Market Timing 08 (Apr 2023 - Dec 26)

[winston]

Based on What We’re Seeing Today, Stocks Have Plenty of Upside Left

by Chris Igou

Today, just 22% of AAII survey respondents are bearish.

So while investors may be bullish today, it’s not a headwind for the current rally’s progress. History says that the opposite is probably true. The 22% bearish reading is likely to fuel higher prices from here.

It’s still not too late to go long. The data tells us investor optimism is a healthy development for this bull run. And based on what we’re seeing today, the market rally has plenty of upside left.

Source: DailyWealth.com

https://dailytradealert.com/2024/04/12/ ... side-left/

[winston]

The S&P 500 Just Issued a Buy Signal

by Jeff Clark

The Volatility Index (VIX) triggered a new buy signal when it closed back inside its Bollinger Bands earlier this week. We should see higher stock prices over the next several days.

Sell signals occur whenever the VIX closes below its lower Bollinger Band and then closes back inside the bands.

Buy signals occur when the VIX closes above its upper Bollinger Band and then closes back inside the bands.

It seems reasonable that any oversold bounce that comes off of this VIX buy signal could push the S&P 500 back up towards the resistance of its 50-day MA.

That would generate an excellent short-term gain.

Source: Jeff Clark Trader

https://tradesoftheday.com/2024/04/22/t ... uy-signal/

[winston]

S&P 500 is at risk of crashing 44% — and selling early could pay off, says elite forecaster

by Theron Mohamed

The S&P 500 is at risk of plunging 44% to around a four-year low, Paul Dietrich said.

The top strategist explained that selling stocks well before they crash can yield outsized returns.

Dietrich predicted a mild US recession this year based on multiple warning signs and threats.

Source: Business Insider

https://finance.yahoo.com/news/p-500-ri ... 48287.html

[winston]

You Should Stay Bullish, Even During This Market Pullback

by Brett Eversole

Ending this kind of months long streak isn’t a bad omen. It tends to lead to even larger gains. And that means you should stay bullish, even during this market pullback.

Source: DailyWealth.com

https://dailytradealert.com/2024/05/15/ ... -pullback/

[winston]

I’m Waving My Caution Flag

by Jeff Clark

Meme Market Mania… Again

It’s largely due to the existence of zero-day-to-expiration options on the major stock market indexes.

These are options that expire on a daily basis. Trading in these contracts has increased the size and persistency of the daily moves in the indexes.

Folks have been buying large amounts of daily out-of-the-money call options on the market indexes (SPX and QQQ mostly). Market makers who are selling those calls need to buy the stocks of the underlying indexes, or futures contracts on the indexes, in order to neutralize their short call positions.

Now, with the old meme stocks catching fire again this week, and with the major market indexes surging to new all-time highs, it feels right to start waving the caution flag again.

Source: Jeff Clark Trader

https://tradesoftheday.com/2024/05/20/i ... tion-flag/

[winston]

This is why S&P 500 could pull back in June: strategists

by Vahid Karaahmetovic

Potential pullback in the S&P 500 this June, driven by a temporary liquidity drain.

Strategas expects a $130 billion liquidity drag beginning in late May and lasting through June, which could contribute to stricter financial conditions.

The drain, according to the firm, is anticipated due to a mix of factors, including changes in the Federal Reserve's balance sheet and increased T-bill issuance.

The Fed is expected to slow the pace of its balance sheet contraction starting in June, a move that is likely to put upward pressure on the dollar and bond yields, which historically led to a temporary dip in equity markets.

Starting in July, there will be a large increase in T-bill issuance, funded through money market funds parked in Reverse Repos.

While the shift in liquidity is expected to ease conditions after June, the near-term impact could be negative for stocks.

June is a smaller hiccup compared to April, and once June clears out, we expect liquidity to flow through the election starting in July," they explain.

“We see more risk in 2025 than 2024 as the hangover from this easing, the stickiness of inflation, and the fiscal cliffs comes to fruition.”

Source: investing.com

https://www.investing.com/news/stock-ma ... ts-3462820

[winston]

Traders: Don’t Be Fooled by This Bull Trap

by Jeff Clark

The stock market’s spectacular intraday reversal on Friday may turn out to be a bull trap.

Bull traps are moves designed to sucker folks back into the stock market just before another large down-draft begins. And Friday’s action had all the telltale signs of one.

I’m not suggesting folks liquidate all of their positions and take a full 100% short trade.

I am suggesting, however, that rather than getting caught up in the current casino-like atmosphere of the stock market, folks might want to be a bit cautious here. NYSI sell signals have a good track record.

So, until this one is negated – with the NYSI closing back above its 9-day EMA – it is possible, even likely, the bounce that started last Friday is a bull trap. Traders should approach it with caution.

Source: Jeff Clark Trader

https://tradesoftheday.com/2024/06/05/t ... bull-trap/

[winston]

Turn Your Back on This Faulty Market Wisdom

By Sean Michael Cummings

Sell in May and Go Away?

The "sell in May and go away" crowd was just proved dead wrong. Stocks soared 5% last month – making it one of the greatest May rallies in a century.

According to history, May's 5% performance should prove to be a significant tailwind for stocks. Now is not the time to sell...

The bulls have momentum on their side this year. And in this kind of environment, stocks can absolutely soar.

Source: True Wealth

[winston]

We Want to Keep Owning Stocks

by Brett Eversole

This isn’t what most folks would expect. They’d see a collapsing fear gauge as a bad omen for stocks.

But when we look at the data, history shows it’s a bullish sign for the year ahead.

This low-volatility environment won’t doom the bull market. Outperformance is likely over the next year… And that’s why we want to keep owning stocks.

Source: Daily Wealth

https://tradesoftheday.com/2024/06/12/w ... ng-stocks/

[winston]

How bullishly do you want to interpret things?

by Jeff Remsburg

While the timing of the first rate-cut remains up for debate, nothing about today felt truly bearish for stocks.

Rather, it was simply a question of “how bullishly do you want to interpret things?”

Now, we agree that the Fed’s “kick the gain down the road” approach could open the door to some trouble in the months ahead but for now, the markets are happy.

So, how do we, as investors, respond?

By doing the same thing we’ve been doing…

We mind our stop-losses and position sizes but then we stay in the market, riding it higher.

Bottom line: If the market wants to climb, let’s not overthink it.

For now, the trend is our friend.

Source: Investor Place