The stock market made 7 consecutive new closing highs in the Dow Jones Industrial Average creating a point of buying exhaustion. On Friday with the background of a tariff war with China, the market gave up all of the last month’s gains in a matter of hours. With oversold readings in several indicators, a gap down opening in the next trading session may cause a selling climax to create a bounce from the session’s lows. But overall, I’d expect the market to head lower but with increased volatility in both directions over the near term.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 9. This indicates that it is in deep “oversold” territory. But the clustering effect has not appeared yet to indicate a tradable bottom. It may be time to exit short positions, but too early to go long except for a short bounce. A better buying opportunity should appear in a few weeks, not days.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 29. I would expect a reading under 25 in the “Extreme Fear” territory to indicate a bottom. That could come at any time now. I suspect that the market is setting itself up for a Santa Claus Rally in December. But it could be rough sledding until then. Be careful getting in too soon.
The stock market has been on a record shattering rally since the April “Trump Tariff” bottom. This rally has exceeded all expectations and brings to mind the concept of a “5th Wave Blow-Off.” But that kind of thinking can be a trading trap and it’s best to just play it carefully and wisely. With that being said, today represented the 7th consecutive closing DJIA all-time high and a pullback can be expected. But how long is anyone’s guess. Just remember that it is October, a month that is notorious for sharp corrections.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 19. This indicates that it is in “oversold” territory but far from “clustering” as in the case of forming a bottom. Until we see more points in a tight area, a bottom is not here yet.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 54. This does not indicator a buying area but could go in either direction.
The stock market has been on a record upswing since April when I warned about a climatic bottom as indicated by a reading of “4” in the Fear/Greed Index. Now we are at the other end of the spectrum with the anticipation of a final top. But tops are more often trickier than bottoms to predict. The last confirmed high in the Dow Jones Industrial Average was on July 23rd about 3 1/2 weeks ago. I expect a closing high next week to be unconfirmed by many key indicators to signify an important top. The key other indicator that I’m especially looking at is a lack of strength in market leaders such as Nivida and Palantir.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 30. This indicates that a bottom is very near this area, but it is unclear how long it will stay in this area or how low it can go.
Fear/Greed Index: This popular indicator is in the “Greed” territory with a reading of 58. This does not indicator a buying area but could go in either direction.
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The stock market is in full crash mode with back-to-back -5% moves on Thursday and Friday. This sets up a possible bottom for Tuesday, Wednesday or Thursday of this coming week with an intermediate top most likely coming in May. Walter Deemer, the esteemed stock market veteran, wrote, “When it’s time to buy, you won’t want to.” And that’s how it will feel next week when the market searches for a tradable bottom below the $SPX 5000. The real question is exactly how far below $SPX 5000 does it go? Maybe 4800?
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 26. This indicates that a bottom is in this area, but it is unclear how long it will stay in this area.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 4. It rarely gets this low and when it does it only stays in this area for a day or two. Based on this indicator alone, a tradable bottom will be at hand next week.
Categories: Market Analysis, Stock Market Timing Tags: investing, investments, stock action, stock market, stock trading, stock trading tips, stocks, trading, trading tips, wall street
The stock market has just had a sharp decline that broke through many moving averages and trend lines. But the oversold readings likely signaled a short-term bottom for a final move to All-Time Highs. If there is a new closing high in the DJIA that is not confirmed by the majority of other indicators, then we could have our final high and a classic “Dow Theory Sell Signal” or “Joe Granville Sell Everything Signal.” That final high must also coincide with an obvious “Cover Story” to bring in the “Bagholders” or final sucker buyers who will be left holding the proverbial bag.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 10. This indicates that a bottom is in this area and the next move it up.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 34. It did reach an oversold reading last week for one day and qualifies as a “buy signal” for this indicator.
