Stock Market Analysis

Sunday, May 17, 2015

Imminent Breakout!

Remember I predicted that this market is going to look for a topside breakout? Well, so far, the SP-500 has rode a rising 30MA strongly and has not broken below that line despite the barrage of negativity in the market over the past weeks. Last Thursday's critical rebound off the 30MA and the subsequent closing yet again positive on Friday puts the odds in favor of this being the breakout move. Total equities put call ratio has also persisted below par in favor of call options trading the past week as options traders anticipate a topside breakout as well. I do think the market is due for a significant correction very soon, very likely sometime in June like the market did so many times before. As such, I have prepositioned my Master's Stock Options Picks Subscribers on call options over the past week in order to profit from this final leg before it all goes down. Are you ready for this move?

For now, the US market remains in a short term neutral trend within an intermediate and primary bull trend.

Tuesday, May 05, 2015

Is It Time For a Market Crash?

The US market took a beating today on multiple fronts; Trade deficit pointing to a potential lower revision of the already dismal first quarter GDP and Asian stocks taking a beating. All these reasons simply add on to the profit taking sentiment that is already in the market as evident by the significant selling pressure each time the S&P500 flirts with an all time high. Total equities put call ratio also surged into the bearish zone in favor of put options trading for the first time since 6 March.  (Learn about what put options are)

So, is this the start of a market crash?  Its after all 6 years since the end of the last market crash and the 2008 market crash took place 5 years after the end of the tech bubble crash.

From the looks of it, I don't think so at this point in time. There simply isn't enough evidence to convince me that this is a turning point yet. Bond yields have been rising the past few trading days even though the stock market has been dropping. This shows that real investors are still reallocating into equities from bonds and buying into the weakness from the traders who are taking profit and displaying strong short term bearishness (as evident from the total equities put call ratio). The single day surge in total equities put call ratio also isn't enough data to say that traders have turned bearish for real because the last time total equities put call ratio did this back in 6 March, it lasted only one day and immediately turned back down the next day, leading to a bottom in the market over the next few days that follows.(So did the time before that back in January) However, it is also evident that the market is now needing an intermediate correction in order to take a breather and set up for better entry points.

All in all, plenty of reasons to take short term profit and plenty of reasons to accumulate into the weakness depending on which side of the camp you are in now. Such is the typical sentiment of a toppy neutral market. This is also when smart traders wait for more evidence before taking action rather than try to predict which direction the next run would be. However, going by the fact that the market is still in an intermediate and primary bull trend, I maintain that the inclination for such a breakout would be bullish.

For now, the market turns short term neutral trend within an intermediate and primary bull trend.

Sunday, April 26, 2015

All Out Bull Leg?

Without any surprise, the US market staged a topside breakout of its month long sideways volatile congestion channel exactly how I predicted it the week before. I started prepositioning my Master's Stock Options Picks Subscribers into QQQ and SPY call options last week and we are now holding on profitable positions right now. My conservative income strategy, the Ride the Flow System also made a nice 7% profit for April, for an annualised 84% gain, which is not bad as well. Have you profited from last week's move?

Its ISM week this week with the market moving ISM number to be released on Friday. Economic data continues to be volatile and earnings continue to be mixed so I am expecting a volatile week ahead. This outlook is also supported by a sudden plunge in total equities put call ratio in favor of call options, such a plunge is never a good thing so I expect to see some slight profit taking early this week. However, the breakout remains well formed with nothing out of sort to cast doubt on its validity. Let's ride a new leg up!

For now, US market turned from a short term neutral trend into a short term bull trend within an intermediate and primary bull trend... yes, an all out bull.

Tuesday, April 21, 2015

Critical Rebound

US market rebounded Monday, recovering almost all of last Friday's lost as expected of a Friday sell off that has no obvious economic data or news trigger. Almost every single time a Friday sell off happens, it leads to a strong Monday almost like a mantra. So there were no surprise there when once again market rebounded strongly yesterday, supported by a drop in bond yields across the board suggesting a reallocation from bonds back into stocks and a sharp drop in total equities put call ratio in a bullish call options vote. This rebound is also extremely important in that it happened right off the daily 30MA line. Such a rebound establishes the 30MA as short term support and gives the SP-500 strength to fulfill the topside breakout that I spoke of last week. In fact, pre-market futures are already pointing upwards and my Master's Stock Options Picks subscribers were already prepositioned for such a breakout, are you?

For now, the market remains in short term neutral trend within an intermediate and primary bull trend.

Tuesday, April 14, 2015

Earnings and Expiration Uncertainty

The US market sold off on Monday exactly how I predicted it to on Sunday ahead of the earnings season. This week is also turning out to be as volatile and uncertain as I predicted ahead of the April expiration. The better than expected business inventories numbers failed to significantly turn the tide around and left bond yields lower across the board as investors continue to flee for safety and total equities put call ratio remains in the uncertain zone. All of these occurring during this period where the S&P500 is in yet another congestion zone makes for very uncertain short term trading. However, in the slightly longer term, its not hard to see the bullish inclination in the market due to the bullish intermediate and primary trend. As such, this may also be the best time to start strategically prepositioning for a breakout.

For now, the US market remains in short term neutral trend within an intermediate and primary bull trend.

Sunday, April 12, 2015

Weekly Update... Week 3 April

Once again the SP-500 reaches upwards for the top of the bullish pennant formation in preparation for an upside breakout just like how I predicted it last week. No surprises there. Total equities put call ratio also came back down to 0.85 in favor of the bulls. Earnings season also starts Monday so, I will not be surprised to see some short term profit taking on Monday after such a bullish week last week ahead of the uncertainties. This was also why I made my Master's Stock Options subscribers take a quick 28.5% profit on our winning call options (Read more about what call options are)position on BAX last Friday ( click here to read about this win ). Perfect market timing, knowing when to take short term profits and knowing when to extend your profit is what makes successful options swing trading. Such perfection and consistent execution may be hard to achieve for amateur traders and this is why we also started our Managed Accounts service for those who would like for me to trade your account for you.

This week is April options expiration week, this is also when our Ride the Flow system takes profit and is set to once again make its predicted 5% to 10% monthly profit without surprises. 

For now, the market remains in short term neutral trend within an intermediate and primary bull trend.


Wednesday, April 08, 2015

Uncertainty Grows... What's Next?

The market continues to move largely sideways on Wednesday through this period of volatile economic data. Investors were encouraged by the promising outlook of higher inflation in the near future from the FOMC minutes and returned from the the safety of bonds, raising bond yields across the board. However, such a limited trading range on such healthy volume does suggest a strong sense of uncertainty and that is supported by the total equities put call ratio lingering once again in the uncertain zone of between 0.95 to 1.05. This shows that options traders, which is generally a good indicator of short term sentiment, are largely divided between call and put trading. When short term sentiments are bullish, total equities put call ratio would skew towards call options trading and vice versa. Even though there is alot of short term uncertainty, forming the bullish pennant formation on the SP500 now, the longer term remains healthy as the SP500 continues to trade strongly above its weekly 30MA and as the global economy continues to grow. A bullish pennant formation also means that the most likely direction of a breakout is to upside, continuing the previous bull trend. I have already begun pre-positioning my Masters Stock Options Picks subscribers for this breakout, have you?

For now, the market remains in short term neutral trend within an intermediate and primary bull trend.