STOCK MARKET OBSERVATIONS FOR February 9, 2014: The stock market reached oversold levels last week and is now poised to rally further. While a retest of the lows could occur at the beginning of next week, it is certainly possible for the market to simply hesitate at this level to digest the recent gains. While the majority of indicators are in neutral positions, a little bit of weakness early this coming week may be your only opportunity to hop on board for what could be a big rally worth the risk.
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 buy on any weakness in the beginning of the coming week. The majority of internal indicators are in neutral positions now. The optimal time to buy was last Wednesday so getting in on the absolute low doesn’t look likely in this next week. Things do change quickly is this current market environment so stay alert!
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STOCK MARKET OBSERVATIONS FOR February 2, 2014: The stock market has now reached oversold levels that are consistent with recent trading lows. However, the danger is that the closing high on December 31, 2013 may have been a major bear market top with much more to go on the downside. While many investors and traders are looking for a relief rally to occur, it may be smarter to wait for a retest of previously established lows. That scenario puts us at least a week or two away from a tradeable bottom at the earliest. In my opinion, this decline still needs more time and “bad news” in order for the sentiment to shift significantly towards the bearish side.
Key underlying market indicators show the following
Another way to look at the general market is to see if there are matching oversold “Full Stochastics” readings on the major ETF broad-based averages. You will notice that all major intermediate bottoms start after oversold reading. Current readings show that the market is oversold enough in terms of price.
- DIA – Full Stochastic – 10 (Buy) on lagging red line
- SPY – Full Stochastic – 17 (Buy) on lagging red line
- QQQ – Full Stochastic – 19 (Buy) on lagging red line
- IWM – Full Stochastic – 18 (Buy) on lagging red line
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My advice for traders and investors is exactly the same as last week’s: remain on the sidelines and let the market set itself up for a possible bottom in the intermediate term. The majority of internal indicators have moved into buy readings but need more time in the misery zone. Expect a short-term bounce early next week and then a retest 5 to 10 days after those previous lows. The time to take a chance on the long side is when weakness occurs amid obvious bad news on the retest of previous lows. That could come in mid-February so be ready to act!
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Note: Stock that have moved into their buy range according to the Money Flow Indicator include the following: General Electric, Citigroup, Starbucks, and Wal-Mart.
Categories: Stock Market Strategy Tags: Citigroup, General Electric, investing, investments, Starbucks, stock action, stock market, stock tips, trading tips, Wal-Mart, wall street
STOCK MARKET OBSERVATIONS FOR January 26, 2014: The stock market corrected sharply during this past week. While I did expect a little more strength earlier in the week, the overriding message was to stay out of long positions. This proved to be wise advice as almost all sectors experienced large percentage losses during the week. From here, the majority of internal indicators are about a day away from becoming oversold enough to produce a technical bounce. But I’d still expect that the final lows for this move aren’t going to happen until at least February.
Key underlying market indicators show the following
Another way to look at the general market is to see if there are matching oversold “Full Stochastics” readings on the major ETF broad-based averages. You will notice that all major intermediate bottoms start after oversold reading. The current readings require more time before reaching oversold levels. Note: The QQQ does not always reach oversold readings at bottoms due to its high relative strength:
- DIA – Full Stochastic – 37 (neutral) on lagging red line
- SPY – Full Stochastic – 61 (neutral) on lagging red line
- QQQ – Full Stochastic – 83 (neutral) on lagging red line
- IWM – Full Stochastic – 79 (neutral) on lagging red line
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My advice for traders and investors is to remain of the sidelines and let the market set itself up for a possible bottom in the intermediate term. The majority of internal indicators have moved into buy readings but need more time in the misery zone. Expect a short-term bounce early next week and then a retest 5 to 10 days after those previous lows. The time to take a chance on the long side is when weakness occurs amid obvious bad news on the retest of previous lows. That should come in February most likely.
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Note: Stock that have moved into their buy range according to the Money Flow Indicator include the following: General Electric and Berkshire-Hathaway.
STOCK MARKET OBSERVATIONS FOR January 21, 2014: The stock market appears to be on the last leg up of its long bullish trend. The rally of the past week has been narrow in breadth which suggests that the next closing high for the Dow Jones Industrial Average will be its last. Look for strength during this coming week as an opportunity to sell or even go short as a speculation. The overly bullish sentiment of the past few months has set the market up for a possible fall of some significance. If anything, this is not a time to add to new long equity positions.
Key underlying market indicators show the following
My advice for traders and investors is to remain of the sidelines and let the market set itself up for a possible top in the near term. The majority of internal indicators have moved into neutral readings while the Dow looks like it wants to challenge the old highs. This is usually a sign of an important top and something that investors want to avoid being long equities. Instead, this is one of those times where being in cash is probably the wisest place to be for now.
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Note: The behavior of a big Dow stock like General Electric since the last day of 2013 suggests that it needs to correct back to its 200-day moving average.
MARKET OBSERVATIONS FOR December 29, 2013: The stock market rallied to 6 consecutive new highs before its slight drop on Friday. This certainly qualifies as confirmed strength but also a possible sign of an internal top. I would expect the strength to continue for a few more days with a good chance of a correction starting at the beginning of the New Year. This market is now overbought, over-loved, and overextended as the indicators below are signaling. This isn’t a time for buying, it’s a time for selling.