The stock market has made a dramatic recovery from its sharp decline last month. However, this could be the ideal setup for a classic Dow Theory Sell Signal. A new closing high the DJIA over 41,198.08 will not be confirmed by the NDX, DJTA, and the popular Magnificent 7, three prominent indicators. The ideal cover story is also present with the new Kennedy/Trump alliance and the Fed’s announcement of a cut in interest rates. This could all occur as early as Monday so watch the last hour of trading with the idea of taking pilot positions on the sell side if a rally comes without significant volume. Note: Be careful since Wednesday’s NVDA announcements may trigger another leg up as well.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 76. This suggests that there may be some more time left to this rally (1-2 weeks) since this indicator is still in a rising trend.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 53. This does not mean that it is an ideal time to short the market. In fact, this indicator is best used for finding bottoms, not tops. It did another good job of spotting this current rally.
Categories: Stock Market Strategy, Stock Market Timing Tags: Categories: Stock Market Strategy, retirement, SPY, stock action, stock market, Stock Market Strategy, stock market timing, stock trading, stock trading tips, stocks, Tags: investing, Tags: investments, Tags: QQQ, trading, trading tips, wall street, WALL STREET CRAPS STOCK MARKET STRATEGY JUNE 19
The stock market continues to correct for the last 15 trading sessions. This is a time match from the previous correction with the possibility that Friday marked the end of the decline. The Fear/Greed Index seems to agree that one more lower close on Monday might mark the bottom of this decline and the start of the Elliot Wave #5 to ATHs. However, the NYSE McClellan Summation Index is clustering in the overbought region and suggests the opposite – that a decline of a few weeks is due to reverse the upward trend in breadth numbers.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 81. This suggests that a decline is due to occur over the next few weeks to correct the upward trend in breadth statistics.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 27. A close below 25 would take this widely-followed indicator into the “Extreme Fear” area that has marked the bottom of all corrections. Note: Major corrections end when this Index is below a reading of 5.
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The stock market has been continuing its relentless march upwards in terms of the S&P 500 and the Nasdaq Indexes. At the same time, the Advance/Decline Line, the Dow Jones Industrial Average and the Dow Jones Transportation Average have not confirmed that same strength. This presents a time to be extra careful about trading the upside for too long of a time and trading the downside too early or in the wrong sectors.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This index’s oscillator has a current reading of 22. This clearly means that a bottom is closer than a top. This is a rare occurrence when many major indexes are making new highs.
Fear/Greed Index: This popular indicator is in the “Fear” territory with a reading of 42. This means that the market could head lower and reach a bottom soon. Or the market can head higher for a much longer period of time.
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The stock market has declined sharply from its rally highs only one week ago. The short term oscillators are all in oversold territory suggesting that a bounce is due at any time now. Perhaps, Wednesday will be a day that opens lower, scares bulls into dumping, and turning around for a positive close. But where the market goes on an intermediate term basis is anyone’s guess at this time.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator has a current reading of 74 which is just coming out of overbought territory. This suggests that an intermediate term bottom has not had enough time to set up and any trades on the long side are for short-term speculation only.
Fear/Greed Index: This popular indicator is in the “Neutral” territory with a reading of 45. A reading below 25 is needed for a tradable low based on this sentiment indicator.
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The stock market had an extremely memorable shorten week with the invasion of Ukraine news backdrop. After a climatic bottom on Thursday’s opening, the market rallied strongly during the remainder of the day and on the following Friday. It was a classic bad news bottom and many are wondering if that was THE BOTTOM or whether there will be a retest in the coming weeks. These are turbulent times and for those with a weak stock market stomach, this may be a time to sit on the sidelines. Another good time to go long could be on a retest of last week’s low.
Key underlying short-term timing indicators show the following:
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NYSE McClellan Summation Index: This indicator has been bottoming after a long decline for many weeks now. It is hard to see any reliable signal here as it may still fall off the cliff and go to a lower bottoming level. But overall, it says that the risk is in trying to short this market as strange as that may seen.
Fear/Greed Index: This popular indicator is only in the “Fear” territory with a reading of 31. At the December 2018 bottom, this indicator reached a reading of 3. This week it reach an “Extreme Fear” reading of 25 which is just barely in this territory. I would expect a much lower reading if this is to be the final bottom and gives me the strong conviction that we still have more downside to go.
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