STOCK MARKET OBSERVATIONS FOR July 28, 2014: The stock market made another attempt at the old highs during this past week. In doing so, it pushes most of the internal breadth indicators to “neutral” readings. With a lot of negative news from geopolitical sources, the market could easily decline into a short-term oversold condition in the coming week. The kind of action that we are seeing now is typical of the topping process. My guess is that we will either get a short-term buy signal on more bad news or else make another push to new highs. But be careful here because the next closing high in the Dow Jones Industrial Average may, in fact, be the last one of this rally.
Key underlying market indicators show the following:
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My advice for traders and investors is do nothing and let the market set itself up for its next big move. More downside here would permit the oscillators to become more oversold and present a short-term buying opportunity. When the bad news lets up from the geopolitical problems, there could be a sharp but short rally to new highs. If you’re looking to sell, do so on a less-than-strong closing high in the DJIA in the last hour.
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STOCK MARKET OBSERVATIONS FOR July 20, 2014: The stock market reached short-term oversold conditions on “obvious bad news” Thursday. A bounce on Friday has put most internal indicators in “neutral” positions. With the old highs less than 100 points away, it is certainly possible for the market to continue its march upwards to new highs. So with prices near their highs and breadth oscillators near their lows, it allows for room to travel in either direction.
Key underlying market indicators show the following:
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My advice for traders and investors is do nothing and let the market set itself up for its next big move. More downside here would permit the oscillators to become more oversold and present a short-term buying opportunity. Despite the length of this rally, it still could have even more to go on the upside.
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STOCK MARKET OBSERVATIONS FOR July 12, 2014: The stock market sold off after the most recent high that was posted just prior to the July 4th holiday. This selloff has moved all four of the key breadth oscillators to “oversold” readings. This indicates that the correction is over and that a short-term retest of the recent highs is in order. We’ll be looking for confirmation or non-confirmation of the retest in order to determine if this next rally will be the last one for this phase of the market. The Equity-Only Put/Call Ratio is also very close to issuing a “sell signal” after a long gradual decline into that reading. All of this adds up to a tricky retest of the old highs with a possible top in mid-July of major importance.
Key underlying market indicators show the following:
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My advice for traders and investors is expect a short-term rally up to the old highs that were registered on July 3rd. Some may want to play the upside here for a quick move up. But long-term funds should be held back just in case the retest of the old highs fails and a top of major importance is made in mid-July. This is next rally may be the time to exit most, if not all, of your equity positions.
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STOCK MARKET OBSERVATIONS FOR June 27, 2014: The stock market is hovering around its all-time highs, chewing up time and setting itself up for its next big move. With neutral readings in many internal indicators, the stock market could still go either way. At a time like this, it is important to stay neutral and unbiased in one’s market opinion. Other indicators like the SentimenTrader.com’s Long-Term reading shows that we are in “Excessive Optimism” territory with a reading of 70 out of 100. The Equity-Only Put/Call Ratio is also very close to issuing a “sell signal” after a gradual decline into that reading. All of this adds up to a possible tricky retest of the old highs with a top in mid-July of importance. So most of all, don’t get too complacent!
Key underlying market indicators show the following
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My advice for traders and investors is to be largely in cash while the market sets itself up for its next big move. The market could go in either direction, but I think that the upside is already stretched and limited. But the forming of a top here, still takes more time and fake-outs before declining with any significance. Be on the lookout for a big move beginning in mid-July.
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STOCK MARKET OBSERVATIONS FOR May 18, 2014: The stock market advanced to new highs during the early part of last week. The small rally on Friday sets up the market for another retest of the previous high. Whether it closes above or below the previous high, the stock market appears to be losing its upside momentum and provides another chance to sell into strength. Overall, this is not an oversold, undervalued, or unpopular market to buy. If anything, it is one to sell.
Key underlying market indicators show the following
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My advice for traders and investors is to be largely in cash while the market sets itself up for its next big move. With most indicators showing “neutral” reading, a possible scenario is for the market to decline from here into an oversold condition. That would present nimble traders with a short-term buying opportunity to ride still further to the upside. But for now, it’s a “wait and see” policy that is most prudent.
