Wall Street Craps – 2012 Global Ebook Finance Award-Winner

STOCK MARKET OBSERVATIONS FOR November 17, 2014: The stock market is churning near these price levels as money is nervously flowing in and out of the market. Those who bought this last bottom may be eager to cash out after this spectacular run, while others who missed it are trying to get in. With a mixed bag of internal indicators, expect the market to remain in this holding pattern with another possible run to the upside in order to entice the public into buying at the top. Keep in mind that the next cyclical bottom is due in mid-December just in time for tax-loss selling in Big Oil stocks that influence the widely-watched DJIA.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 21 (oversold)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 33 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 76 (overbought)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 72 (overbought)
• S&P 100 % Above 200 Day Moving Average – Ultimate Indicator – 73 (overbought)
• S&P Bullish Percent Indicator – Ultimate Indicator – 91 (overbought)
• Risk On/Risk Off Indicator – Ultimate Indicator – 46 (neutral)
• Volatility Indicator – Ultimate Indicator – 45 (neutral)

Other key market gauges worth following right now include:

• Equity-Only Put-Call Ratios – topping out and headed lower towards the next bottom
• Investor Sentiment – mid-range (neutral)
• NYSE Summation Index – topping out & headed down towards it next cycle low

Personal Note: The timing of Tony Robbins’ new bestseller, Money – Master the Game may coincide with a classic top in the market. As a former trainer for Mr. Robbins, I have tremendous respect for his ability to learn and master anything that he puts his heart and mind into. I’m just saying that his publisher’s timing of this work is when the book market is ripe for this topic. Hence, the uninformed public is ready to invest in equities (low-cost Equity Index Funds) at a highly popular but less-than-optimal trading time.

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My advice for traders and investors is let the market set-up for a near term bottom in mid-December in order to establish new long positions. Don’t get antsy and remember that the “casino is always open!”

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STOCK MARKET OBSERVATIONS FOR November 2, 2014: The stock market has fulfilled its “V-Shaped Bottom” with last week’s historic run to the upside. However, the new closing high on Friday is still unconfirmed by a number of major indicators. This coupled with several “overbought” readings in key underlying indicators would suggest that the upside may be limited right now. It’s probably too late to buy into this rally without experiencing some sort of sideways correction soon, but be ready to buy any dips for a resumption of this long bull market.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 71 (overbought)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 76 (overbought)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 86 (overbought)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 91 (overbought)
• S&P 100 % Above 200 Day Moving Average – Ultimate Indicator – 82 (overbought)
• S&P Bullish Percent Indicator – Ultimate Indicator – 83 (overbought)
• Risk On/Risk Off Indicator – Ultimate Indicator – 59 (neutral)

Personal Note: A good student of the market needs to update their strategy over time in order to play the game more effectively. The reason is that the stock market game is now more volatile than ever before. The new players in the game are quicker, smarter, better equipped, more competitive, and forever looking for an “edge” in order to make money in this market.

As an individual do-it-yourself investor, the new strategy for today’s market is to make smaller bets while buying the dips and selling the rips – and thus, holding your trading positions for a shorter time. This applies to “playing” the stock market for fast money with less risk.

As far as “asset allocation” and the vehicles for “security assets” and “growth funds,” the best funds for long-term money are in the higher-yielding broad-based low-fee Exchange-Traded Funds offered by Charles Schwab and Vanguard. The annual fees charged by Exchange-Traded Funds when compounded over time can amount to significant cuts in your overall returns. This is especially true when it comes to large positions that are held for a long time – as in “Security Assets” that they are described in my book, Wall Street Craps: How to Play Today’s Hot & Cold Stock Market For Fast Money With Less Risk.

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My advice for traders and investors is let the market set-up for a dip in the near term in order to establish new long positions. Rather than a simple bounce in a topping pattern, this rally appears to me to be a new leg of a revived bull market. Otherwise, it might be less risky to simply wait for the seasonal correction during mid-December in order to establish or add to long positions. Don’t get antsy and remember that the “casino is always open!”

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STOCK MARKET OBSERVATIONS FOR October 19, 2014: The stock market experienced a sharp decline and a possible capitulation on Wednesday of last week. Will this turn out to be another “V-Shaped Bottom” or just a bounce? That’s a big question that no one really knows the answer to and can only speculate. With the majority of indicators below showing “neutral” readings by the close of Friday, the stock market is in a position of going in either direction.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 57 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 59 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 37 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 39 (neutral)
• S&P 100 % Above 200 Day Moving Average – Ultimate Indicator – 19 (oversold)
• Risk On/Risk Off Indicator – Ultimate Indicator – 59 (neutral)

Personal Note: I expected the NYSE Breadth Oscillator and Nasdaq Breadth Oscillators to have reached “oversold” readings during this last decline, but they never got close in terms of their respective Ultimate Oscillators. So my bet is on the market to retest last Wednesday’s bottom in the coming week after a sharp decline on Monday and Tuesday. If that decline looks like it’s going to be a successful retest, I’d be willing to put a few small “place bets” on some broad-based ETFs while trying to catch that proverbial “falling knife.”

