Market Timing 08 (Apr 2023 - Dec 26)

[winston]

Stocks are likely headed higher in the short term

by Jeff Clark

Conditions are oversold enough to justify a rally towards the upper end of our 5,400-5,500 target zone.

In fact, I can make a case for higher levels if the rally happens fast enough. But I don’t think we have any chance of getting above the 50- and 200-day moving averages near 5,750.

The closer the S&P gets to 5,750 the better the odds for adding short exposure.

Ultimately, the index will need to retest the 4,835 low, and more likely, break below that level.

For the next few days, I am leaning bullish. But, with one eye glued to the exit sign.

A rally to 5,750 would mean we’re in for another 12% climb based on where the S&P trades.

Assuming that happens, the subsequent fall to 4,835 (and potentially, beyond) would mean a 16% drop.

As long as 5,200 holds, on a closing basis, I favor an upside move over the next few days.

If the S&P closes below 5,200, then the odds favor a retest of at least the 5,000 level, and possibly an immediate retest of the recent low at 4,835.

I am leaning mildly bullish for the week. That will change if the S&P closes below 5,200.

For now, though, sentiment is so poor, and the daily technical indicators are starting to turn bullish. So, I tend to think we’re due for a quick pop higher before we get a retest of the recent lows.

So, all eyes on whether the S&P closes above or below 5,200 today.

As noted earlier, 4,150 or 4,100 is Jeff’s predicted bear-market low. That would mean a 29% fall from where he thinks a relief rally could top out (5,750).

If you're holding stocks long all the way through that, that could spell a little bit of trouble.

But if you take advantage of opportunities where you get deeply oversold conditions, where you can get into a good bounce – play that bounce.

But be quick to take your profits off the table and then allow the market to come back down again and give you another opportunity…

Bottom line is, I think there's going to be an awful lot of opportunity to trade.

Source: Jeff Clark Trader

[winston]

A Recovery May Be Starting for Stocks and the Dollar

by Brett Eversole

Expect Stocks and the Dollar to Rise After Falling Together

First, it’s darn rare for stocks and the dollar to fall together at the rate we just witnessed…

And, second, that fall doesn’t mean the declines will continue.

Stocks have already recovered most of their tariff-induced losses.

The dollar hasn’t fared as well so far. But according to history, both could see gains in the months ahead.

Source: DailyWealth.com

https://dailytradealert.com/2025/05/09/ ... he-dollar/

[winston]

Why Market Volatility Can Be Your Best Friend

by Marc Lichtenfeld

When volatility is high, you may want to consider selling options, because high volatility pushes option prices higher. So you could sell puts or calls and capture a significant premium.

When volatility is low, you may look to buy puts or calls, because the options should be cheap.

Source: Wealthy Retirement

https://dailytradealert.com/2025/05/13/ ... st-friend/

[winston]

It’s time to bet on another decline phase

by Jeff Clark

[Last week’s] news of a trade deal between the U.S. and the UK seems like good news. Bullish traders used it as a reason to charge into the market – helping the S&P 500 to rally to its highest level since “Liberation Day” in early April.

But there’s a good chance that folks who bought stocks yesterday will regret it in the days ahead.

Jeff believes that “regret” will be even greater for investors who jumped into the China-truce market surge.

Now, one of the technical tools informing Jeff’s latest bearishness is the PMOBUYALL indicator. It’s a momentum indicator that fluctuates between zero and 100.

When it gets to zero, most of the fuel for a large decline has been used up. Traders should look to buy stocks into any additional weakness.

Conversely, when the PMOBUYALL hits 100, most of the fuel for a rally has been used up. Traders should look to sell stocks and/or establish short positions into any additional strength.

To be clear, the PMOBUYALL is not an exact timing tool. But it’s a helpful broad indicator that can traders help frame a market move, and from there, refine their exact trade timing with other tools.

The PMOBUYALL rallied as high as 100 seven previous times over the past year. Each time this happened the S&P 500 was near a short-term high.

The stock market declined each time the MACD turned lower when the PMOBUYALL was in this condition.

The PMOBUYALL hit 100 about two weeks ago. It has been stuck at the 100 level ever since then. Now, the MACD indicator is starting to turn lower.

If the current situation plays out like the seven previous situations did, then we should see a decline phase get started any day now.

But what about the market explosion based on the trade deal with China?
It didn’t change Jeff’s opinion of what’s coming. It just meant there’s farther to fall.

Folks with too much short exposure, or not enough long exposure will be chasing this move.

DON’T DO IT!

Buying stocks into extremely overbought conditions is almost always a bad decision.

And that brings us to today. Jeff just recommended a bearish trade on the S&P.

Here’s part of his thinking:

All the conditions that set the stage for a bounce off the lows last month are now pointing to the potential for a decline. And it looks like that decline could get started as soon as today…

The index is trading historically far above all of its various moving averages. All of the technical indicators have flipped from extremely oversold to extremely overbought. And the financial TV talking heads who were warning of a crash last month are now calling for new highs.

Jeff notes that the current setup is eerily like how things looked back in April 2022. And if the similarity continues, stocks will be much lower in the months ahead.

How much lower?

