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Posts tagged ‘Market sentiment’

Wealthbuilder Market Brief September

The Dow Industrials, Transports and the S&P are range bound with the NASDAQ in a bullish breakout.

By  Christopher M. Quigley

The “Syrian Conflict pullback” is over and the market is back in bullish mode, particularly the NASDAQ which has just given a bullish breakout signal.

For the third time the 1480’ish level on the Dow Transports has held. With this support holding, the bull trend is back in business on the Industrials the Transports and the S&P. However, they are range bound.

Within this apparent overall strength however there is much technical weakness about when you start to drill down a bit into specific stocks, particularly consumer staples. This development is causing me to worry somewhat and indicates that all is not completely “rosy” in the economic fundamental garden.

For example of the 10 top holding in the bell-weather consumer staples ETF: XPL, 5 are trading at or below their 100 DMA (PG, PEP, CVS, CL and MO) and another 3 are trading at or below their 200 DMA (KO, PM and WMT). Apparently this technical weakness is due to bad guidance moving forward which is not a good omen for the health of the overall world economy. This may also explain why so many companies, in the broader market, are trading below recent highs. Thus caution is warranted.

Full PDF doc Here:  Wealthbuilder Market Brief September 10th

Stock Market Extreme Euphoria Tops

By: Zeal_LLC

The levitating stock markets continue to  seductively entrance traders, powering to new nominal record highs day after  day after day.  No one believes a  meaningful selloff is even possible anymore, thanks to the vast deluge of  central-bank monetary inflation.  Sheer  euphoria has set in as all perception of risk has vanished.  This makes these stock markets  extraordinarily dangerous, they are truly at topping extremes.

As of Wednesday, the flagship S&P 500 stock index (SPX) had rallied to new nominal record highs in 11 of the past 13 trading days. It blasted 4.8% higher over this short span. If sustained for an entire year, this blistering rate of ascent would nearly double the stock markets! This latest euphoric surge extended the cyclical stock bull that was born way back in March 2009 to a massive 145.2% gain over 50.2 months.

This move, particularly the one-sided 22.6%  melt-up in the last 6 months, has bred unmistakable euphoria.  Wall Street  vehemently tries to deny this truth, but the definition of euphoria is “a  feeling of great happiness or well-being, a feeling of great elation”.  Does that not describe the outlook for the  stock markets today?  There are no bears  left, everyone is incredibly bullish  and expects no material selloffs.

Normal healthy bull markets climb a literal  “wall of worry”, traders are always anxious about some catalyst arising that  will spark a sharp selloff.  But not  today.  The markets have run up for so  long with nary a hiccup that traders no longer believe significant selloffs are  even possible.  They expect any selling  to be met with immediate buying, effectively backstopped by the Fed’s  unprecedented QE3 debt monetization.

All news is being interpreted as bullish today, thanks to the Fed manipulating the markets. If it ramps up QE3, then there will be more freshly conjured money pouring into stocks. If it instead tapers QE3, then the underlying US economy must be improving so cash on the sidelines will return. And of course any poor economic news is seen as forcing the Fed to keep aggressively monetizing debt, again bullish for stocks.

But all markets flow and ebb.  Prices rising and falling is the natural order of  things.  This is because nearly all  short-term price action is driven by the perpetually warring emotions of greed  and fear.  These are mutually exclusive,  so prevailing market sentiment swings back and forth between them like a great  pendulum.  Excessive greed is followed by  excessive fear, as the markets always ultimately balance out.

Euphoria, which is built on rampant greed,  is the most tell-tale sign of a major topping underway.  Traders no longer worry about anything, so their  greed drives them to buy every trivial dip.   This pushes markets higher and higher regardless of newsflow until  everyone interested in buying in anytime soon has already bought in.  That leaves only sellers, so the great  sentiment pendulum starts swinging back.

I suspect that very peak-euphoria moment is  here, when the SPX’s anomalous uptrend suddenly reverses.  Contrary to popular belief, this doesn’t  require a news catalyst.  Once all  available near-term buyers are sucked in, sellers assume control by  default.  Most bull markets top without  any crisis or even bad news to spark  the initial selling!  And that quickly  feeds on itself as late buyers rush to cut their losses.

Pretty much every technical or sentimental  indicator you want to look at these days confirms the euphoria blinding stock  traders.  Last week I focused on the  excessive valuations, stocks are very expensive so the  foolish traders chasing this topping are buying high.  This week I’m examining psychology, the extraordinary  greed and complacency driven by a one-sided melt-up.  And its resulting overboughtness.

