STOCK MARKET STRATEGY FOR JULY 31, 2016: The stock market has been chewing up time and consolidating its gains from the Brexit lows. The internal indicators show that the general market is within reach of oversold readings. This presents an interesting situation where the price levels would appear to be too high, but the internal market shows that it’s getting set up for more upside. At the very least, I’d expect a retest of the previous highs and show us clues of either strength or weakness. Until then, the market can go in either direction with equal probabilities.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market is in a position to go in either direction. A good case can be made for each. I’d expect another quick test of the previous highs with the anticipation of weakness on that retest. This would set up a correction in mid-to-late August that most traders would want to avoid holding long positions. But at this time, there doesn’t appear to be good high-probability trading opportunities for either long or short major market indexed positions.
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STOCK MARKET STRATEGY FOR JULY 23, 2016: The stock market continues to push higher making new consecutive closing highs. The Dow ended up with 7 new highs in a row before backing off the last two days. A new closing high may signal the point of exhaustion if it is not confirmed by strength in other major indices. From there, we could start the decline to correct the advance from the February lows. This means that further strength should be sold into while buying needs to wait for the next oversold condition.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market appears to be near the point of exhaustion, but not in a way that a prudent trader would want to short. The most likely scenario is for the markets to chew up time by backing and filling in terms of price action. That type of market behavior would frustrate most traders and investors. So while we may not go up much from here, it doesn’t mean that we’re headed straight down either. I would advise stepping aside and waiting for the market to set itself up for the next big move in whichever direction it chooses.
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STOCK MARKET STRATEGY FOR JULY 17, 2016: The stock market has made 4 consecutive new closing highs in the Dow Jones Industrial Average. This leg of the rally is near the point of exhaustion meaning that a dip or correction is likely to occur soon. With the majority of indicators in neutral positions, the general market can still go in either direction. But it would be smarter to wait in order to take on new positions. The momentum is clearly on the bullish side so buying the dips is the optimal trading strategy.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market washed out all the pessimism on the Brexit panic which left the market with only one way to go and that was up. If that Brexit bottom was in fact a cyclical low, the market from a time perspective has a lot more time to advance. The next similar bottom is most likely several weeks away. While it may be tough to buy here, it would be smart to wait for a dip and add new positions then. Otherwise, you can wait for a better bottom in the fall even if that should occur at higher prices.
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STOCK MARKET STRATEGY FOR JULY 4, 2016: The stock market was an amazing roller coaster ride is past week. In the end, the internal indicators that I follow most closely are all a few days away from becoming overbought. This means that there is a little more room to the upside (100-300 DJIA points), but most likely it’s too late to buy. Instead, use near-term market strength to lighten up positions with a likelihood of a better low-risk entry point later in the summer or early fall.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market proved to be a tricky place to be last week after two straight down days were followed by 4 straight up days. With this kind of volatility, you certainly don’t want to be on the wrong side of a trade. Right now, we are not anywhere close to an entry point so one should hold their positions and look to sell overbought/overvalued positions. It will take some time in order to set up for another buying opportunity. For most swing traders, this is a time to sit out.
Note: Previous closing highs for the Dow Jones Industrial Average were 18312 in May 2015 and 18096 in April of this year. A final closing DJIA between those marks should probably mark the end of this rally from the February 2016 lows.
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STOCK MARKET STRATEGY FOR JUNE 27, 2016: The stock market had a sharp rally on Thursday followed by an even sharper decline on Friday. This left the internal indicators with neutral readings trending down. This means that the decline has more to go on the downside with a bounce expected soon. But overall, the market is more likely to decline for some more time in order to create the necessary shift in sentiment that is critical to forming an intermediate term bottom opportunity. But for now, anticipate central bank manipulation to create a wild ride on Wall Street.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market needs some more time in order to reach an oversold tradeable bottom. The soonest that could happen would be the week following the 4th of July holiday. Until then, it may be smarter to detach yourself from this market as a period of wild moves can be expected this coming week as Central Banks try to instill confidence in an unstable global market. I’d guess the July 11th plus or minus one day is about the time market rallies again. This rally could be sharp, tricky to catch, but highly profitable for those who can bet wisely.
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STOCK MARKET STRATEGY FOR JUNE 20, 2016: The stock market has reached oversold conditions in all of the internal indicators that are followed here. But be careful about committing too much to the long side at this time. Expect lots of volatility in the coming week with the news coming out of Britain. I would expect false moves in either direction with the end result being the formation of an overall topping formation. But for the nimble, a little more weakness could lead to another trip to challenge the previous highs.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market may produce a short-term bounce or a period of volatile up and down action. Expect the political news from Britain to provide the backdrop to some wild action over the next two weeks. As a trading strategy, I may go long on a move to the 200-day moving average of any of the major indices. It would only be as a short-term trade to play the bounce.
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STOCK MARKET STRATEGY FOR JUNE 5, 2016: The stock market hit its high for this rally since February on Wednesday just above the 18,000 mark of the DJIA. With the internal indicators all trending down, the major averages might reach an oversold conditions this coming week and produce a bounce. This bounce will tell whether there is enough strength to continue the rally or begin a longer, intermediate-term decline of significance. In any case, be prepared for scary volatility in both direction for the rest of this month.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market may have reached the end of this rally since February 11th this past Wednesday. As such, treat any bounces as chances to lighten up or get out of the market. We could get oversold reading this week which would produce a retest bounce. That bounce may be a wise time to take the money and run. This may be a significant intermediate change in the market’s direction.
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STOCK MARKET STRATEGY FOR JUNE 5, 2016: The stock market is coming off of an overbought condition with a decent chance of a buying opportunity soon. The internal indicators are trending down and with some more weakness could reach oversold conditions by the end of the week. So a time to buy into this market with good odds is possible if the market corrects some more. Otherwise, a move to challenge the old highs would more than likely run out of gas.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market could present a buying opportunity in the next week to 10 days if a correction were to continue. So be ready, keep your powder dry, and wait for a possible chance to ride the market up to new highs and beyond.
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STOCK MARKET STRATEGY FOR MAY 28, 2016: The stock market recovered 3 weeks worth of correction in just 2 days! But now it is reaching overbought levels which puts a lid on further advances for the time being. But after a short, mild, or sideways correction, a move to new highs is very possible. Perhaps it has more to do with time than price. By that I mean, that the market needs a week to correct its move and it doesn’t matter how many points it goes down. What matters is that a buying opportunity is likely during the second week of June and it would be wise to prepare for it.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market needs a breather. The upside is limited from here as the internal indicators are near or at overbought levels. But after some time spent going down or sideways, there might be a good entry point to ride this market to new highs. Be prepared for a buying opportunity during the second week of June.
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STOCK MARKET STRATEGY FOR MAY 22, 2016: The stock market bounced off of trendline and moving average support levels intraday on Thursday. This was from semi-oversold levels and could be the marking of a bottom. If so, I’d be looking for a zig-zag down in the coming week to provide another entry point for a short-term trade. But otherwise, a major intermediate bottom would require more prolonged emotional pain in the minds of investors and that doesn’t appear to be the case now.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The stock market may provide an entry point this week for a short-term trade. But a more sustained bottom will require more pain in terms of lower prices. That won’t happen until June at the very earliest. With the internal indicators in neutral positions, the market can go in either directions with the same probability. Stay on the sidelines for now.
Categories: Stock Market Strategy Tags: insurance, investing, investments, life insurance, money, QQQ, retirement, SPY, stock action, stock market, stock trading, stock trading tips, stocks, tony robbins, trading, trading tips, wall street