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My advice for traders and investors is let the market set-up for a retest of last Wednesday’s intraday low. If that retest comes with glaring technical divergences and “obvious bad news”, we could experience a sharp rally worth trading in broad-based Exchange-Traded Funds like DIA, QQQ, IWM, SPY, and maybe even SSO.

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STOCK MARKET OBSERVATIONS FOR August 2, 2014: The stock market experienced a broad correction last week that took most oscillators to deep “oversold” readings. We could be just one day away from a good bounce right here. But at the same time, there is the danger of going into a “flash crash” sometime in the next couple of weeks. While a small amount can be risked for a sharp short-term bounce, I am more inclined to let the market run its course to the downside with a better bounce off the 200-day moving averages of the major indices. That would require 200 more points to the downside in the Dow Jones Industrial Average.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 15 (oversold)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 32 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 9 (oversold)
• NYSE % Above 150 Day Moving Average – Ultimate Indicator – 9 (oversold)
• S&P Bullish Percent Indicator – Ultimate Indicator – 62 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 20 (oversold)

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My advice for traders and investors is be on the lookout for a “flash crash” scenario in the next couple of weeks. We may get a golden opportunity to buy soon if you’re out of the market now and in cash. But the market could experience sharp swings in either direction. My guess is that August 2014 will be the month of an important trading bottom.

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STOCK MARKET OBSERVATIONS FOR May 4, 2014: The stock market as measured by the Dow Jones Industrial Average hit new all-time highs. But those highs were largely unconfirmed by the majority of other indices. At present, the internal indicators listed below are showing “neutral” readings across the board. This means that the market has an equal chance of going in either direction. Remain patient and wait for the market to set itself up for its next major move. The old Wall Street adage, “Sell in May and go away,” may indeed prove to be the correct course of action.

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 51 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 47 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 52 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 42 (neutral)
• S&P 100% Above 200 Day Moving Average – Ultimate Indicator – 44 (neutral)
• Stock vs. Bond Indicator – Ultimate Indicator – 57 (neutral)
• Risk On/Risk Off Indicator – Ultimate Indicator – 40 (neutral)
• S&P Bullish Percent Indicator – Ultimate Indicator – 73 (overbought)
• Volatility Indicator – Ultimate Indicator – 62 (neutral)

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My advice for traders and investors is to be largely in cash while the market is in this indecision pattern. There are currently no stocks or Exchange-Traded Funds that are in the “oversold” area. Along with the “neutral” readings on all of the internal indicators, this is most likely a time to sit and wait for the next major move to take shape.

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STOCK MARKET OBSERVATIONS FOR March 16, 2014: The stock market declined last week to a point where it is moderately oversold. By early this coming week, it could be ready to bounce upwards. In the recent past, oversold readings in the NYSE and Nasdaq Breadth Oscillators have been the best indicators for timing tradeable short-term bottoms. That may be the case again if the market were to rally right back up to challenge its previous highs. However, I am inclined to wait another week and let the sentiment turn more negative in order to cause a “panic-selling” bottom.

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 25 (Oversold)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 25 (Oversold)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 34 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 24 (Oversold)
• S&P 500 Bullish Percent Index – Ultimate Indicator – 56 (neutral)
• Volatility Indicator – Ultimate Indicator – 25 (Oversold)

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My advice for traders and investors is to be ready to buy into the market for a quick ride back up to challenge the previous market highs. That exact moment may be hard to pin down so it would be wise to make even money bets on last hour declines or early morning weakness. This is done with the understanding that the bottom could be very tricky to trade with accuracy. My best guess is that a tradeable bottom is 2 to 8 trading days away. But I’d warn everyone to expect volatility in the next couple weeks as the market over-reacts to both positive and negative external news events.

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STOCK MARKET OBSERVATIONS FOR March 2, 2014: Last week, the stock market reached the upper end of its trading range. In fact, many people would argue that the market has broken out to new highs. But while several stocks and indices have advanced to new highs, many traditional sectors such as Industrial, Transportation, Retail, and Financial have lagged badly in this current rally. Unless strength rotates into these weaker core areas, I wouldn’t be surprised to see the DJIA make a new token closing high and then begin an immediate correction of major proportions. 

