Stock Market Analysis

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.

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