MARKET OBSERVATIONS FOR DECEMBER 22, 2012: The stock market appears to be setting up for an obvious top to coincide with an agreement to the “fiscal cliff” matter. Friday’s retreat was merely a pause before this last rally attempt. I would expect that rally to begin just after Christmas. But otherwise, the market is closer to an intermediate top than a bottom and should have most investors out of the market. Note: Beware of one more downside scare from the “fiscal cliff” matter. It could come during the middle of next week and could be very sharp and costly to overextended traders!!! So be careful.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a possible intermediate top in January. For nimble traders, there is a small bottom possibility on Monday morning if the market should go into a quiet retreat. If you should be tempted to play this short rally, be ready to sell whenever a resolution gets passed for the “fiscal cliff.” On the other hand, be on the lookout for one more sharp scare from a disappointment regarding the “fiscal cliff.” That could happen right before New Years Eve!
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MARKET OBSERVATIONS FOR DECEMBER 13, 2012: The stock market appears to be headed towards a bottom sometime after Christmas. With the “fiscal cliff” behind itself after a likely scare, I’d expect the month of January to be a good one to the upside. I wouldn’t get too clever with the advance and avoid “stock picking.” Go with broad-based ETFs for a smoother ride to a top in late January or early February. My choices are DIA, SSO, TLT, and QQQ.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a buying opportunity after a good scare from the “fiscal cliff” news. That should occur sometime during the last week of December. I’m also watching Apple (APPL) closely for a possible Money Flow Indicator buy signal which could be good for a quick 100 point upside ride. (The stock should be in the 400s at that time!) The Money Flow Indicator for Apple has picked the last 3 bottoms within a day when its reading is below 20. Right now, the indicator reading is 30.78.
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MARKET OBSERVATIONS FOR NOVEMBER 29, 2012: The stock market has rallied from its deeply oversold condition after the election. The threat of the “fiscal cliff” makes the near-term market one for swing trading purposes only. The market rallied Wednesday on good news concerning compromises for solving this so-called “fiscal cliff,” but it is more likely that a sharp retreat will occur during December to retest its mid-November low instead. With the market short-term overbought, be looking for weakness into the December 12-18 time period to take trading positions for a run into the New Year.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a short-term top in this general area. I would expect some sort of bottom to occur in mid-December with a possible “Santa Claus Rally” going into the New Year. With clear sell signals in the NYMO, NAMO & Stock vs. Bond Indicator, the upside looks limited with news being the only generator of strength in the market.
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MARKET OBSERVATIONS FOR OCTOBER 21, 2012: The stock market just experienced a sharp 1-2 day correction that was mainly centered around technology issues. The Dow Jones Industrial Average’s most recent closing high occurred on October 5th. The “One Month Rule” puts the next bottom no sooner than November 5th. In May of this year, the market experienced a 28 trading day decline. By the Law of Recency and the Law of Rhythm, the stock market could easily follow the same pattern and present an ideal buying opportunity within two weeks.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a chance to re-enter the market on more short-term weakness. The ultimate intermediate term bottom, though, could be another 10 trading days away.
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In regards to Apple (AAPL), the stock has had its first bounce from a slightly oversold condition. It has an RSI reading of 33, ULT reading of 38, and MFI reading of 35. The 200 day moving average is at 579. With a current price of 609, I would first begin accumulating the stock on any move under 600. It is likely to spike down to 579-580 on an intraday basis, but only the most nimble traders will be able to get this price. I’d look to any move under 590 as a “Golden Opportunity” to buy Apple for a 2013 run towards $950-$1000.
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MARKET OBSERVATIONS FOR OCTOBER 9, 2012: The stock market is stalling at the top of its trading range right now. Any new closing highs in the Dow Jones Industrial Average will surely not be confirmed by the other key indices. I would look for a further and deeper correction in order to get the necessary sentiment shift that is needed before going strongly higher. But overall, this is a time in which the risk vs. reward is not that enticing for stock market bulls. I will continue to look for side-bets to play lightly in other areas like gold, bonds, and emerging markets until the US stock market sets itself up for a more major move.
