Wall Street Craps – 2012 Global Ebook Finance Award-Winner

STOCK MARKET STRATEGY FOR MAY 15, 2016: The stock market bounced from an oversold condition mid-week and then reversed to the downside by Friday. With the internal indicators reset to neutral positions, the market can experience moves in either direction. This sets up a volatile market and one that is likely to have some scary moments to the downside. While a retest of previous highs in still a possibility, I would stay out until a better bottom appears as a result of higher investor fear in the market.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 45 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 47 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 44 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 45 (neutral)
• Volatility Indicator – Ultimate Indicator – 52 (neutral)

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THE BOTTOM LINE: The stock market could go in either direction. My guess is that the market needs more fear in order to sustain a rally worth betting on. So expect bad news and increased volatility in the near term in order to create the ideal buying situation.

This intermediate-term indicator shows that the rally from February 11th is over. The next destination is a buy signal marked by the red “B” which should ideally arrive when the x-axis is above 150. In terms of time, that would project to the July time period if you were to measure the space between the two most recent buy signals. Based on this, it would be prudent to sit out the action in the stock market until more severe pain causes a better buying opportunity. With the goal of buying low and selling high, it is not a time to buy now. (Source: www.optionstrategist.com)

STOCK MARKET STRATEGY FOR MAY 8, 2016: The stock market reached oversold breadth conditions on Thursday’s close. The early down move on Friday presented an opportunity to enter the market for a possible ride back to challenge the previous highs. The market’s character for the past several years is to form V-shaped bottoms on corrections so don’t be surprised if it goes straight up from here. Traders – look for any weakness on Monday as one more chance to buy this market for a short-term rally.

Key underlying short-term market indicators show the following:

• NYSE McClellan Oscillator – Ultimate Indicator – 29 (oversold)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 31 (neutral)
• Nasdaq McClellan Oscillator – Ultimate Indicator – 24 (oversold)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 27 oversold)
• Volatility Indicator – Ultimate Indicator – 41 (neutral)

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THE BOTTOM LINE: The stock market may go up from here based on oversold breadth indicators. This will probably be the last rally in this market and be the proverbial “Sell in May” high for the intermediate term. The best place to be on final rallies is usually the Dow Jones Industrial Average (DIA). And as legendary market analyst, Joseph Granville, used to point out, “The last rally is usually lead by the oils.”

This reliable intermediate-term indicator suggests that an important sell signal has just been triggered for the general market. While tops tend to be broader and trickier than bottoms, it still implies that this is not a good time to be long equities or to initiate new purchases. But with breadth indicators at oversold readings on Friday, we could have one small rally from here before resuming a further decline. The buy signal (red B on the chart) is projected to be around July-August based on an equal time interval. (Source: www.optionstrategist.com)