This first chart looks at the benchmark  S&P 500 in blue and its definitive sentiment gauge, the VIX  implied-volatility index, in red.  The  span encompasses the SPX’s entire mighty cyclical bull market since March  2009

full article at source: http://www.marketoracle.co.uk/Article40502.html

Stock Market Cyclical Trend Forecast 2013

By: Jim_Curry

As we forge ahead into the year 2013, I wanted to post an article going over   the complete yearly forecast path, as suggested by the various time cycles that   I track – and also with other indicators such as seasonal patterns, the Bradley   indicator, and also the post-election ‘presidential cycle’ pattern in   stocks.

With the above said and noted, the projected path for 2013 looks somewhat   similar to that seen in 2012, though with a larger percentage correction being   expected in the second-half of the year – primarily due to the position of the   larger 180-day, 360-day (18-month) and four-year cycles. In- between, there   should the normal up-and-down gyrations along the way, ideally with a peak in   here in January ideally giving way to a low in February, prior to returning to   strength again into late-Spring or early-Summer, setting up for that important   top with the 360-day wave.

As for the various time cycles that I track, the 45-day cycle is seen as 10   days along and is currently labeled as bullish. The 90-day cycle is seen as 40   days along and is also labeled as bullish, while the larger 180-day wave is seen   as 40 days along and is regarded as bullish. The 360-day cycle is 322 days along   and is currently labeled as neutral, while the four-year cycle is 972 days along   and is also regarded as neutral at the present time.

full article at source: http://www.marketoracle.co.uk/Article38534.html

Current Position of the Market

By: Andre_Gratian

SPX: Very Long-term trend – The very-long-term cycles are down and, if they make their lows when expected (after this bull market is over) there will be another steep and prolonged decline into late 2014. It is probable, however, that the steep correction of 2007-2009 will have curtailed the full downward pressure potential of the 120-yr cycle.

SPX: Intermediate trend – SPX is in a limited intermediate uptrend which is estimated to end in the first week of Au

Market Overview

Ever since the SPX started its uptrend from 1267, I projected that the rally would end at about 1404. That was a target derived from a Point & Figure count taken across the base and confirmed by a Fibonacci measurement. While this is a preferred count, it is not an absolute, and there is a valid count to 1425 and some even higher. Last Tuesday, the index rose to 1407 before backing off and spending the rest of the week moving sideways in what could turn out to be a pattern of distribution — which would put an end to the rally, resulting in a subsequent decline, or one of re-accumulation, with an eventual break-out to the upside followed by higher prices

Next week should determine what path the market wants to follow over the near-term. Taking into consideration the cyclic configuration, the odds favor an end to the rally sometime this month, with a preference for the first part of August. Friday’s price action was caused by a minor cycle bottoming in the first hour which initiated a bounce into the close. Although that looks like the start of a move to higher highs, some important indices did not participate, bringing into question whether this was simply a test of the highs. On the other hand, XIV made a new high while the market did not — action which is potentially bullish (but not infallible). This is why we need to wait for Monday to clarify the market’s intention.

Whether or not we are ready for an intermediate correction, the odds of this being a major top which would put an end to the bull market are not great. During this uptrend, the weekly indicators of the SPX had a bullish move to the top of their range and are now overbought, a condition from which they normally correct, but not one from which they start a major decline. On the other hand, the NDX weekly indicators are less bullish and are beginning to show negative divergence

Full article at source: http://www.marketoracle.co.uk/Article36023.html

Tech Stocks Signal Bearish Move for Stock Market

By: Steven_Vincent

Today’s intraday pop and drop reversal contributes to the growing picture of bearish tape action more consistent with a C wave decline. We are starting to see “good” news, such as recent announcements from the EU, either ignored or actually sold, whereas bad news is being hit hard, such as AMD’s profit warning. Alcoa announced an earnings beat and it intially popped and then got crushed for -3.3% on big volume

It’s also interesting that while the news media were reporting about the beat last night, there has not been a single mention of the selling onslaught today.

One of the major technical features underlining the bearish potential in this market is the dramatic underperformance of the darling sector, technology. Equal Weighted Tech (NDXE) is getting crushed and semiconductors and networking are leading the way down.

Here’s the major index relative performance chart since the April high, with NDXE in blue

read full article at source:  http://www.marketoracle.co.uk/Article35540.html

High Risk of Near Term Global Financial, Stock Market Crash

By: Steven_Vincent

Deutsch: Bulle und Bär vor der Frankfurter Bör...