Key market indicators show the following:
For now, it would be prudent to move out of stocks and into cash. This high-level consolidation could have a lot of non-confirmations of strength on any new Dow Jones Industrial closing highs. A cluster of new closing highs unconfirmed by the Transportation Index and Nasdaq Index would probably set up the market for a tumble shortly afterwards.
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In regards to Apple (AAPL), the stock continues to correct amid a lot of negative news. My guess is that this is setting up a great buying opportunity either late in October or early in November. The price level will probably be under the 600 mark and near its 200 day moving average around 580. But if we receive confirming buy signals from the Ultimate Indicator and Money Flow Indicator, it would be time to start accumulating the stock either through the stock itself, the QQQ ETF, or XLK ETF. As of Monday’s close, the Ultimate Indicator reading is 33 and the Money Flow Indicator is 31. These readings are only a few days from the first bounce in price for AAPL.
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MARKET OBSERVATIONS FOR SEPTEMBER 30, 2012: The stock market is still going through a very shallow correction in terms of price. I expect the old highs to be tested soon. The stock market may need to back and fill for another week before taking off again for the upside. While an argument can be made that the direction should be down, the current oversold condition of the market in terms of breadth makes me think that there is more to this rally. So don’t get complacent!
Key market indicators show the following:
- McClellan Summation Index – has started trending downwards. It is a warning that market breadth is going south.
- Investor Sentiment – is now mid-ranged in the short-term and long-term. The market can go either way.
- NYSE Breadth Oscillator – Ultimate Indicator reading of 33 is slightly above its mid-week reading of being oversold. I would expect another move down to retest the correction lows before heading back up.
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 34 after being in oversold range for most of last week. This confirms the NYSE Breadth Oscillator and it is expected to head back up shortly…perhaps after one more attempt to the downside.
- Risk On/Risk Off Indicator -Ultimate Indicator reading of 38 after barely touching oversold reading. This also confirms the breadth indicators of an oversold market.
For now, the best advice is to wait for a retest of either last week’s lows or the previous week’s highs within days. The market could surprise a lot of people by continuing it rally against the backdrop of a classic “wall of worry.”
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In regards to Apple (AAPL), the stock has had its typical 50 point correction this past couple of weeks. It may go up from here to challenge its recent high at 705 or go down to its 200-day moving average around 570. Near-term the stock is close to its first oversold reading in the Full Stochastics Indicator. That oversold reading would be the first place to start accumulating this stock for a trade.
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MARKET OBSERVATIONS FOR SEPTEMBER 25, 2012: The stock market is going through a very shallow correction in terms of price. I would expect the market to begin a short rally any day now as part of institutional window dressing. That rally should take the Dow to a new closing high. But the early part of October could bring the long-awaited swing to the downside in order to counter-balance the excessive euphoria and complacency in the market. That move down could end up being steep and swift as well. So be prepared!
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a retest of last week’s highs. For nimble traders, a short-term buy signal could come around Wednesday with further weakness in the market. That buy signal would be for a very short ride up to new highs. Be ready to sell out quickly if the new high does not have strength in other areas to confirm.
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In regards to Apple (AAPL), the stock may be finally making a case for weakness. A Wall Street Craps trading tool called “The Apple/Google Trading Indicator” has just flashed a sell signal on Apple. This indicator shows the relative strength of Apple vs. Google/Android in terms of leadership. I use it as an early sign of strength or weakness in the world’s most popular company, Apple. And today, it says “sell.”
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MARKET OBSERVATIONS FOR SEPTEMBER 20, 2012: The stock market has blown above its trading range with a successful test of the old highs. And while this move seems to have been triggered by obvious good fundamental news, a wise investor would be smart to go with the trend which is up. There’s nothing worse then being too clever in your analysis so that you end up fighting against a strong bullish trend with risky short-selling strategies. Remember that a market doesn’t change direction until it reaches a clear point of exhaustion which is not necessarily the most extreme price.
The McClellan Summation Index is consolidating its gains as shown by the cluster of dots on the chart. It may be regrouping for another charge to the upside.
Other key market indicators show the following:
- Investor Sentiment – is neutral in the short-term and overbought in the long-term
- NYSE Breadth Oscillator – has a reading to 51 and may come down enough for a re-entry point in this rally.
