market’s modest decline. While the general market is certainly overbought by many measures, it is not as over-loved as you might expect. Since investor sentiment is still largely neutral, the market may correct in the short-term and then present investors with another chance to buy for the next leg up. That appears to be a less risky approach to making money than trying to short this relentlessly bullish market.
Key market indicators show the following:
Many key breadth indicators are showing neutral readings even after this persistent advance. If the market continues to march upwards in the coming week, it may present an opportunity to buy the Long-Term Treasury Bond ETF (TLT). This is one of the best ways to participate with less risk in a downward market as opposed to going short or buying inverse Exchange-Traded Funds.
If the market heads down next week, it may set up a short term buying opportunity for a continuation of this advancing market. So be ready to move in either direction as the market reveals its next opportunity for traders and investors.
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MARKET OBSERVATIONS FOR MARCH 9, 2013: The stock market hit consecutive new highs during the last 6 trading sessions. This is a classic example of letting a powerful move run its course and resisting the urge to short. The upside momentum has probably peaked at this time, but after a short correction, I’d expect at least one more overshoot rally to a new closing Dow high. In order for that scenario to pan out, we first need a sharp and broad correction lasting a week to 10 days. Then one final narrow advance up to a new high which is not confirmed by breadth and other broad-based averages.
Key market indicators show the following:
With many key breadth indicators at or near sell signal levels, I would be looking for a correction to begin on Monday. This will be the first leg down with most likely a retest of Friday’s highs in one to two weeks. Since the “Wall Street Craps Method” discourages both leverage and shorting the market, the best thing to do is remain on the sidelines and let the market correct. Then look for either a short-term upside opportunity in the general market or a trade in the Long Treasury Bond ETF (TLT).
Remember that the sentiment indicators show that market participants are still neutral. This is not a sign of a major top. So a correction here would give nimble traders and investors a chance to ride this market up when the rally resumes.
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MARKET OBSERVATIONS FOR FEBRUARY 25, 2013: The stock market hit a new high last Tuesday before embarking on a sharp decline. Friday’s advance recovered most of the previous two-day decline. The market is in the unique position to either test last Tuesday high or test last Thursday low. Don’t be surprised if the market follows a common pattern of heading down towards the end of the month (and rallying in the beginning).
Key market indicators show the following:
With many key breadth indicators near buy signal levels, I would welcome a return to last Thursday’s low with a chance to go long towards an intermediate top in March.
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