Wall Street Craps – 2012 Global Ebook Finance Award-Winner

MARKET OBSERVATIONS FOR December 7, 2013: The stock market had a mild 5-day correction after hitting its 13th consecutive new high in the DJIA. Yesterday (Friday Dec. 6th), the market snapped back with a rally that puts it into position to retest the previous week’s highs. That retest will occur early next week and could produce a new closing high. My hunch is that this retest will fail and clear the way to a more substantial correction shortly afterwards.

Key underlying market indicators show the following:

• Investor Sentiment – Short-term = 50/neutral | Long-term = 70/sell
• NYSE Breadth Oscillator – Ultimate Indicator – 41 (neutral)
• Nasdaq Breadth Oscillator – Ultimate Indicator – 43 (neutral)
• NYSE % Above 50 Day Moving Average – Ultimate Indicator – 37 (neutral)
• Nasdaq % Above 50 Day Moving Average – Ultimate Indicator – 44 (neutral)

For now, my advice for traders and investors is to remain of the sidelines and watch for short term buying opportunities in alternative oversold asset classes. Those would include real estate (IYR), long-term Treasury bonds (TLT), emerging markets (EEM), silver (SLV), and gold mining (GDX). Other stocks that could experience tax-loss selling in December and may be worth picking up for longer-term holdings include: IBM, CSCO, and AT&T.

MARKET OBSERVATIONS FOR APRIL 29, 2013: The stock market may be headed to its final closing high in the Dow Jones Industrial Average. It is approaching overbought levels while remaining 150 points below its previous high. From a technical standpoint, the final closing high in the Dow Jone Industrial Average while not be confirmed by the majority of other key indicators or averages. Be on the lookout for this final solo march up by the Dow. On the other hand, if the Dow does have support from the majority of other averages, then this rally can continue higher into June.

Key market indicators show the following:

• Investor Sentiment – is still in a neutral position
• NYSE Breadth Oscillator – Ultimate Indicator reading of 68 – close to a sell signal
• Nasdaq Breadth Oscillator – Ultimate Indicator reading of 68 – close to a sell signal
• Risk On/Risk Off Indicator – Ultimate Indicator reading of 54 – neutral
• Dow Jones Transportation Average – shows a key divergence with a second lower hig

For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. A major top could be ahead of us shortly. But the neutral sentiment readings cause me to think that the market still needs more time on the upside. Stay flexible and read the market as it moves in either direction for clues.

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