WALL STREET CRAPS MARKET OBSERVATION FOR FEBRUARY 5, 2013
MARKET OBSERVATIONS FOR FEBRUARY 5, 2013: The stock market’s advance may be nearing its end sometime this coming week. If we can get another token new high in the Dow that is not confirmed by corresponding strength in the Dow Transportation and Nasdaq Index, it could signify the end of rally and the beginning of a sustainable correction. Smart traders and investors would be wise to sell into any strength during this coming week especially if it comes with “obvious good economic news.” That news will be the signal for all the latecomers who missed the rally to come into the market at precisely the wrong time.
Key market indicators show the following:
- Investor Sentiment – is still neutral short-term & over-loved long-term
- Fear & Greed Index – is at 94 which is in “Extreme Greed” territory (it’s been there for a few weeks now and it would be natural for it to return to a more neutral reading soon)
- NYSE Breadth Oscillator – Ultimate Indicator reading of 38 which is Neutral
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 54 which is Neutral
- Risk On/Risk Off Indicator -Ultimate Indicator reading of 63 which is near a sell signal at 70
This coming week may mark the end of the current rally that started last November. Traders and investors should use any strength to lighten up on any remaining positions. The risk-reward ratio just doesn’t support adding or even holding too many long positions in the stock market at this time. While some issues may continue to rally, the time for the general market has probably come to get out.
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