Market Timing 08 (Apr 2023 - Dec 26)

[winston]

Fed Pivot

Every single time the Fed has paused its rate-hike cycle over the past 40 years, stocks rallied over the next few months, with returns often running north of 20%.

This time will not prove different.

A Fed pivot is coming. So, too, is a big stock market rally.

Source: Investor Place

[winston]

Buy

Last week, the Coppock Curve triggered a buy signal, on adjusted parameters.

Red-hot inflation has turned into significant disinflation. Every time that has happened in the past, stocks rallied.

The Fed is likely to pause its rate-hike campaign within a few months. And similarly, every time that has happened in the past, stocks rallied.

Meanwhile, the economy is stable, earnings have been pretty good, and valuations are normal.

The ingredients are there for a massive stock market rally into the end of 2023.

Source: Hypergrowth Investing

[winston]

“Earnings and interest rates. That’s it”

Unfortunately, neither is friendly.

The odds of a 0.25% rate hike in May increased to 87% this morning.

Meanwhile, Q1 earnings season is likely to be rough. S&P 500 companies are expected to report a -6.5% decline in EPS year over year, according to FactSet -- the worst drop since Q2, 2020.

A bit ahead of itself? The stock market’s rally could run out of a steam, warns Top Stocks’ technician Helene Meisler.

Short-term oscillators are overbought, and her intermediate-term measure of advancing to declining stocks will likely be frothy by the first week of May.

Source: The Street

[winston]

'There's no reason to wait': Sell US stocks now before the S&P 500 tanks by over 20%, strategist says

by Zahra Tayeb

Exit the stock rally now as the S&P 500 index could tumble about 22%, according to the chief market strategist at FS Investments.

The benchmark index is up about 8% so far in 2023 on hopes the Federal Reserve will soon end interest-rate increases.

"This is a golden opportunity to use this bear market rally to de-risk in advance of potentially very painful losses over the next six, nine, 12 months".

Source: Business Insider

https://finance.yahoo.com/news/theres-n ... 33115.html

[winston]

Why the stock market's running of the bulls might be about to kick off

by Phil Rosen

To Bank of America, any of these scenarios could mean upside for stocks:
1. An end to the Russia-Ukraine war
2. An increase of immigration in the US and ChatGPT's deflationary impact on the workforce
3. An arms race in Big Tech spending
4. No recession
5. Investors once again viewing stocks as a better alternative to bonds

Fundstrat's Tom Lee said that the market actually already told us a new bull market has started.
Lee said bearish investors are now "trapped" because the possibility of a downturn has already come and gone — and a key technical indicator just flashed.

"The S&P 500 has now spent more than 25 weeks above its 200-week moving average," Lee said. "Since 1950, there are zero instances of the S&P 500 making a new low once it has recovered above the 200-week moving average and spent at least 15 weeks there."

Source: Business Insider

https://finance.yahoo.com/news/why-stoc ... 00427.html

[winston]

Investors Should Be Extra Careful As We Head Into May

by Jeff Clark

“When the VIX is high, it’s time to buy. When the VIX is low, it’s time to go.”

Whenever the VIX popped above 30 – it was a good time to buy stocks.

Whenever the VIX dropped below 20, the S&P declined almost immediately after.

But based on the history of this indicator – and with the calendar heading into May – investors should be extra careful here.

The odds favor a move lower.

Source: Jeff Clark Trader

https://dailytradealert.com/2023/04/19/ ... -into-may/

[winston]

Here are the 7 signals that suggest a 'bullish cocktail' is about to power a surprise rally in the stock market

by Matthew Fox

His no-recession call is backed up by the fact that the economy has added nearly six million jobs over the past 15 months.

Seven bullish technical signals:-
1. Strong January, strong year
2. A big January after a down year
3. Staying above December low
4. Back-to-back quaterly gains
5. A strong first five days
6. Quarterly gains of more than 7%
7. Rare Zweig Breadth Thrust

Source: Business Insider

https://finance.yahoo.com/news/7-signal ... 00183.html

[winston]

Here are 10 reasons why investors should own stocks right now despite fears of an imminent recession, according to Bank of America

by Jennifer Sor

1. Market sentiment is extremely bearish.
2. Recession is "very expected."
3. The Fed can ease up on interest rates.
4. There's trillions of dollars of "dry powder" on the sideline.
5. Cyclical stock sectors are purged.
6. The Japan Factory Automation Index hit a trough.
7. Equity risk premium should fall.
8. The economy will see productivity gains.
9 Earnings should be healthy.
10. The market is headed into historically strong-return quarters.

Source: Business Insider

https://finance.yahoo.com/news/10-reaso ... 06366.html

[winston]

Bullish signals are flashing that suggest the stock market is headed for a 'summer rip', Bank of America says

by Jennifer Sor

Stocks could be headed for a rally this summer, according to Bank of America

Analysts pointed to indicators that suggest the market will dip in May before rallying.

The S&P 500 could blow past its previous highs, potentially adding 5%, the bank said.

Three-month VIX versus the broader volatility index, which measures the three-month expected volatility of the stock market compared to the 30-day expected volatility, peaked below a ratio of 1.25, a level that typically precedes downside for stocks.

Dow Theory remains on an early 2022 sell-signal, but a December into March bullish divergence (a higher low for the Transports vs a lower low on the Industrials) and a shift to rising 200-day MAs on both the Dow Transports and Dow Industrials provide green shoots for this technical backdrop indicator that suggest buying a May dip for a summer rip" .

Source: Business insider

https://finance.yahoo.com/news/bullish- ... 02221.html

[winston]

It Looks Like the Odds Favor the Bulls This Week

by Jeff Clark

They say you should never short a dull market. The past week has been about as dull as any non-holiday week I can recall. So, traders should be careful on the short side.

It looks to me like the S&P 500 is gearing up to make one last big push higher.

As bearish as I am on the intermediate- and longer-term potential for the stock market, it looks to me like the odds favor the bulls this week.

Source: Jeff Clark Trader

https://dailytradealert.com/2023/04/27/ ... this-week/