STOCK MARKET OBSERVATIONS FOR January 4, 2015: The stock market dropped for 7 straight sessions from early to mid December. It then turned around and rallied for a matching 7 sessions. If the current pattern holds, a near-term bottom could materialize around Wednesday January 7th. If the general market declines sharply into an “oversold” condition as we approach mid-week, it might be a good time to take new trading positions for a quick ride back up to test the old closing highs.
Key underlying market indicators show the following:
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Special Notes: The 7 key indicators listed above are all below the reading of 50 after being in “overbought” areas only a week ago. Having traversed across the oscillators in each separate indicator, we could easily reach “oversold” readings if we should have just 2 or 3 days of weakness at the beginning of this coming week.
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My advice for traders and investors is let the market set-up for the next dip or trading opportunity in the coming week. It could result in a sharp rally to retest the old highs set last Monday. I’d stay diversified for this projected rally in any of the following Exchange-Traded Funds: DDM, SSO, DIA, SPY, QQQ (Note: select only the ones that have oversold readings)
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STOCK MARKET OBSERVATIONS FOR December 21, 2014: The stock market formed another “V-Bottom” in a similar way that it did in October. It only took 7 trading days for the market to go from top-to-bottom. In the process, the market became oversold and responded with a matching rally to the upside. This kind of breathtaking performance is something to take note of as it characterizes the current age of computerized hedge fund trading. From now on, you definitely want to avoid being on the wrong side of any large bets involving volatile trading vehicles.
Key underlying market indicators show the following:
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Special Notes: Last Monday December 15th, marked the 14th day out of 15 in which the TRIN Index showed a bearish reading. This has never happened since I’ve been tracking the markets from 1974. While price movements have largely disguised this breadth indicator’s reading, it does demonstrate that the internal market forces have most likely corrected upside excesses. With the end of the year in sight, I’d be looking to buy some shares of diversified, non-leveraged broad-based Exchange-Traded Funds for participation in what could be a final speculative phase of the Bull Market lasting a few more years. Those ETFs would include the DIA, SPY, and QQQ (Note: Charles Schwab clients should consider building positions in SCHD and SCHB for larger, longer-term accounts)
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My advice for traders and investors is let the market set-up for the next dip or trading opportunity in order to establish additional long equity positions. Any short-term oversold readings would be prudent times to make simple additions to your positions. While there are several more clever ways to play the upside from here, it is most likely wiser to just keep it simple by timing the dips, purchasing the above mentioned ETFs, and building core equity positions. That way, you won’t waste any time and/or energy on “stock selection” instead of the more important aspect of strategic “money management.”
Categories: Stock Market Strategy Tags: AAPL, ETF, invest, investing, investing tips, investments, SPY, stock action, stock market, stock trading, stock trading tips, stocks, trading, trading tips, wall street
STOCK MARKET OBSERVATIONS FOR December 6, 2014: The stock market continues to push upwards to new closing highs in the Dow and S&P 500. But under the surface, many breadth indicators show that the rest of the market is not following through. This suggests that the upside is limited at this time until we can create an oversold condition. With a mild correction in the coming week, we could have a buy opportunity to take us into the New Year. But for now, the market is over-extended and not a place to buy.
Key underlying market indicators show the following:
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Personal Note: The 21-Day Weighed Equity-Only Put-Call Ratio flashed an intermediate “sell signal” on Monday December 1st. This indicator has proven to be a very reliable measure of the extremes in term of the duration of bullish and bearish sentiment. I would respect this signal as a clear warning to avoid new purchases here. This would also be a good time to take profits on overextended long positions. On the other hand, the TRIN Index readings have been negative for 8 out of the last 9 trading sessions. This indicates a disproportionate amount of selling (energy sector), but could mean that any correction in the general market will be short in duration.
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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!”
Categories: Stock Market Strategy Tags: AAPL, ETF, invest, investing, investing tips, investments, SPY, stock action, stock market, stock trading, stock trading tips, stocks, trading, trading tips, wall street
STOCK MARKET OBSERVATIONS FOR November 23, 2014: The stock market is approaching a point of exhaustion to the upside. But Thursday’s “buy” signals in the NYSE and Nasdaq breadth indicators show that there is still more room to advance. I’m looking for the market to retest Friday’s intraday highs in the coming week. But more importantly, I would be ready for a mid-December buying opportunity should the market to begin its correction right here.
Key underlying market indicators show the following:
Personal Note: I’m watching some other medium-term indicators (Equity-Only Put-Call Ratios, Investor Sentiment, and NYSE Summation Index) with great interest now. With this past Friday’s 10th successive new closing high in the Dow Jones Industrial Average, we are historically only 2 or 3 more new highs from the point of “buying” exhaustion. The top of this move may become a mirror-image of the most recent bottom – turning on a dime and never looking back. So be careful out there. In the wise words of Art Cashin, UBS Director of Floor Operations at the NYSE, “Stick with the drill: stay wary, alert and very, very nimble
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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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Categories: Stock Market Strategy Tags: AAPL, ETF, invest, investing, investing tips, investments, SPY, stock action, stock market, stock trading, stock trading tips, stocks, trading, trading tips, wall street