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STOCK MARKET OBSERVATIONS FOR May 4, 2014: The stock market as measured by the Dow Jones Industrial Average hit new all-time highs. But those highs were largely unconfirmed by the majority of other indices. At present, the internal indicators listed below are showing “neutral” readings across the board. This means that the market has an equal chance of going in either direction. Remain patient and wait for the market to set itself up for its next major move. The old Wall Street adage, “Sell in May and go away,” may indeed prove to be the correct course of action.
Key underlying market indicators show the following
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My advice for traders and investors is to be largely in cash while the market is in this indecision pattern. There are currently no stocks or Exchange-Traded Funds that are in the “oversold” area. Along with the “neutral” readings on all of the internal indicators, this is most likely a time to sit and wait for the next major move to take shape.
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STOCK MARKET OBSERVATIONS FOR March 23, 2014: The stock market rallied sharply in the beginning of last week which prevented a true “oversold” condition from developing. With weakness towards the end of the week, the stock market is currently showing “neutral” readings across the board. This means that the market has an equal chance of going in either direction. So be patient and wait for the market to set itself up for its next important move.
Key underlying market indicators show the following
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My advice for traders and investors is to be largely in cash while the market is in this indecision pattern. There are currently no stocks or Exchange-Traded Funds that are in the “oversold” area. Along with the “neutral” readings on all of the internal indicators, this is most likely a time to sit and wait for the next major move to take shape.
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STOCK MARKET OBSERVATIONS FOR March 16, 2014: The stock market declined last week to a point where it is moderately oversold. By early this coming week, it could be ready to bounce upwards. In the recent past, oversold readings in the NYSE and Nasdaq Breadth Oscillators have been the best indicators for timing tradeable short-term bottoms. That may be the case again if the market were to rally right back up to challenge its previous highs. However, I am inclined to wait another week and let the sentiment turn more negative in order to cause a “panic-selling” bottom.
Key underlying market indicators show the following
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My advice for traders and investors is to be ready to buy into the market for a quick ride back up to challenge the previous market highs. That exact moment may be hard to pin down so it would be wise to make even money bets on last hour declines or early morning weakness. This is done with the understanding that the bottom could be very tricky to trade with accuracy. My best guess is that a tradeable bottom is 2 to 8 trading days away. But I’d warn everyone to expect volatility in the next couple weeks as the market over-reacts to both positive and negative external news events.
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STOCK MARKET OBSERVATIONS FOR March 2, 2014: Last week, the stock market reached the upper end of its trading range. In fact, many people would argue that the market has broken out to new highs. But while several stocks and indices have advanced to new highs, many traditional sectors such as Industrial, Transportation, Retail, and Financial have lagged badly in this current rally. Unless strength rotates into these weaker core areas, I wouldn’t be surprised to see the DJIA make a new token closing high and then begin an immediate correction of major proportions.
Key underlying market indicators show the following
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My advice for traders and investors for this week is this: move to the sidelines and let the market correct into an oversold condition. Then add to long positions in strong sectors for a final ride to the top. The majority of internal indicators are mixed as of today. That means that the market has an equal chance to go in either direction. But the only prudent low-risk strategy to capitalize on this market is to buy on the next oversold condition. That may take another week or so to set up properly.
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STOCK MARKET OBSERVATIONS FOR February 17, 2014: The stock market quickly reached overbought levels by the end of last week. While this rally has been impressive by its straight-up action, it could still stall out in this current price range. The lagging performance of the Dow Jones Transportation Average is setting up a classic Dow Theory Sell Signal should the DJIA reach new highs while the Transports clearly don’t. It’s probably too early to short the market (I don’t recommend this as a wise strategy) but it certainly isn’t a time to go long the broad market.
Key underlying market indicators show the following
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My advice for traders and investors for this week is this: look for a chance to sell on any strength during the coming week. The majority of internal indicators are in overbought positions now. The optimal time to sell is when the majority of indicators have started to come down after reaching their highest points. That means that some additional rallying could occur over the short-term. But selling into strength after an extended rally is usually a good strategy. If a small correction starts this week, then you may have another chance to hop on-board the long side in well-chosen individual stocks. Remember that “overbought” does not necessarily mean “sell.” It means “do not buy now.”
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