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:
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:
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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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Categories: Stock Market Strategy Tags: investing, investments, stock action, stock investing, stock market, stock market trading tips, stock timing, stock trading, stock trading tips, trading, trading tips, wall street
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
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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
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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
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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 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
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.
Categories: Stock Market Strategy Tags: Citigroup, General Electric, investing, investments, Starbucks, stock action, stock market, stock tips, trading tips, Wal-Mart, wall street
STOCK MARKET OBSERVATIONS FOR January 6, 2014: The stock market may have reached its internal high on New Years Eve. A new closing high 5 to 10 trading days after that date could very easily be the final external high for this major rally. But with most professional traders sitting out last week, the stock market can still do almost anything in either direction this coming week. Expect at least one more new high in January to occur before any kind of significant decline begins.
Key underlying market indicators show the following:
My advice for traders and investors is to remain of the sidelines and let the market set itself up for the next major move. The internal indicators have mostly moved back into neutral readings after the declines on Thursday and Friday. The current list of oversold Blue Chips stocks and Exchange-Trade Funds that are near the lower range of their Money Flow Indicator and should be monitored on further weakness include: Apple , IEF, and MSFT. With such a short list of buying candidates, it implies that the market needs to correct further before moving to the upside.
MARKET OBSERVATIONS FOR December 29, 2013: The stock market rallied to 6 consecutive new highs before its slight drop on Friday. This certainly qualifies as confirmed strength but also a possible sign of an internal top. I would expect the strength to continue for a few more days with a good chance of a correction starting at the beginning of the New Year. This market is now overbought, over-loved, and overextended as the indicators below are signaling. This isn’t a time for buying, it’s a time for selling.
Key underlying market indicators show the following:
My advice for traders and investors is to remain of the sidelines and let the market set itself up for the next major move. The current list of oversold Blue Chips stocks and Exchange-Trade Funds that are near the lower range of their Money Flow Indicator and could be bought on further weakness include: Ford, TLT & FXI. This short list is another indication that very few issues are in good buying ranges. I noticed that bellwether stock, Apple, may have made a final double top on “obvious good news” marking the end of its rally.
Categories: Apple Trading Strategies, Stock Market Strategy Tags: APPL, apple, investing, investing tips, investments, stock action, stock market, stock tips, stock trading, trading tips, wall street
MARKET OBSERVATIONS FOR December 22, 2013: The stock market rallied right from the start of last week and didn’t give traders a chance to buy into any weakness. As of Friday December 20th, the Dow Jones Industrial Average has hit 3 consecutive new closing highs. The first week of 2014 may turn out to be a top of some significance, so traders and investor beware! But until we get a key interday reversal to the downside and a weak retest of the highs, my bet is on the market to continue higher.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and let the market set itself up for the next major move. Oversold Blue Chips stocks and Exchange-Trade Funds that are near the lower range of their Money Flow Indicator and could be bought on weakness include: Starbucks, Microsoft, Verizon, Japan iShares, and China iShares.
MARKET OBSERVATIONS FOR December 14, 2013: The stock market declined this past week after its failed attempt at a new high following the previous Friday’s strong rally. This sets the market up for a short-term bottom this coming week. My best guess is that this bottom will come between Tuesday and Thursday. I would suggest buying into weakness on any of these days with small pilot positions in anticipation of a year-end rally. In order to do this, you’ll have to ignore any bad news.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for a short term buying opportunity in the coming week. This bottom would set up the traditional “Santa Claus Rally” into the New Year. Oversold stocks would include IBM, Verizon, AT&T, and Newmont Mining.
Categories: Stock Market Strategy Tags: investing, investments, QQQ, SPY, stock market, stock tips, stock trading, stock trading tips, stocks, Tesla, wall street