He sees a bear market bottoming later this fall around 4,125. That’s 30% lower than where I write Tuesday approaching lunch.

Bottom line: If you’re a battered bear, Jeff urges you to hang in there.

Source: Investor Place

[winston]

The Stage is Set for a Massive Summer Rally

by Luke Lango

Inflation didn’t flare up as so many feared. It fizzled. And in this environment, that’s about as bullish a signal as it gets.

The Final Word: Soft CPI Clears the Way for a Summer Surge

The market’s technicals are just as bullish as the macro backdrop is.

Source: Investor Place

https://tradesoftheday.com/2025/05/15/t ... mer-rally/

[winston]

Why the 20% Rally Might Be Just Another Bear Market Trap

by Chris Johnson

The CNN Fear & Greed Index has swung violently in the last month. The index is a good read on investor sentiment- from “Extreme Fear” in April to nearly “Extreme Greed” in less than a month.

The VIX has collapsed, reflecting widespread complacency.

Bear market rallies typically:
Recover 20% to 25% of prior losses (often retracing a Fibonacci 50% level)
Fail to reclaim the 200-day or 20-month moving averages
Peak on lighter volume
Coincide with a temporary macro catalyst (rate cuts, stimulus, headline relief)
End with a swift reversal that takes out the prior lows

Because in every major bear cycle the biggest losses came after the strongest rallies. And right now, this market feels more like a setup than a solution.

Source: Money Morning

https://tradesoftheday.com/2025/05/16/w ... be-a-trap/

[winston]

It’s time to bet on another decline phase

by Jeff Clark

Big picture, Jeff believes we’re in a bear market that won’t bottom until later this fall around 4,125. That’s 30% lower than where it trades as I write Tuesday approaching lunch.

The S&P 500 managed to recover all of yesterday morning’s losses, and close up a few points on the day. Much of that action, I suspect, was bears and reluctant bulls throwing in the towel and just buying anything in order to participate in the rally.

Meanwhile, all of the technical warning signs remain.

So, as I’ve argued for the past several sessions – if not the past few weeks – there is a pullback coming. I can’t say definitively when. Though, I suspect it’ll happen soon…

Technical conditions are stretched. Fundamental valuations are stretched. And, the risk in the market right here is far greater than the potential reward.

Troubling as that might sound, even in a bear market, Jeff writes that there’s plenty to look forward to – massive rallies (within a broader decline) that we can trade for fast, double-digit profits, followed by a “generational buying opportunity” at the ultimate bottom.

Source: Investor Place

[winston]

Mystery options buyer bets some $3 billion on US stock rally

By Bernard Goyder

Over the past month, market participants have noted steady buying of mostly June 2027 call options across a swath of large US companies.

Estimates vary of the total premium being spent, with Nomura Holdings Inc. tallying nearly $3 billion.

Speculates that the buyer is a deep pocketed and broadly optimistic investor.

The trades are being done by a “big global macro player who is long term bullish and wants the optionality and volatility exposure of long calls as opposed to buying equities.

The options buyer spent $316 million for at-the-money calls on Amazon.com Inc., $159 million on similar options on Salesforce Inc. and $878 million on ARM Holdings Plc.

Since the options are years away from expiring, the premium is far higher than for the shorter-term contracts — zero-day-to-expiry in particular — that have driven much of the trading.

While it’s difficult to say for sure that it’s a single investor, the repeated pattern of buying lines up with one party building up most of the position, with others possibly copying the trades.

Source: Bloomberg

https://theedgemalaysia.com/node/756361

[winston]

We Have a Rare and Powerful Contrarian Signal Right Now

by Brett Eversole

Recency bias drives expectations. When times are good, everyone expects the good times to continue… And when times are bad, folks expect more trouble.

That’s why contrarian investing works. When expectations hit massive lows, there’s no one left to drive prices down further. So instead of getting “more of the same,” you get a major reversal.

Nearly half of investors expect stock prices to fall. That’s one of the highest readings on record.

As contrarians, this should get our attention. Sure enough, history shows this is a good buying opportunity that could lead to double-digit gains…

Consumer Confidence Index: Nearly Half of Folks Expect Stocks to Fall

We want to buy when everyone else assumes the worst. That’s the key to contrarian investing. And right now, we have a rare and powerful contrarian signal. Don’t miss it.

Source: Daily Wealth

https://tradesoftheday.com/2025/05/23/w ... right-now/

[winston]

This Stock Market Rally Is Just Beginning

by Brett Eversole

The S&P 500 Index jumped 18% in just 25 trading days. That handed investors about two years’ worth of returns in just five weeks – a truly incredible result.

Importantly, history shows that this kind of rally only happens at major market bottoms. In fact, we have annual upside potential of 31%. So instead of worrying, we should be bullish.

We’ve only seen five similar setups since 1950. They all signaled fantastic buying opportunities… And four out of the five unfolded at generational bottoms.

In short, we’ve just lived through a momentous rally. But history says the good times are only beginning. Again, you really want to own stocks in times like these.

So don’t worry right now. Instead, history tells us now’s the time to buy.

Source: Daily Wealth

https://www.investing.com/equities/most-active-stocks