STOCK MARKET STRATEGY FOR DECEMBER 27, 2015: The stock market will spend the next week or two setting itself up for a big move in early January. My guess is that is will be a surprise to the upside after a fake-out to the downside. Right now, a decline to retest the lows at 17128.55 on December 18th seems likely. But overall, get your “powder dry” for a bottom of major significance during the first week of January. But for right now, the market is overbought and needs time to go down.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: With an overbought market, it will take a week or so for it to get to an oversold buying area. If that should take place in the first week of January, be ready to take solid diversified positions in both SPY & QQQ. The next ride up could be spectacular so don’t get too tricky with buying this next bottom. It will be meant to fake you out and miss. So be willing to be a little early and buy into weakness. When the bottom comes, it might be followed be consecutive gaps up leaving many investors back at the dock. And as has been the pattern of late, the bottom may occur on late Friday afternoon when it is not easy to buy heading into the weekend.
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STOCK MARKET STRATEGY FOR NOVEMBER 30, 2015: The internal breadth indicators are now turning down after reaching the overbought area this past weekend. A likely set-up would be for the market to continue to correct as the breadth indicators move their way down into an oversold condition. It may take another week or so for that to transpire. If it does correct in that fashion, then we will have an oversold buying opportunity as a set-up before a “Santa Claus Rally.” Expect that bottom somewhere between December 10th-18th.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The market appears to be turning down after its last rally. Expect an oversold condition during the second week in December as a good spot to go long in anticipation of a strong “Santa Claus Rally” to end out the year.
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STOCK MARKET STRATEGY FOR NOVEMBER 22, 2015: The stock market rallied sharply from the oversold condition that was described in last week’s post. At the present time, the market is neither oversold or overbought. The neutral readings of breadth indicators imply that the market can go in either direction from here. The odds favor a “Santa Claus Rally” in December which means that we should anticipate one more return to an oversold condition sometime in early-to-mid December.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The market presented a buying opportunity at the last oversold condition on Monday’s opening. After such a robust rally, it’s probably too late to go long equities especially with resistance levels nearby, a possible negative reaction to a Fed hike, and a typical short-term December bottom preceding the traditional “Santa Claus Rally.” For these reasons, I would prefer to sell into additional strength, hedge any long positions, and keep the powder dry for a possible trading opportunity in the first half of December.
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STOCK MARKET STRATEGY FOR NOVEMBER 14, 2015: The stock market has been setting up for a trading low this past week. With the events in Paris, the market could experience a large gap opening to the downside on Monday’s opening. But with nearly all breadth indicators at historical trading lows, this “cover story” may serve to be the catalyst for a climatic bottom. Don’t be surprised if Monday proves to be an important intermediate bottom from which the “year-end rally” takes us back up to the all-time highs.
Key underlying short-term market indicators show the following:
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THE BOTTOM LINE: The market looks to be in the vicinity of an important trading low. While we may have one or two more down days, it may be wise to start taking pilot positions in stocks with high correlations to the upside. That would include all of the broad-based ETFs. But be careful about taking too large a position because the news could be scary while this bottom takes it form. It will be important to remain emotionally-detached during this trading period and control your risk.
Categories: Stock Market Strategy Tags: investing tips, investments, money, nvesting, QQQ, SPY, stock action, stock market, stock trading, stock trading tips, stocks, tony robbins, trading, trading tips, wall street