The stock market haD been on a relentless advance since its bottom in October of last year. However, these past two weeks have shown signs of a possible topping pattern and a time to move to the sidelines or lighten up on long positions. From a Dow Theory perspective, the Dow Transportation Index may provide a non-confirmation of a new Dow Industrial Average high. And if other major indexes and technical indicator also fail to confirm a new closing high in the Dow Jones Industrial Average, then we will have a classic “Sell Everything” Joe Granville Sell Signal worth respecting. This all makes for an interesting time.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 47. But the daily readings just closed below its 15 Day Moving Average two days ago. This suggests that a bigger decline may be in the cards over the shorter term and not a time at all to buy or hold.
Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 61. It is too early to buy based on this indicator which has been very accurate in picking bottoms to the exact day. Maybe a lot of people are watching and acting on this index.
The stock market has been trading in a very tight trading range for many weeks now. While many technology stocks have performed well, others like bank. transportation and Russell 500 stocks have performed poorly. With such a split market, the breadth readings will give distorted readings. Based on my experience, a sharp but quick drop should create a good buying opportunity for nimble traders. But otherwise, long-term investors might want to wait in high-yielding money market funds for a better, more oversold bottom.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 31. This indicator has been trending lower for over 10 trading days now. It is approaching an oversold reading which says that a tradable bottom is approaching. This is one of the most reliable intermediate-term trading indicators and gives you plenty of time to prepare.
Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 58. The next upside trading opportunity doesn’t appear unless this trusty indicator hits a reading of 25 or less.
The stock market has broken to the downside after hovering for several weeks in a tight trading zone. The short-term indicators are very oversold so a bounce can be expected in the next day or two to release that upside pressure. But after this bounce, you can expect the market to return to the downside since the intermediate-term NYSE McClellan Summation Index has made its turn to the downside with very negative historical indications.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 58 but is now clearly turning down after rallying for about a month. Timewise, this downturn can be expected to start accelerating in about 5-7 days. Use this anticipated bounce to unload on your long positions with the intent of buying back after this indicator bottoms several weeks from now.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 52. This indicator has a long way to go before it registers a buy signal below a reading of 25 or “Extreme Fear.”
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The stock market is hovering just below its recent short-term high. With nearly all of the oscillators having been overbought at the beginning of this past week, there is a good chance of a retest of the recent highs. But this retest is likely to fail and start a sharp decline to challenge the October lows. This is not a good time to be taking long positions, but possibly one to take light short positions.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 50. It has been coming out of a good low position from two weeks ago and is likely to continue its upwards move to an overbought positions in 2-3 weeks. This is one of the more bullish indicators.
Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 57. This is a neutral position with plenty of room to go up or down.
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The stock market is broke through major resistance to new rally highs this past week. The Bulls were encouraged by positive remarks from the Fed despite some weaker-than-expected earning from several major tech companies. Thursday’s late action along with Friday’s retreat has reset the internal indicators to neutral positions. I will be looking for a short-term oversold condition to add some long positions for the short-term.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 92. This is both a sign of strength and one of being overbought. But does appear to indicate that this indicator is most likely at its peak and that the major part of the current rally is over.
Fear/Greed Index: This popular indicator is in the “Extreme Greed” territory with a reading of 76. This is the first time that it has been in this range for a long time. I can easily spend more time here, but an investor should be careful about joining the Bull crowd at this late time.
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The stock market is currently short-term overbought and is likely to have a correction of some sort in the next week to 10 days. Once this overbought condition is relieved, the market can be expected to retest its current high and possibly breakthrough to higher ground. The most telling characteristic of the most recent bottom is that the final decline was lead by “the Generals” Apple and Tesla. As such, a good trader must be ready for the surprises that may come to the upside instead of the downside for the intermediate term.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 77. This indicator is just now starting to cluster. So there is no indication that a significant decline is going to happen right now. It’s most recent bottom surprised me by not getting to the “oversold” area, but instead turned up at the beginning of the year.
Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 63 and trending up. Timing-wise, this doesn’t meet the criteria for buying right now. However, bullish runs can go on for extended periods of time without much of any time spent heading towards the oversold condition.
The stock market appears to have completed its Bear Market rally from the October lows. Don’t be surprised if those October lows are tested in the coming weeks with either a low-volumn Dow Theory non-confirmation or a climatic high-volume crash to occur. In most cases, this would be a good time to step aside and let the market set itself up for a better opportunity in late December or in the January/February time period. This is a tricky time in the market where a Bear or Bull can easily lose money and/or sleep!
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 76 and trending down. This indicator is starting to cluster now after a big run-up since October. The cycle of this indicator would suggest that it is now time for the market to head down for a number to weeks before clustering again to form a stable bottom.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 54 and trending down. Having been in the “Greed” range for many weeks, it looks like this indicator is heading back towards the “Extreme Fear” area that is required for a good bottom. The trick here is to be patient enough to see a reading in the “Extreme Fear” range, but on the lookout for the deep bottom move to the under 5 reading of major bottoms. This is always a distinct possibility.
Categories: Fear & Greed Index, Stock Market Strategy, Stock Market Timing Tags: Categories: Stock Market Strategy, investing, investing tips, investments, QQQ, retirement, SPY, stock action, stock market, Stock Market Strategy, stock market timing, Tags: AAPL
The stock market had a sharp two-way response to the latest FED meeting. This created both a bull and bear trap for traders. But this latest one-day rally may prove to be a curse in that it relieved downside pressure and opens the way to continued downside action. Prices can certainly continue down rapidly in a short period of time. My guess is that there needs to be a clear sign of capitulation in order for a bottom to take place. This entire decline has been too orderly. The “blood” is still not on the street, even though it should be now. Also,the internal indicators below indicate that there is more room on the downside before the general market becomes short-term “oversold.”
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator is continuing its long downward move. In terms of time, this indicator should be bottoming and even reversing course soon. But first this indicator needs to “cluster” before changing direction. But this indicator suggests that after the cluster is finished, the market to turn to the upside for an extended period.
Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 21. But major bottoms have occurred around the reading of “2-5” so we are far from that. This indicator also confirms to me that this decline has been too orderly and is lacking the signs of “blood on the street” capitulation that is usually needed to reverse course on a down market of this magnitude.
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The stock market declined this past week with only one day to the upside. The market is due for a relief rally that may get started early next week. But this next rally may be setting up the market for a large drop after this temporary buying subsides. My guess is that the market will be very tricky to trade in the coming week. And for many people especially those who want to go long, this may be a good time to avoid the market until a more pronounced bottom has been tested and formed.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator is trending sharply lower with a current reading of 33. It should reach the oversold territory in one more trading day.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 41. A reading below 25 is needed for a tradable low based on this sentiment indicator. This indicator is several days away from signalling a bottom.
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The stock market has declined sharply from its rally highs only one week ago. The short term oscillators are all in oversold territory suggesting that a bounce is due at any time now. Perhaps, Wednesday will be a day that opens lower, scares bulls into dumping, and turning around for a positive close. But where the market goes on an intermediate term basis is anyone’s guess at this time.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator has a current reading of 74 which is just coming out of overbought territory. This suggests that an intermediate term bottom has not had enough time to set up and any trades on the long side are for short-term speculation only.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 45. A reading below 25 is needed for a tradable low based on this sentiment indicator.
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