Deutsch: Bulle und Bär vor der Frankfurter Börse von Reinhard Dachlauer English: Bull and bear in front of the Frankfurt Stock Exchange (Photo credit: Wikipedia)

At each juncture, I look at the available information as represented in the market price and technical data. I approach the body of evidence without preconception and with an open “beginner’s mind”. I see what I see. I analyze. I develop a set of probabilistic outcomes and then rank them. Then I write my report. I simply report my findings.

There is an extraordinarily high risk of some variety of global market panic in the relatively near term. In fact, I would say that there is a extant setup that is as perfectly aligned for an extreme market event as could be dreamed of by the most bearish of permabears. I’m no permabear, but a thorough review of the current price and technical charts has revealed an inordinate confluence of data points which collaborate to represent a very high risk profile. The current extreme risk profile is amplified by a nearly total lack of recognition on the part of market participants. A deflationary episode, potentially on the scale of the 2008 event, is presently on the table. Investors would do well to at least consider the facts, analysis and conclusions of this report.

BULLISH CONSENSUS

I generally place Sentiment and Psychology at the bottom layers of my analysis since it it the softest and least reliable data to consider, but in this case I am going to lead with it simply because there appears to be not merely a significant gap between perception and reality but apparently a widening chasm. Bulls are repeatedly citing “excessive” or “extreme” Bearishness as a primary basis for an ongoing Bullish outlook, but the evidence strongly suggests this is not only not warranted but that the exact opposite conditions prevail.

There appears to be nearly total complacency in the present market environment. Few if any analysts are currently willing to consider a market top of any kind, much less a crash. Based on the findings in my current BullBear Market Report, the continued bold bullishness of the overwhelming majority is simply not supported by the technicals of the market

Full article at source: http://www.marketoracle.co.uk/Article34664.html

Broad Market Reversal

New York Stock Exchange on Wall Street in New ...

Image via Wikipedia

Broad Market Reversal

 by Chris Vermeulen

Better hold on to your hat!

This had been an exiting week for traders as the equities market was on a verge of a major sell off. Fortunately, we were watching the market very closely and saw the sentiment and market internals shift shortly after a new low was set last week. That was an early warning for us that a trend reversal to the upside could happen at any hour or day this week.

Wednesday and Thursday’s rallies were on solid volume and the market internal indicators along with market breadth were strong also. There has been a large surge of new highs across the board on the NYSE, NASDAQ and AMEX. These numbers tell me that it’s not just one sector moving the market; instead it’s a broad market advance (institutional buying).

While I don’t typically try to pick major tops or bottoms because of the added risks and lower probability of winning trades, I do tend to spot them forming a few days in advance allowing me to tighten stops and take some profits on positions.

Trend reversals typically have large violent moves near the beginning and end of their life cycle making things not only tougher to trade but potentially more costly. Once I see a trend confirmed with moving averages, volume, and sentiment along with market breadth that’s when I start looking to take positions on pauses or pullbacks to support zones. This greatly increases the odds of winning/making money from the market. There are some really great Options Trading Strategies for taking advantage of these volatility changes in the market which you can get at OptionsTradingSignals.com

SPY Daily Chart:

 

 As you can see the market has clearly broken to the upside above key moving averages after finding support at the 50 day moving average. This rally has some solid volume behind it which I like to see also.

The first 3-4 days of a trend reversal generally post some give moves but after that initial thrust expect a pause or pullback to happen.

SPY ETF Trading

SPY 60 Minute Intraday Chart:

 We were lucky enough to take profits on our inverse SP500 trade as the market started to give us mixed signals of a possible rally. A couple days later on Nov 26th we saw a major shift within the market sentiment preventing us from shorting the market again.

Two days later the broad market gapped higher triggering protective stops/short covering sparking a fierce two day rally which took the market up to a major resistance level. I do feel as though the market is going higher, but right now, everything is WAY over bought and trading at resistance. Even if the market moves higher for another 2-3 days and breaks this resistance level, it will most likely have a pause, or pullback as it regains energy for another thrust higher.

Trade SPY ETF

Mid-Week Trading Conclusion:

 In short, it looks as though the trend is now up and the Christmas rally could be gearing up for a good one!

source https://machholz.wordpress.com/wp-admin/post-new.php

Comment

Way ahead of you chris with this one

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