STOCK MARKET STRATEGY FOR DECEMBER 9, 2018: The stock market has shown tremendous volatility this past week. Since Black Friday after Thanksgiving, the market has gone up 6 days followed by sharp declines for the last 3 days. One might expect that the market may find a short-term bottom either Tuesday or Wednesday based on time symmetry. And based on the internal indicators listed below, a bottom will also require 2 to 4 more days of decline before reaching oversold readings.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The Fear/Greed Index is currently reading 11 or “Extreme Fear.” The sentiment is certainly negative as this indicator has remained in the negative territory for a couple of months now. The trading environment is very tricky and will punish anyone who is on the wrong side of the market. If you have the temperament to trade, you’ll find lots of opportunities for some fast money. But for most people, this is a market to avoid until it calms down and shows more signs of capitulation. The “blood” is not quite “on the street” but it’s getting there. Be careful out there!
STOCK MARKET STRATEGY FOR DECEMBER 1, 2018: The stock market has gone straight up since its bottom on Black Friday. That day was marked by a new closing low that was not confirmed by the majority of breadth and momentum indicators. This is a classic “Granville Buy Signal” named for the infamous stock market analyst of the period from 1977 to 1983. From this point forward, after the strongest one week rally in stock market history, one could expect that the market to continue going higher in a zig-zag pattern until the end of the year. If you missed this last opportunity, you’ll have to buy on any short-term oversold conditions.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The Fear/Greed Index is currently reading 22 or “Extreme Fear.” It should be in the “neutral” zone shortly with the continued rally in the stock market. Use any short-term oversold readings as a place to add to long positions through the end of the year. It looks like a “Santa Claus Rally” is in the cards for this year.
STOCK MARKET STRATEGY FOR NOVEMBER 10, 2018: The stock market made a huge upside move in response to the election results on Wednesday. The question is whether that move signified a breakout to a new highs or a last grasp top for the latest bounce. Since this is anyone’s guess, the next entry point would likely be an oversold condition in the majority of breadth indicators. But a strong move down from here and a resumption of October’s down move would certainly change the character of the market again. This is a time for caution, as well as a time for opportunity for those willing to accept the risks and stomach the volatility.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The Fear/Greed Index is currently reading 18 or “Extreme Fear.” While this is still in the “Extreme Fear” category, it is far off of the lows from the previous two weeks. This might suggest that the market is simply retracing its strong move up with a chance of forming another pivot bottom in about 5-10 trading days. So be alert and ready to act on a brief buying opportunity ahead.