Wall Street Craps – 2012 Global Ebook Finance Award-Winner

The tide has turned according to this venerable intermediate-term indicator. And while short-term bounces can occur whenever the market gets slightly oversold, this chart shows us that the really good buying opportunities occur when the red “B” is closer to the 150 level on the left axis. This level does not appear to be possible for at least another month of market activity. The general pessimism in the market is not yet at the level of fear that is needed in order to buy for the longer term. (Source: www.optionstrategist.com)

STOCK MARKET STRATEGY FOR MAY 15, 2016: The stock market bounced from an oversold condition mid-week and then reversed to the downside by Friday. With the internal indicators reset to neutral positions, the market can experience moves in either direction. This sets up a volatile market and one that is likely to have some scary moments to the downside. While a retest of previous highs in still a possibility, I would stay out until a better bottom appears as a result of higher investor fear in the market.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 45 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 47 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 44 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 45 (neutral)
• Volatility Indicator – Ultimate Indicator – 52 (neutral)

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THE BOTTOM LINE: The stock market could go in either direction. My guess is that the market needs more fear in order to sustain a rally worth betting on. So expect bad news and increased volatility in the near term in order to create the ideal buying situation.

This intermediate-term indicator shows that the rally from February 11th is over. The next destination is a buy signal marked by the red “B” which should ideally arrive when the x-axis is above 150. In terms of time, that would project to the July time period if you were to measure the space between the two most recent buy signals. Based on this, it would be prudent to sit out the action in the stock market until more severe pain causes a better buying opportunity. With the goal of buying low and selling high, it is not a time to buy now. (Source: www.optionstrategist.com)

STOCK MARKET STRATEGY FOR MAY 8, 2016: The stock market reached oversold breadth conditions on Thursday’s close. The early down move on Friday presented an opportunity to enter the market for a possible ride back to challenge the previous highs. The market’s character for the past several years is to form V-shaped bottoms on corrections so don’t be surprised if it goes straight up from here. Traders – look for any weakness on Monday as one more chance to buy this market for a short-term rally.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 29 (oversold)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 31 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 24 (oversold)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 27 oversold)
• Volatility Indicator – Ultimate Indicator – 41 (neutral)

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THE BOTTOM LINE: The stock market may go up from here based on oversold breadth indicators. This will probably be the last rally in this market and be the proverbial “Sell in May” high for the intermediate term. The best place to be on final rallies is usually the Dow Jones Industrial Average (DIA). And as legendary market analyst, Joseph Granville, used to point out, “The last rally is usually lead by the oils.”

This reliable intermediate-term indicator suggests that an important sell signal has just been triggered for the general market. While tops tend to be broader and trickier than bottoms, it still implies that this is not a good time to be long equities or to initiate new purchases. But with breadth indicators at oversold readings on Friday, we could have one small rally from here before resuming a further decline. The buy signal (red B on the chart) is projected to be around July-August based on an equal time interval. (Source: www.optionstrategist.com)

STOCK MARKET STRATEGY FOR APRIL 24, 2016: The stock market peaked on Wednesday and had a mild decline from that point. I would expect a retest of that high around mid-week with a new closing high for this move. That could mark the end of upside momentum and a start of a more substantial correction. With most of the internal indicators neutral/trending down, the market can go in either way. The action right now is simply setting up the next opportunity whichever direction that may be.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 48 (neutral/trending down)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 48 (neutral/trending down)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 47 (neutral/trending down)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 47 (neutral/trending down)
• Volatility Indicator – Ultimate Indicator – 55 (neutral)

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THE BOTTOM LINE: The stock market is in “no-man’s land” right now. It is setting up for the next intermediate term move. We may surprise some by moving up from here in order to get a more distinct “sell signal.” That would come when a new closing high is accompanied by non-confirmations of strength across the board. Or we could decline into late April with the final top in May.

STOCK MARKET STRATEGY FOR APRIL 17, 2016: The stock market continued its rally after a short-term semi-oversold condition early in the week. With all the breadth indicators at neutral readings, the market can go in either direction from here. If we should correct from here, I’d be looking to buy the dip. Until we have a key reversal day that starts sharply higher and closes sharply lower, I’d expect the market to continue drifting higher while climbing the proverbial “wall of worry.”

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 56 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 57 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 54 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 56 (neutral)
• Volatility Indicator – Ultimate Indicator – 55 (neutral)

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THE BOTTOM LINE: The stock market may correct from here and present a buying opportunity either at an oversold condition or at the 200-Day Moving Average some 70 points lower in the S&P 500. In any case, such a buying opportunity would be at least a week to 10 days away at a minimum. On any strength, I’d look to lightened up on trading positions as this rally is getting a little “long in the tooth” and due for a breather. My hunch is that this coming week will see a top in the market.

STOCK MARKET STRATEGY FOR APRIL 9, 2016: The stock market had a mild correction during this past week with several internal indicators moving into range of a short-term buy/oversold signal. I would expect a bottom to arrive this coming week with a retest of the April 1st high later in the month. But with neutral breadth readings across the board, the stock market can surprise us and swing in either direction. Look towards any retest as an opportunity to lighten up on overextended positions.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 35 (neutral-near oversold)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 39 (neutral-near oversold)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 34 (neutral-near oversold)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 38 (neutral-near oversold)
• Volatility Indicator – Ultimate Indicator – 43 (neutral)

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THE BOTTOM LINE: Be ready for a short-term bottom and a quick move back to the previous DJIA high of 17792 on April 1st. That may be a good opportunity to lighten up on your positions with the anticipation of a more extended correction and bottom in May.

STOCK MARKET STRATEGY FOR APRIL 3, 2016: The stock market continues to push upwards climbing the proverbial “Wall of Worry.” I would expect the All-Time Highs to be tested and then retested soon. The month of April should be a time where the markets does all of this correcting, but watch out for May as it could be a time of real decline. But for now, continue to lighten up positions as the general market approached the old highs.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 38 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 44 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 43 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 49 (neutral)
• Volatility Indicator – Ultimate Indicator – 65 (neutral)

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THE BOTTOM LINE: The stock market should be testing the All-Time Highs in the next week to 3 weeks. Right now the indicators are at their lower end and allow for more upside to continue. This is not a time to be short the market, but instead an opportunity to lightened up on overextended positions.

STOCK MARKET STRATEGY FOR MARCH 7, 2016: The stock market continued its rally to a point where it is clearly overbought. This should put a cap on any further advance for the time being. The general market should either correct downwards or sideways for at least a week to 10 days. Short-term, steep rallies on low volume such as we’ve witnessed lately are more characteristic of bear market, rather than bull market rallies. So it would be prudent to take some chips off of the table now and buy any oversold dips should they appear later in the month.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 80 (overbought)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 80 overbought)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 73 (overbought)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 74 (overbought)
• Volatility Indicator – Ultimate Indicator – 76 (overbought)

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THE BOTTOM LINE: The stock market has had a good run of late, but it’s not the optimal time to buy right now. Instead, lighten up on weaker or over-extended positions in order to raise cash for the next buying opportunity which could occur around March 17-20th. I believe that the February 11th bottom was an important one. It was a new closing low which was below both the Jan 20, 2016 and August 2015 bottoms – but was not confirmed by other internal indicators. In my book and the late Joe Granville’s as well, this represents a significant bottom. That means that all dips should be bought from now on.