Wall Street Craps – 2012 Global Ebook Finance Award-Winner

STOCK MARKET OBSERVATIONS FOR March 15, 2015: The stock market reached an oversold condition in the majority of indicators on Wednesday March 11th. In the following days, the market traced out a zig-zag pattern that often precedes an advance. Barring any extreme bad news, the market favors a return to its previous highs. Most of the indicators listed below are coming off of their lows and are expected to return to the top of their oscillators – implying a retest of the old highs.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 39 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 41 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 45 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 48 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 28 (Oversold)
• Volatility Indicator – Ultimate Indicator – 39 (neutral)

***********

ADVICE TO TRADERS AND INVESTORS: The stock market could spend a few more days retesting last Wednesday’s bottom before embarking on a retest of the old highs. Traders may consider taking new positions on any weakness in the beginning of the week with the intention of holding until it meets resistance near the old highs. A target date for the next high is around March 23rd. After that date, we could have another moderate decline on a failed retest of the old highs. Therefore, this next rally may serve more as a time to lighten up on long positions for longer term investors.

STOCKS NEAR OR AT THE BOTTOM: CVX, INTC, IBM, MSFT, MRK, PEP

EXCHANGE-TRADED FUNDS NEAR OR AT THE BOTTOM: SLV, CVY, GLD, XLB, XLE, XLU, TDIV

STOCK MARKET OBSERVATIONS FOR March 8, 2015: The stock market declined last week after having corrected sideways the previous one. Many of the oscillators are reading “oversold” which allows for a bounce in the next day or so. But most of the individual stock oscillators are in the middle of their price corrections. This would lead me to conclude that the most likely path for the market is a quick bounce on Monday or Tuesday followed by a lower low later in the week or the beginning of the next week.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 17 (Oversold)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 20 (Oversold)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 27 (Oversold)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 30 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 22 (Oversold)
• Volatility Indicator – Ultimate Indicator – 39 (neutral)

***********

ADVICE TO TRADERS AND INVESTORS: Nimble traders may want to buy into early weakness on Monday for a good bounce early in the week. Otherwise, you can probably wait for a lower low either late in the week or early next week. By next week, there should be lots of quality stocks with oversold readings worth buying.

STOCKS AT THE BOTTOM: None

EXCHANGE-TRADED FUNDS AT THE BOTTOM:  SLV

STOCK MARKET OBSERVATIONS FOR March 1, 2015: The stock market climbed to new highs last week on perceived good news from the Fed. A retest of this most recent high is likely this coming week. Whether that retest is with strength or not will determine if the area we are now in is actually a “top.” With the majority of indicators trending lower in “neutral” positions, the stock market could be performing a “sideways correction” where prices don’t come down much, but breadth does.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 43 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 46 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 44 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 29 (Oversold)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 32 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 56 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 62 (neutral)
• Volatility Indicator – Ultimate Indicator – 75 (Overbought)

***********

ADVICE TO TRADERS AND INVESTORS: The market could reach a trading opportunity soon provided that the majority of indicators become “oversold.” That could happen in the next week or so in the event that we don’t get an immediate retest of the most recent top. If instead we get an immediate retest of the last high, then traders should be ready to sell into strength unless the move up has renewed power (volume) to it. But overall, the best strategy of the last few years has been to “buy the dips and sell the rips.”

STOCKS AT THE BOTTOM: No stocks or ETFs have any Money Flow Indicator or Relative Strength Indicator buy signals at this time.

STOCK MARKET OBSERVATIONS FOR February 23, 2015: The stock market reached new closing highs on Friday and still is not “overbought” across the board. This would imply that the rally still has a few more days of upside before correcting or hesitating. In any case, I would expect a retest of any new  closing high in 5 trading sessions. It is good to remember that this last rally was not started from an “oversold” condition. Thus, the buying power to fuel any more upside action would seem to be limited – a time to sell rather than buy.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 59 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 60 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 67 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 65 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 79 (Overbought)
• Volatility Indicator – Ultimate Indicator – 73 (Overbought)

***********

ADVICE TO TRADERS AND INVESTORS: The advice remains the same as last week’s: Wait for the next set-up in the market. The motto that has worked for the last 6 months is to “buy the dips and sell the rips.” And now we are near the crest of the most recent “rip.” So be careful if you’re betting on the upside. And be patient, if you’re betting on the downside. As for me, I’m looking at oversold set-ups in sectors that are operating independent of the general market.

STOCK MARKET OBSERVATIONS FOR February 16, 2015: The stock market has zig-zagged its way to the top of its trading range, yet has not created an “overbought” condition. This bodes well for a possible breakout to the upside. The only flies in the ointment are the Dow Jones Transportation and Utility Averages. At this point, it is not a good time to “Buy” but instead it’s one in which a wise stock player steps aside and lets the market create the next “oversold” condition. Remember that this rally was not started from an “oversold” condition and thus should not have enough power to break through to the upside. We shall see.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 55 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 56 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 63 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 62 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 72 (Overbought)
• Volatility Indicator – Ultimate Indicator – 68 (neutral)
• Dow Jones Transportation Index – Full Stochastics Indicator – 70 (neutral)

***********

MY ADVICE TO TRADERS AND INVESTORS: Wait for the next set-up in the market. The motto that has worked for the last 6 months is to “buy the dips and sell the rips.” And now we are near the crest of the most recent “rip.” So be careful if you’re betting on the upside. And be patient, if you’re betting on the downside. As for me, I’m looking at oversold set-ups in the GLD and IYR Exchange-Traded Funds which are sectors that are operating apart from the general market.

