WALL STREET CRAPS STOCK MARKET OBSERVATIONS FOR AUGUST 17, 2013
MARKET OBSERVATIONS FOR August 17, 2013: The stock market had a big drop last week as it heads into its August bottom. From this bottom, we should see a new rally which will either form the right shoulder of a “head and shoulders top” or challenge the early August highs. But so far, this decline has been a confusing one to analyze and trade effectively. Time and cycle studies indicate that Monday or Tuesday should see the low for August, but it remains to be seen what kind of strength, if any, awaits investors and traders. And despite last week’s weakness, it is still entirely possible that the decline could resume in earnest. So watch your step out there, play it tight to the vest, and keep your bets (position sizes) small.
Key market indicators show the following:
- Investor Sentiment – Short-term = 40 neutral/Long-term = 50 neutral
- NYSE Breadth Oscillator – Ultimate Indicator reading of 33 – close to oversold
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 35 – close to oversold
- NYSE Summation Index – Heading downwards towards a mid-to-late August bottom
For now, my advice for traders is to wait for the next oversold condition and then take positions for an upside move into the Fall. But last week’s unusual TRIN readings on this current decline, shows an absence of selling. This makes it anyone’s guess as to how much further the market will drop in the coming week. Perhaps this is one of those times when it’s best to just stand aside and let the market set itself up for a better percentage move.