Key underlying market indicators show the following:
My advice for traders and investors is to remain of the sidelines and let the market set itself up for the next major move. The current list of oversold Blue Chips stocks and Exchange-Trade Funds that are near the lower range of their Money Flow Indicator and could be bought on further weakness include: Ford, TLT & FXI. This short list is another indication that very few issues are in good buying ranges. I noticed that bellwether stock, Apple, may have made a final double top on “obvious good news” marking the end of its rally.
Categories: Apple Trading Strategies, Stock Market Strategy Tags: APPL, apple, investing, investing tips, investments, stock action, stock market, stock tips, stock trading, trading tips, wall street
MARKET OBSERVATIONS FOR December 14, 2013: The stock market declined this past week after its failed attempt at a new high following the previous Friday’s strong rally. This sets the market up for a short-term bottom this coming week. My best guess is that this bottom will come between Tuesday and Thursday. I would suggest buying into weakness on any of these days with small pilot positions in anticipation of a year-end rally. In order to do this, you’ll have to ignore any bad news.
Key underlying market indicators show the following:
For now, my advice for traders and investors is to remain of the sidelines and watch for a short term buying opportunity in the coming week. This bottom would set up the traditional “Santa Claus Rally” into the New Year. Oversold stocks would include IBM, Verizon, AT&T, and Newmont Mining.
Categories: Stock Market Strategy Tags: investing, investments, QQQ, SPY, stock market, stock tips, stock trading, stock trading tips, stocks, Tesla, wall street
MARKET OBSERVATIONS FOR December 7, 2013: The stock market had a mild 5-day correction after hitting its 13th consecutive new high in the DJIA. Yesterday (Friday Dec. 6th), the market snapped back with a rally that puts it into position to retest the previous week’s highs. That retest will occur early next week and could produce a new closing high. My hunch is that this retest will fail and clear the way to a more substantial correction shortly afterwards.
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). Other stocks that could experience tax-loss selling in December and may be worth picking up for longer-term holdings include: IBM, CSCO, and AT&T.
MARKET OBSERVATIONS FOR October 27, 2013: The stock market has been marching upwards for the past 13 trading sessions. During this coming week, the time of this rally will have matched the previous downleg and thus, be ripe for a pullback. I would not be surprised to see a new closing high in the Dow Jones Industrial Average sometime next week which would mark the high of this phase of the rally. But current readings of key breadth indicators show that the general market has already begun its correction. That could mean that the correction will be sharp in terms of price, but short in duration.
Key market indicators show the following:
For now, my advice for traders is to be on the sidelines as the stock market peaks this coming week. Since I don’t see a good way to participate on the downside, I’d prefer to wait until the market becomes oversold and then play the next rally. Retests of highs and lows has not been characteristic of this market. Instead, the stock market goes up until it runs out of time and then retreats into a similar reversal. Playing the extremes in breadth oscillators seems like the best way to go….. especially to the upside. And in this market, playing the downside has been a study in frustration and capital loss.
MARKET OBSERVATIONS FOR October 20, 2013: As I mentioned last week, the stock market’s rallies and declines over the past few months have ranged between 14 and 17 trading days. The October 8th bottom comes exactly 14 days after the most recent closing high in the Dow Industrial Average. The current rhythm of the market suggests that the next top should come between 14 and 17 days after the October 8th bottom. That means that the end of this rally in terms of time is scheduled to arrive around Oct 28-31. So there is still another week of upside before this market is ready to move downwards.
Key market indicators show the following:
For now, my advice for traders is to move to the sidelines as the stock market reaches the end of this month. The overbought readings along with overly-bullish sentiment makes it an ideal time to start selling positions and moving to cash. The news can’t get any better and the opportunity is to sell, not buy right now.
MARKET OBSERVATIONS FOR August 10, 2013: The stock market made a new closing high 5 trading sessions ago. Since that time, it has been in a slow, choppy decline where there has been an absence of buyers rather than an abundance of sellers. The previous high was largely confirmed by other major indicators and suggests that another “retest” rally will be made in the coming week. But the NYSE Summation Index is making the case for a significant low coming up in a couple of weeks.
Key market indicators show the following:
For now, my advice for traders is to wait for the next oversold condition and then take positions for an upside move into the Fall. But if the market were to rally here into an unconfirmed new high, I’d be wary that the highs for the year have been achieved and to stand aside in a defensive position of cash. Thus far, playing the short side of the market has been difficult to trade and is better off avoided by most people.
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The indicators for Apple (AAPL) read as follows:
- Current price: 454
- Relative Strength Indicator = 61 heading down
- Ultimate Indicator = 59 heading down
- Money Flow Indicator = 50 heading down
- 50-Day Moving Average = 435
The stock of Apple appears to have achieved its upside objective for this cycle in terms of price. I would wait to take new positions in the stock whenever any of the indicators (RSI, Ultimate, Money Flow) reach oversold readings. Of these, the Money Flow Indicator has been the most reliable one for swing trading. I’ve surmised that trying to chart this stock purely from a price standpoint has been an exercise in futility. The best trading results for the past year have been by simply relying on the Money Flow Indicator to identify low-risk buying areas to go long.