Stock Market Analysis

Monday, March 31, 2014

End of Q1 2014

The last trading day of Q1 2014 ended well with the Dow gaining 134 points today, ending the first quarter of 2014 on a positive note exactly how I have predicted it at the start of the year. Overall, the Dow gained 1.68% in the first quarter of 2014 or an annualized 6.7%, which is a very healthy bull trend. However, will the US market really gain 6+% by the end of the year? I am skeptical. As I mentioned at the start of the year, I expect the US market to be in a volatile bull trend all throughout the first to third quarter with the fourth quarter looking to be more uncertain. In fact, I am of the opinion that we could see an extremely significant correction by the fourth quarter due to the business cycle and the Hindenburg Omen.

Looking more closely, today's "Bull Day" seems to be a little doubtful as it was slightly overdone on no significantly bullish economic data or news. Bond yields and put call ratio both didn't display the kind of behavior that a truly bullish day in the stock market produces. As such, I would be careful to call this the start of another very strong leg upwards. Doesn't mean it cannot but that this simply isn't the time to jump in long too strongly without further evidence.


Wednesday, March 19, 2014

Strangely Bullish Bearish-Day

The Dow dropped 114 points today after the Fed's hawkish announcement of a pending rate hike after 2pm.

We all know it is going to happen but every time the Fed talks about it, investors punish the market for it. However, we also know one thing for sure, rate hikes during a period of "Confirmed" growth and market strength is actually a good thing and keep the economy and the market growing. In fact, today's "Bearish Day" isn't as bearish as it could be when we take a look behind the curtains.

Bond yields rose across the board as investors returned to equities late in the afternoon, taking the market off its intraday low, the VXO actually dropped instead of rise and total equities put call ratio continued to remain below 0.9 in favor of call options trading. All of these tells me that today's "bearish day" isn't truly bearish but rather a one day kind of thing and looks more like a bullish continuation pattern when taking the overall market's rebound from 30MA within the framework of an intermediate bull trend into consideration. In fact, that didn't stop my Master's Stock Options Picks Subscribers from taking a 20% profit on PSX call options today.

Wednesday, February 19, 2014

Breather Pullback

After an impressive 8 days run, market took a dive today as the Fed once again frightened investors with their mixed sentiments. US market went into a nose dive right after the 2pm FOMC minutes release and closed fully negative (all 3 major index down) for the first time in 9 days.

Yes, it has been a pretty mixed week so far with poorer than expected Empire state index and better than expected sales data and today's FOMC minutes is just an excuse for investors to take some short term profit off an impressive recovery run. The market has proven extremely resilient once again coming out of the recent intermediate correction and shrugging off a much poorer than expected Empire State Index.

Indeed, even though the market is decidedly down today, there is a secret bullish undercurrent. Bond yields actually rose across the board, suggesting that investors are actually buying into the weakness and total equities put call ratio also stayed below par in a more bullish vote. Indeed, this looks more like a breather pullback within a bullish framework and definitely setups for buying into weakness. However, that didn't stop me and my Master's Stock Options Picks subscribers from taking almost 100% profit on QQQ today before waiting for a better re-entry point.

For now, the market remained in all out bull trend.

Monday, February 10, 2014

Negative January Negative Year?

There is a saying "How January Ends So Will The Year". This means that if January is a positive month, the year would most likely end up positive and if January is a negative one, the year would most likely conclude negatively as well.

How true is that statement?

Well, over the past 5 years, there were two Januarys that ended negative with the market ending significantly positive by the end of the year and one January that ended positive but the market ending significantly negative. Only two Januarys followed the adage. So I won't give it too much credit.

So what do I think this year?