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 54 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 56 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 81 (Overbought)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 79 (Overbought)
• S&P 100% Above 200 Day Moving Average – Ultimate Indicator – 62 (neutral)
• Stock vs. Bond Indicator – Ultimate Indicator – 57 (neutral)
• S&P 500 Bullish Percent Index – Ultimate Indicator – 80 (Overbought)
• Volatility Indicator – Ultimate Indicator – 54 (neutral)

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My advice for traders and investors for this week is this: move to the sidelines and let the market correct into an oversold condition. Then add to long positions in strong sectors for a final ride to the top. The majority of internal indicators are mixed as of today. That means that the market has an equal chance to go in either direction. But the only prudent low-risk strategy to capitalize on this market is to buy on the next oversold condition. That may take another week or so to set up properly.

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STOCK MARKET OBSERVATIONS FOR February 17, 2014: The stock market quickly reached overbought levels by the end of last week. While this rally has been impressive by its straight-up action, it could still stall out in this current price range. The lagging performance of the Dow Jones Transportation Average is setting up a classic Dow Theory Sell Signal should the DJIA reach new highs while the Transports clearly don’t. It’s probably too early to short the market (I don’t recommend this as a wise strategy) but it certainly isn’t a time to go long the broad market.

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 84 (Overbought)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 83 (Overbought)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 83 (Overbought)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 78 (Overbought)
• S&P 100% Above 200 Day Moving Average – Ultimate Indicator – 74 (Overbought)
• Stock vs. Bond Indicator – Ultimate Indicator – 75 (Overbought)
• S&P 500 Bullish Percent Index – Ultimate Indicator – 71 (Overbought)

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My advice for traders and investors for this week is this: look for a chance to sell on any strength during the coming week. The majority of internal indicators are in overbought positions now. The optimal time to sell is when the majority of indicators have started to come down after reaching their highest points. That means that  some additional rallying could occur over the short-term. But selling into strength after an extended rally is usually a good strategy. If a small correction starts this week, then you may have another chance to hop on-board the long side in well-chosen individual stocks. Remember that “overbought” does not necessarily mean “sell.” It means “do not buy now.”

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STOCK MARKET OBSERVATIONS FOR February 9, 2014: The stock market reached oversold levels last week and is now poised to rally further. While a retest of the lows could occur at the beginning of next week, it is certainly possible for the market to simply hesitate at this level to digest the recent gains. While the majority of indicators are in neutral positions, a little bit of weakness early this coming week may be your only opportunity to hop on board for what could be a big rally worth the risk.

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 60 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 57 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 49 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 39 (neutral)
• S&P 100% Above 200 Day Moving Average – Ultimate Indicator – 49 (neutral)
• Stock vs. Bond Indicator – Ultimate Indicator – 52 (neutral)
• S&P 500 Bullish Percent Index – Ultimate Indicator – 18 (BUY)

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My advice for traders and investors for this week is this: look for a chance to buy on any weakness in the beginning of the coming week. The majority of internal indicators are in neutral positions now. The optimal time to buy was last Wednesday so getting in on the absolute low doesn’t look likely in this next week. Things do change quickly is this current market environment so stay alert!

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STOCK MARKET OBSERVATIONS FOR February 2, 2014: The stock market has now reached oversold levels that are consistent with recent trading lows. However, the danger is that the closing high on December 31, 2013 may have been a major bear market top with much more to go on the downside. While many investors and traders are looking for a relief rally to occur, it may be smarter to wait for a retest of previously established lows. That scenario puts us at least a week or two away from a tradeable bottom at the earliest. In my opinion, this decline still needs more time and “bad news” in order for the sentiment to shift significantly towards the bearish side.

Key underlying market indicators show the following

• NYSE Breadth Oscillator – Ultimate Indicator – 36 (near buy)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 36 (near buy)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 31 (near buy)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 28 (Buy)
• S&P 100% Above 200 Day Moving Average – Ultimate Indicator – 27 (Buy)
• Stock vs. Bond Indicator – Ultimate Indicator – 36 (neutral)
• S&P 500 Bullish Percent Index – Ultimate Indicator – 8 (BUY)

Another way to look at the general market is to see if there are matching oversold “Full Stochastics” readings on the major ETF broad-based averages. You will notice that all major intermediate bottoms start after oversold reading. Current readings show that the market is oversold enough in terms of price.

• DIA – Full Stochastic – 10 (Buy) on lagging red line
• SPY – Full Stochastic – 17 (Buy) on lagging red line
• QQQ – Full Stochastic – 19 (Buy) on lagging red line
• IWM – Full Stochastic – 18 (Buy) on lagging red line

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My advice for traders and investors is exactly the same as last week’s:  remain on the sidelines and let the market set itself up for a possible bottom in the intermediate term. The majority of internal indicators have moved into buy readings but need more time in the misery zone. Expect a short-term bounce early next week and then a retest 5 to 10 days after those previous lows. The time to take a chance on the long side is when weakness occurs amid obvious bad news on the retest of previous lows. That could come in mid-February so be ready to act!

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Note: Stock that have moved into their buy range according to the Money Flow Indicator include the following: General Electric, Citigroup, Starbucks, and Wal-Mart.