STOCK MARKET OBSERVATIONS FOR February 9, 2015: The stock market started its rally with an early bottom last Monday. At the time, the general market was not in an oversold condition. The upwards explosion during the rest of the week puts the market in another position to challenge the old closing highs. But with “neutral” readings in all 7 indicators listed below, the market can move strongly in either direction with the same certainty. For now, the trading range in the Dow 17000 to 18000 remains intact.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 55 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 55 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 62 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 61 (neutral)
• S&P 100 Above 200-Day Average – Ultimate Indicator – 65 (neutral)
• Volatility Indicator – Ultimate Indicator – 60 (neutral)
• Dow Jones Transportation Index – Full Stochastics Indicator – 58 (neutral)

***********

STOCK MARKET OBSERVATIONS FOR January 31, 2015: The stock market displayed extreme volatility during this past week with radical moves in each direction. This serves the purpose of creating fear in the hearts and minds of both traders and investors. By the end of the week, all of the internal indicators listed below had moved collectively towards “neutral” readings below 50. Expect a short-term buying opportunity as soon as a majority of these indicators strike below the “30” reading. This could easily happen within the next 10 trading sessions.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 46 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 45 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 45 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 48 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 45 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 46 (neutral)
• Volatility Indicator – Ultimate Indicator – 43 (neutral)
• Risk On/Risk Off Indicator – Ultimate Indicator – 38 (neutral)
• Stocks vs. Bonds Indicator – Ultimate Indicator – 42 (neutral)

***********

STOCK MARKET OBSERVATIONS FOR January 25, 2015: The stock market presented two short-term buying opportunities during the past week for a ride back up to challenge the old highs. Now that we are in “middle ground” with all seven of the indicators below at “neutral” readings, the market can go in either direction with the same level of certainty. This appears to be one of those times where the market is churning while looking for new strength or further weakness to come in.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 59 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 57 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 58 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 53 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 48 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 53 (neutral)
• Volatility Indicator – Ultimate Indicator – 65 (neutral)
• Risk On/Risk Off Indicator – Ultimate Indicator – 58 (neutral)
• Stocks vs. Bonds Indicator – Ultimate Indicator – 54 (neutral)

***********

STOCK MARKET OBSERVATIONS FOR January 19, 2015: The stock market reached a slightly oversold level on Thursday’s close on the 15-day TRIN Index. This index showed that 12 out of the previous 15 sessions registered a disproportionate amount of selling volume compared to issues traded. But this indicator was only confirmed by a few other oversold/overbought oscillators. Thus, the general market could experience another short-term rally to challenge the old closing highs. Whether, this rally has enough staying power or not is the big question on the minds of investors.

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 49 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 45 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 49 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 46 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 42 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 46 (neutral)
• Volatility Indicator – Ultimate Indicator – 40 (neutral)

***********

Special Notes: The market did present a buying opportunity during the early fade on Friday morning. So don’t be surprised if Tuesday opens strongly in either direction as big money moves quickly from asset class to asset class. At such times, there is both risk of losing money and risk of losing out on an opportunity. This might be a time to simply sit things out until the markets stabilize or at least retest more clearly-defined levels such as the 200-Day Moving Average or recent cyclical bottoms.

***********

STOCK MARKET OBSERVATIONS FOR January 10, 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. On this most recent decline, the market plunged 6 days before making a “V-Bottom” and surging ahead on Wednesday and Thursday. This violent price action suggests that we could have more of these types of moves in the coming days. The ideal strategy now would be to “buy the dips and sell the rips.” The only trick is to be one step ahead of the “quants.”

Key underlying market indicators show the following:

• NYSE Breadth Oscillator – Ultimate Indicator – 45 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 38 (neutral)
• NYSE Overbought/Oversold Indicator – Ultimate Indicator – 45 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 37 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 39 (neutral)
• Nasdaq Overbought/Oversold Indicator – Ultimate Indicator – 41 (neutral)
• Volatility Indicator – Ultimate Indicator – 43 (neutral)

***********

Special Notes: The 7 key indicators listed above all have neutral readings after nearly reaching deeply oversold levels. This is a reminder to traders like me that the market rarely gives perfect readings where every single indicator flashes an “all-clear” signal at the same time. Legendary technician, Joseph Granville, used to say that the market always leaves a “hook” that causes someone to postpone action. And that’s why I separate my indicators between NYSE and Nasdaq just in case one major market sector gives a signal before the other and, thus, an early opportunity to act without full confirmation. Without complete certainty from the readings of technical indicators, the fast action of the market forces smart traders to do three things:  1. Take smaller position sizes, 2. Buy only broad-based highly-active ETFs, and 3. Hold for shorter periods of time.

***********