STOCK MARKET STRATEGY FOR OCTOBER 21, 2018: The stock market has either completed its bounce or is in the process of retesting the previous lows. I have a hunch that whichever direction the market goes on Monday, the rest of the week will do the opposite. So if we get a rally on Monday, I’d be selling into that strength, but conversely I’d be buying on a retest of the lows. Of course this is a gamble, but something that I see as an opportunity for gain.
Key underlying short-term timing indicators show the following:
***********
THE BOTTOM LINE: The Fear/Greed Index is currently reading 14 or “Extreme Fear.” It has been in the this area for over a week and usually doesn’t stay here for more than two weeks. So the market is either going to rally here or is in the middle point of a decline into a lower-risk buying zone before the election.
MARKET OBSERVATIONS FOR November 24, 2013: The stock market continues to push upwards without a hint of an extended correction. This past Friday marked the 10th consecutive new high of this current rally from its October 8th low. This pattern of new consecutive highs should continue until it reaches 13 which could occur in another week. About the only thing that could cause the change in momentum to the downside would be investor expectations of new Fed tapering. Otherwise, the lone prudent investment choice will continue to be the asset class of equities.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for short term buying opportunities in alternative oversold asset classes. Those would include real estate (IYR), long-term Treasury bonds (TLT), emerging markets (EEM), silver (SLV), and gold mining (GDX). I strongly discourage trading leveraged, inverse ETFs for downside action because of their tricky nature, limited history, and deceiving internal indicators. But for those who insist on dabbling in this dangerous area with small bets for short holding periods, my two choices would be (TZA) and (SDS) based on liquidity and volatility.
MARKET OBSERVATIONS FOR November 17, 2013: The stock market continues to push upwards without a hint of an extended correction. Last Friday marked the 7th consecutive new closing high in the Dow with still more room to go on the upside. When a series of new highs occurs around the 13th time, it often marks the point of upside exhaustion….but we are not there yet. Other underlying indicators (shown below with links) also imply that the stock market still can move upwards for a little longer (4-7 market days) without a correction.
Key underlying market indicators show the following:
For now, my advice for traders is to be on the sidelines and wait for the market to set itself up for its next big move. The balance of indicators have neutral readings despite the upwards movement in prices. While many chartists are jumping at the bit to call the next top, the internal readings of the market still allow for more room or time to the upside. But that being said, a market player should be ready for one good correction in December in order to set up the customary Santa Claus Rally. Be on the lookout for a tricky, but opportunity-filled stock market during Thanksgiving Week.
MARKET OBSERVATIONS FOR JANUARY 6, 2013: The stock market’s late December oversold breadth condition set itself up for last week’s sharp news-related rally. But sentiment readings should put a lid on anymore sizable upside action. A few more up-days should also move the breadth oscillators into “sell” mode. Also the “Risk On/Risk Off Indicator” shows that the “Risk On trade” has extended to its normal range again limiting much upside action. With the upside being limited, this is not a time to be buying and one to be moving to the sidelines (and waiting for the next high-probability opportunity).
Key market indicators show the following:
For now, my advice is to stay of the sidelines and let the market set itself up for its next big move. Last week’s update presented a scenario for taking advantage of the resolution of the “fiscal cliff,” but you would have had to move quickly on New Year’s Eve morning in order to capitalize on it. In addition, last week’s rally points to another trading tip which is “don’t watch breaking news while you’re trading” because you’ll get easily talked out of making a move (which happened to me!!!)
**********
As for Apple (AAPL), the stock moved up sharply after a positive article in Baron’s over last weekend, thereby blowing our chances to buy it on a quiet New Year’s Eve trading morning. But by midweek, it had hit its 250-day moving average around 555. From here, it could still have another leg down but I’ll be watching its internal signals (Money Flow, Ultimate Indicator, RSI) for clues more so than its external price moves. So overall, Apple is in “no man’s land” between 555 and 500 and is setting itself up for its next big move. This could come in another 10 days or so at the earliest.