WALL STREET CRAPS STOCK MARKET OBSERVATIONS FOR JANUARY 4, 2015
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:
- NYSE Breadth Oscillator – Ultimate Indicator – 46 (neutral)
- NYSE % Above 50 Day Moving Average – Ultimate Indicator – 42 (neutral)
- Nasdaq Breadth Oscillator – Ultimate Indicator – 38 (neutral)
- Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 43 (neutral)
- S&P 100 % Above 200 Day Moving Average – Ultimate Indicator – 45 (neutral)
- Stock vs. Bond Indicator – Ultimate Indicator – 41 (neutral)
- Volatility Indicator – Ultimate Indicator – 39 (neutral)
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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)