STOCK MARKET OBSERVATIONS FOR January 21, 2014: The stock market appears to be on the last leg up of its long bullish trend. The rally of the past week has been narrow in breadth which suggests that the next closing high for the Dow Jones Industrial Average will be its last. Look for strength during this coming week as an opportunity to sell or even go short as a speculation. The overly bullish sentiment of the past few months has set the market up for a possible fall of some significance. If anything, this is not a time to add to new long equity positions.
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 a possible top in the near term. The majority of internal indicators have moved into neutral readings while the Dow looks like it wants to challenge the old highs. This is usually a sign of an important top and something that investors want to avoid being long equities. Instead, this is one of those times where being in cash is probably the wisest place to be for now.
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Note: The behavior of a big Dow stock like General Electric since the last day of 2013 suggests that it needs to correct back to its 200-day moving average.
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.
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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.
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MARKET OBSERVATIONS FOR December 7, 2013: The stock market had a mild 5-day correction after hitting its 13th consecutive new high in the DJIA. Yesterday (Friday Dec. 6th), the market snapped back with a rally that puts it into position to retest the previous week’s highs. That retest will occur early next week and could produce a new closing high. My hunch is that this retest will fail and clear the way to a more substantial correction shortly afterwards.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for short term buying opportunities in alternative oversold asset classes. Those would include real estate (IYR), long-term Treasury bonds (TLT), emerging markets (EEM), silver (SLV), and gold mining (GDX). Other stocks that could experience tax-loss selling in December and may be worth picking up for longer-term holdings include: IBM, CSCO, and AT&T.
MARKET OBSERVATIONS FOR November 24, 2013: The stock market continues to push upwards without a hint of an extended correction. This past Friday marked the 10th consecutive new high of this current rally from its October 8th low. This pattern of new consecutive highs should continue until it reaches 13 which could occur in another week. About the only thing that could cause the change in momentum to the downside would be investor expectations of new Fed tapering. Otherwise, the lone prudent investment choice will continue to be the asset class of equities.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for short term buying opportunities in alternative oversold asset classes. Those would include real estate (IYR), long-term Treasury bonds (TLT), emerging markets (EEM), silver (SLV), and gold mining (GDX). I strongly discourage trading leveraged, inverse ETFs for downside action because of their tricky nature, limited history, and deceiving internal indicators. But for those who insist on dabbling in this dangerous area with small bets for short holding periods, my two choices would be (TZA) and (SDS) based on liquidity and volatility.
MARKET OBSERVATIONS FOR November 17, 2013: The stock market continues to push upwards without a hint of an extended correction. Last Friday marked the 7th consecutive new closing high in the Dow with still more room to go on the upside. When a series of new highs occurs around the 13th time, it often marks the point of upside exhaustion….but we are not there yet. Other underlying indicators (shown below with links) also imply that the stock market still can move upwards for a little longer (4-7 market days) without a correction.
Key underlying market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for the market to set itself up for its next big move. The balance of indicators have neutral readings despite the upwards movement in prices. While many chartists are jumping at the bit to call the next top, the internal readings of the market still allow for more room or time to the upside. But that being said, a market player should be ready for one good correction in December in order to set up the customary Santa Claus Rally. Be on the lookout for a tricky, but opportunity-filled stock market during Thanksgiving Week.
MARKET OBSERVATIONS FOR November 9, 2013: The stock market’s wild swings on Thursday and Friday suggest that we are entering a period of high volatility. This makes the game make trickier to play and being wrong can end up putting your emotions to the test. While Wednesday’s top looked like a classic non-confirmation, the strong rally on Friday ends the most recent simple price patterns of the market and puts the future in doubt. As the indicators will show, the overall market is a mixed bag of both buy and sell signals.
Key market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for clearer signals on the market. While the oscillators are close to buy signals, the price appears to be too high for a low-risk entry point. But a series of weak new closing highs in the Dow Jones Industrial Average could signal a sharp sell-off in the coming week.
MARKET OBSERVATIONS FOR October 27, 2013: The stock market has been marching upwards for the past 13 trading sessions. During this coming week, the time of this rally will have matched the previous downleg and thus, be ripe for a pullback. I would not be surprised to see a new closing high in the Dow Jones Industrial Average sometime next week which would mark the high of this phase of the rally. But current readings of key breadth indicators show that the general market has already begun its correction. That could mean that the correction will be sharp in terms of price, but short in duration.
Key market indicators show the following:
For now, my advice for traders is to be on the sidelines as the stock market peaks this coming week. Since I don’t see a good way to participate on the downside, I’d prefer to wait until the market becomes oversold and then play the next rally. Retests of highs and lows has not been characteristic of this market. Instead, the stock market goes up until it runs out of time and then retreats into a similar reversal. Playing the extremes in breadth oscillators seems like the best way to go….. especially to the upside. And in this market, playing the downside has been a study in frustration and capital loss.