I think the adage might just come true this year because the market has behaved almost exactly as I have predicted so far. An intermediate correction, which has just ended, leading into the final leg which will lead to another market crash in the third quarter or so. Yes, it is time for yet another market crash and signals are already flaring up all over Asian markets. The Hindenburg Omen is also something that cannot be overlooked. In fact, I think the next five years will see extreme changes in the global financial picture on power shifts and currency changes. So yes, I do not think the current intermediate correction is going any deeper and I would take any weakness as buy signals for now. Follow how I trade into this year's turbulent market and still profit through my Master's Stock Options Picks service.

Thursday, January 02, 2014

Happy New Year 2014!

Happy New Year 2014!

How time flies, yet another year has passed. 2013 turned out to be an extremely fruitful year especially with the Santas Claus Rally happening exactly as I have predicted despite all kinds of fundamental issues in the US. The S&P500 closed at a historic high of 1848, gaining 446 points or a whoooping 31% gain year on year! In fact, My Master's Stock Options Picks Subscribers managed to take 128.3% profit off call options on QQQ on 31 Dec, closing off our Santa Claus rally trade nicely. (Click here to see how we did it)

Indeed, it is amazing how the US market has managed to ride on Santa's sleigh through so much uncertainties and fear, especially through the QE tapering. However, the reaction to the QE tapering decision was pretty much in line with my expectations. I did expect a positive market reaction to the QE tapering due to the fact that much of the anxiety building up to the point has been digested by the market through the months of "hinting" by the Fed and that the market has held up nicely during the run up to the tapering decision. That told me that the market did consider the QE tapering to be a confirmation of economic strength rather than a bad thing.

This year also marked the 5th straight positive year since the 2008 crash... so what's 2014 going to be like?

Past trend seems to suggest that we should see a significant rally through most of the year before a market crash towards the end of the year. This outlook ties in with the 5 years cycle the market has been in for the past decade and also the triggering of the Hindenburg Omen. Indeed, it is not hard to see global markets actually doing well for the most part of 2014 as investors start to get onboard with the global economic recovery scenario but the trigger for the next market crash has yet to reveal itself.

So, let us continue to be nimble and ride along with the new 2014 market! Here's wishing all my readers Health, Wealth and Happiness!

Tuesday, December 03, 2013

No More Santa Claus Rally?

The Dow took a 94 points hit today as mixed sales data confirms a lackluster holiday season sale.

Indeed, sales data seems to have taken center stage this post-Thanksgiving week and has given the stock market a quick one-two in the jaw, causing doubt as to whether or not Santa Claus rally will occur this year and whether this would be that one out of three years that the US market will turn out to be negative on a December.

The stock market rally has been built on the theme of recovering overall economic indicators so far and the ISM index this week confirmed this trend once again. However, it is not unusual for investors to find reasons to take short term profit off the table after such a huge run. Within the framework of a primary and intermediate bull trend, with the Dow riding above a rising 30MA, a little pullback before the primary trend continues is absolutely necessary and normal. Such pullbacks give better entry points for investors, especially with window dressing needs, which will help December become a positive month again. So far, this behavior seems very much intact and why I have pre-positioned my Master's Stock Options Picks subscribers with call options position so far.

Monday, November 25, 2013

What To Expect During Thanksgiving Week

Welcome to Thanksgiving week once again!

How time flies, its thanksgiving week once again and its once again time for Christmas season trading! Is "Santa Claus Rally" coming this year? Santas Claus rally is a phenomena in the stock market where the US market tends to be positive Thanksgiving through January. It has its fundamentals in dramatically increased Christmas spending and internet spending as well as a general sense of positivity around the holiday season.

In fact, the US market tends to be positive in December even through the recent stock market crash year of 2008. Hence it is no surprise that most of my Master's Stock Options Picks Subscribers are also in bullish call options positions as well, prepositioned for Santa Claus' arrival once again. Yes, the US market survived and strived against all fundamental and technical odds this year so far and there is no reason why that positivity should not carry through December once again this year.

However, I would be cautious going into next year and generally start to take profit on profitable positions coming January.

Happy holidays!