- Nasdaq Breadth Oscillator has a reading of 49 and may signal a new entry point with a short-term decline
- Risk On/Risk Off Indicator – actually flashed an overbought sell signal on Friday.
- Dow Theory/Dow Transportation Average – this index has not confirmed the strength in the other major averages. This is a concern for me as it signals that a top is being formed here. A new DJIA high in the short-term does not look like it will be confirmed by the Dow Jones Transportation Average. That would be a classic sell signal according to Dow Theory principles.
For now, the best advice is to remain on the sidelines getting ready for a chance to reenter the market on short-term weakness. That signal will be triggered by oversold breadth signals from the NYMO and confirmed by the NAMO. That could come in the next week so be ready. But if the weakness in the Transportation Average persists, I’d sell out and move to cash on the next DJIA high in all trading and speculative funds.
Quick Update: The Transportation Index fell sharply while the DJIA made a new high on Thursday’s close. This is a classic non-confirmation according to the Dow Theory. Expect market weakness at any time now.
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MARKET OBSERVATIONS FOR SEPTEMBER 11, 2012: The stock market is at the top of its trading range right now. It has made three new rally highs in the last four trading sessions. The question is whether these new highs are confirmed or not confirmed by strength across the board. There’s a good chance that today’s closing high is the high for the year especially if tomorrow’s early strength does not follow through.
The McClellan Summation Index has broken out into a new uptrend after going sideways for several weeks. It gives the indication that the rally has more to go on the upside in both time and price. This prevents me from being more certain about an immediate correction.
Other key market indicators show the following:
- Investor Sentiment – is slightly negative over the long term but neutral near term
- NYSE Breadth Oscillator – the Ultimate Indicator reading is 68 which is only two points away from a sell signal. This would be triggered by one or two up-days.
- Nasdaq Breadth Oscillator – the Ultimate Indicator reading is 64 which is 6 points away from a sell signal.
- Risk On/Risk Off Indicator – the Ultimate Indicator reading is 67 and is 3 points away from a sell signal. This would be triggered by one to two up-days.
For now, it would be prudent to move out of stocks and into cash. For those seeking a chance to speculate, a small bet on the downside can be made if Wednesday’s initial up move is not confirmed by strength in the Nasdaq and S&P 500.
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In regards to Apple (AAPL), the stock was hit hard today and could be setting itself up for a classic cover story top tomorrow September 12 with the unveiling of its new iPhone. Weakness in AAPL and other technology issues are a signal of subsurface weakness in the market. This is one of the main reasons why I think today’s close may be the top of this rally.
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MARKET OBSERVATIONS FOR AUGUST 26, 2012: The stock market has gone through a short and shallow correction since its intraday highs early last week. If the correction is complete, then I expect those highs to be retested sometime this week. If a nominal new closing high (or series of exhaustion highs) occurs without underlying strength in key breadth and volume areas, this could mark the end of the summer rally. But a successful retest of the highs will add more fuel to the upside and prolong the current rally well into September and maybe beyond. Either scenario has a decent chance of playing out so stay flexible in your stock market decision-making.
Key market indicators show the following:
- McClellan Summation Index – is on the verge of turning down. This is warning us to beware of the market failing at the upcoming retest and then falling sharply afterwards.
- Investor Sentiment – is still close to the mid-range area with no definitive signals.
- NYSE Breadth Oscillator – Ultimate Indicator reading of 40 and needs to close below 30 to signal a buy.
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 44 and needs to close below 30 to signal a buy.
- Risk On/Risk Off Indicator -Ultimate Indicator reading of 48 and needs to close below 30 to signal a buy. It is now in a “risk-off” position which means to be on the side of safety (Treasury Bonds or cash).
- Volatility Indicator – had a recent sell warning and gives a hint of future weakness up ahead.
For now, the best advice is to remain on the sidelines getting ready for a retest of last week’s highs. A successful test will give the rally more time on the upside. But an unsuccessful test may lead to a sharp shakeout and increased volatility to the downside.
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In regards to Apple (AAPL), the stock may see its highs on Monday with the favorable news on its court ruling with Samsung. This is just the kind of “cover story” and obvious good news that tends to trap the amateurs into buying at the top! Any buying done here is at high risk! However, lightening up and getting out of long positions in AAPL would be considered prudent from a trader’s perspective.
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