The stock market has been staying above its June lows in the face of horrible news on the inflation/interest rate front. The rally so far from the June lows has not been very impressive, but the internal indicators are setting up for a possible tradable low on either Monday or Tuesday of next week. So keep your powder dry and buy into weakness early next week for a possible rally into August. Overall, the odds look good for decent bet to the upside.
Key underlying short-term timing indicators show the following:
NYSE McClellan Summation Index: This indicator has a current reading of 55. It is just now starting to trend down which is not in tune with a tradable low early next week.
Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 24. This may be low enough to confirm a “retest low” for early next week.
The stock market has turned in a spectacular rally in the face of bad news climbing the proverbial “Wall of Worry.” With a few internal indicators getting in the “overbought” range, you could expect some downward or sideways action over the near term. But the intermediate term (next few months) is still anyone’s guess. The Elliott Wave followers are looking for continued higher prices, while other’s see a limit to the upside and plenty of economic reasons for it to go down. Personally, I am waiting for another good set up like we had two weeks ago in order to make a good bet with strong odds.
Key underlying short-term timing indicators show the following:
NYSE McClellan Summation Index: This indicator had an “oversold” reading of 29 on March 12, just two days before the bottom. It had been in the oversold area for several weeks and the dots were “clumping” in a basing area. So when the market turned decisively to the upside these past two weeks, you could expect that move to be sustained. So buy the dips!
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 49. This means that the general market can go up or down with an even probability. So it is not an optimal time to go long or go short. Note: This indicator got an “Extreme Fear” reading of 17 in mid-March which at the time did not seem low enough to a climatic bottom. So instead we got an exhaustion to the downside with too much pessimism and negative news that created a decent trading bottom. Has this been a “Bear Market Rally” or the start of a new “Bull Market?” That’s the question for many.
The stock market had a mild down week against a challenging news backdrop and thus sets itself up for either a strong move up or down in the near term. My hunch is that the market will do both in the coming week or two. And that is a strong move down followed by a strong move up. But catching the final bottom in this scenario is bound to be tricky. Unless you are an experienced trader, it might be smarted to control your risk with smart “betting strategies” – buy even chip size over an even time frame in active ETF positions. Anticipate a possible scary plunge and reversal based on “obvious bad news.”
Key underlying short-term timing indicators show the following:
NYSE McClellan Summation Index: This indicator has a current “oversold” reading of 29. It has been in the oversold area for several weeks and the dots are clumping in a basing area. When the market turns decisively to the upside, expect that move to be sustained.
Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 14. It has been in this territory for several days now and only needs to continue going down towards a sub-5 reading ideally. That could happen in the next week or so with the negative news background and the gradually declining sentiment.
The stock market has made a strong rebound from the deeply oversold bottom from late February’s invasion day. But that momentum appears to be waning with the prospect of more weakness over the near-term. The internal indicators are in middle ground suggesting that the general market is not deeply oversold or overbought. Therefore, the short-term market direction is up for grabs. With the general climate of the market, I would favor a retest of the late February lows with enough bad news to scare the weak Bulls to capitulate. That climatic bottom could come in the next 5-8 trading sessions.
Key underlying short-term timing indicators show the following:
NYSE McClellan Summation Index: This indicator is still bottoming after a long decline for many weeks now, but it is starting to turn up. This points to a possible intermediate term bottom or powerful bounce in the making.
Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 17. It has taken a lot of time to get this index into the “Extreme Fear” range, but it now has the possibility of going to the sub-5 reading that has often marked the bottom of major moves in the recent past. This index is telling us to get ready for a possible buy signal on a scary retest of the February lows.
The Fear & Greed Index moved strongly into “Extreme Fear” territory today with a reading of 19. Solid intermediate-term bottoms have occurred when this indicator gets as low as 2 or 3. There is a chance that this indicator is setting up for such an occurrence during next week. That provides enough time for more bad news to hit bullish investors into dumping their holdings at the bottom in a brief period of maximum fear.
The stock market had an extremely memorable shorten week with the invasion of Ukraine news backdrop. After a climatic bottom on Thursday’s opening, the market rallied strongly during the remainder of the day and on the following Friday. It was a classic bad news bottom and many are wondering if that was THE BOTTOM or whether there will be a retest in the coming weeks. These are turbulent times and for those with a weak stock market stomach, this may be a time to sit on the sidelines. Another good time to go long could be on a retest of last week’s low.
Key underlying short-term timing indicators show the following:
NYSE McClellan Summation Index: This indicator has been bottoming after a long decline for many weeks now. It is hard to see any reliable signal here as it may still fall off the cliff and go to a lower bottoming level. But overall, it says that the risk is in trying to short this market as strange as that may seen.
Fear/Greed Index: This popular indicator is only in the “Fear” territory with a reading of 31. At the December 2018 bottom, this indicator reached a reading of 3. This week it reach an “Extreme Fear” reading of 25 which is just barely in this territory. I would expect a much lower reading if this is to be the final bottom and gives me the strong conviction that we still have more downside to go.
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.
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.
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 July 10, 2013: The stock market reached a short-term bottom last Monday morning. Normally, one would expect a retest of that bottom in about 5 to 7 days. Therefore, we would expect some weakness on Monday and/or Tuesday as that retest. We had 3 days up from the bottom and can anticipate an equal 3 days down in this simple time symmetry. But the Summation Index clearly shows that we have already arrived at an intermediate term bottom and that smart traders/investors should get on-board for another bull run that will climb the proverbial “wall of worry.”
NYSE Summation Index – Triple bottom and a turn at the bottom of the cycle. This indicates a change to bullish!!!
For now, my advice is to buy into any weakness at the beginning of the week. Active broad-based exchange-traded funds to consider buying would include DIA, SPY, QQQ, SSO.
Relative Strength Indicator = 26 (buy signal under 30)
Ultimate Indicator = 33 (buy signal under 30 which it was on Thursday’s close)
Money Flow Indicator = 6 (buy signal under 20)
This means that the stock of Apple is now in a buy zone and time to start accumulating. While it would appear that a test of the previous lows around 383 can be expected, we’ve learned to expect the unexpected when it comes to this stock. With a 3% dividend, an investor will get paid to wait on this unpredictable stock.
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