The stock market is broke through major resistance to new rally highs this past week. The Bulls were encouraged by positive remarks from the Fed despite some weaker-than-expected earning from several major tech companies. Thursday’s late action along with Friday’s retreat has reset the internal indicators to neutral positions. I will be looking for a short-term oversold condition to add some long positions for the short-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 92. This is both a sign of strength and one of being overbought. But does appear to indicate that this indicator is most likely at its peak and that the major part of the current rally is over.
Fear/Greed Index: This popular indicator is in the “Extreme Greed” territory with a reading of 76. This is the first time that it has been in this range for a long time. I can easily spend more time here, but an investor should be careful about joining the Bull crowd at this late time.
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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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STOCK MARKET STRATEGY FOR FEBRUARY 4, 2019: The stock market has continued its strong, broad-based rally from the Christmas lows by going practically straight up. But now is the time for a correction of this rally (most likely starting after the State of the Union address Tuesday) and based on the momentum, I’d expect it to be more of a sideways, stalling decline than a steep drop which serves the purpose of chewing up time. But a good buying opportunity will likely arise from the next oversold reading.
Key underlying short-term timing indicators show the following:
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THE BOTTOM LINE: The market may be setting itself up for a decline starting after Trump gives his State of the Union speech. This correction may not amount to a lot of points to the downside, but I’d be a buyer on the next oversold bottom. I think that the December lows were an important pivot point for this market and a continuation of the Bull Market.
Categories: Stock Market Strategy, Stock Market Timing Tags: Categories: Stock Market Strategy, investing tips, investments, retirement, stock action, stock market, stock market timing, stock trading, stock trading tips, stocks, Tags: investing, trading advice, trading tips, wall street