The stock market has been doing a great job of “climbing the wall of worry.” On Thursday of this past week, many short-term indicators topped out and the evaluation is whether it did so from: 1) exhaustion & a move down across the trading range or 2) just a pause before resuming its relentless climb. Unfortunately, no one really knows despite what they may claim with almost total certainty. I would look for either a decline and then a failed retest or a high volume reversal before making any bets to the downside. Sometimes it’s just better to watch from the sidelines and preserve your capital (chips).
Key underlying short-term timing indicators show the following:
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Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 67 after being in the “Extreme Greed” zone for a day or so. This indicator gave a one-day buy signal in early October, but it is not a reliable timing tool for catching tops. Therefore, it’s not worth reading too much into its reading this coming week.
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The stock market appears to have topped out over the shorter-term on September 2nd. Since that time, the market has been trending downwards towards a possible bottom in mid-September. Recent bottoms have occurred on July 19th and August 19th which were 23 trading days apart. If that same pattern were to repeat itself, then the next bottom would be between September 19 and September 22. So be ready for a quick trade to the upside if the conditions for a bottom look worth risking.
Key underlying short-term timing indicators show the following:
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Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 34 after being in the “Neutral” and “Greed” zone for the past two weeks. The best buy signals on major corrections have occurred when the reading gets below 10. But a minimum reading of 25 would be required for a short-term bottom worth trading.
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The stock market traded lower for most of the week that coincided with the turmoil in Afghanistan. With the rally on Friday, the Dow Jone Industrial Average is about 500 points below its August 16th high. I would expect a rally to new highs to be unconfirmed by the majority of other indicators. That would set up a Dow Theory Sell Signal as well as a Granville Sell Signal worth shorting or selling existing long positions. Such a scenario could take place in the next 3-7 trading sessions so be on your toes for this developing opportunity.
Key underlying short-term timing indicators show the following:
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Fear/Greed Index: This popular indicator is in the “Extreme Fear” territory with a reading of 25 after being in the “Extreme Fear” zone with a reading of 22 on Thursday. The best buy signals on major corrections have occurred when the reading gets below 10, however.
Monday August 23rd Note: The Granville Sell Signal usually occurs when the new unconfirmed high in the Dow Jones Industrial Average coincides with an obvious public good news cover story. Could the Pfizer COVID vaccine FDA approval be that cover story?
Categories: Fear & Greed Index, Stock Market Strategy, Stock Market Timing Tags: investing, investing tips, investments, QQQ, retirement, SPY, stock action, stock market, Stock Market Strategy, stock market timing, stock trading
