Stock Market Analysis

Monday, June 29, 2015

Scary Day?

Yes, it was a scary day coming out of a scary weekend as investors were helplessly bombarded by news coming out of Greece that they can do nothing about.

In fact, investors were already selling off last week prior to the weekend in case something like this happened. I wasn't one of the prudent ones because like there are some companies that are too big to fail, Greece is also too big to fail and there will always be something or someone stepping in last minute to remedy the situation like so many times before. However, this time round, amazingly, no such remedies turned up.

However, looking at the trading behavior today, everything screams out "overdone" once again. Volume surged, Put Call Ratio surged, Bond prices surged... all of these with the Dow down over 300 points in a single day. All of these suggest to me that pretty much all the negativity surrounding the Greek issue have been priced in and we should see one more down day in the most and then we should be ready to gear up to upside.

Yes, its a painful day, but the market did something similar not so long ago back in March and see what happened? Yes, I did say the second half of this year is going to be very dangerous and today's market action has all the looks of starting a bear trend... but just not yet... its just still too prematured. The pieces are not yet in place... just a couple of months more...

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

Tuesday, June 23, 2015

Will We See New High?

After a day of mixed economic data, the US market closed very slightly higher today as it continued the breakout that I predicted since two weeks ago. So far, my Master's Stock Options Picks subscribers have benefited from our call options picks on the QQQ and SPY since the reversal begun last week, are you?

Today's economic data continued the trend that I have been writing about for weeks, which is, housing continues to boom while the rest of the economic indicators wane. Durable goods orders turned in much worse than expected today while New Home Sales boomed. This resulted in a small rally in the morning and following the release of the New Home Sales data and then a sharp sell off. It was truly an uncertain day as investors continued to return to equities from bonds, raising bond yields across the board while options traders start to get cautious, raising total equities put call ratio once again to near par. Every time the total equities put call ratio movement do not agree with the market action of the day, I take a second look and see what might be the problem and for now, it seems like breaking the new high seems to be not that certain for traders in general who have been more risk adverse for months. However, at this point in time, there isn't any strong market action to suggest that this rally is in any kind of risk and it still looks strongly poised to make new highs. As traders, we trade what is going on, not what we think is about to happen. As such, I would still be pretty much bullish inclined at this moment.

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

Thursday, June 18, 2015

Breakout Day... As Expected!

The US market staged an impressive breakout today on much better than expected Jobless Claims report and as correctly predicted by the double dragon formation two days ago! My stock options picks subscribers, profited from today's breakout, did you?

What I like about this break out is that it is not overdone, bond yields did go down as investors return to equities but not too much, put call ratio remained below par in favor of call options trading but did not dive. When its not overdone, it can last, thats how the stock market works.

Tomorrow is Quadruple Witching Friday, something that happens only once in a quarter (read more about what Quadruple Witching is) and typically a day of very high trading volume, intraday movement but very little end result. This is definitely a good place to take some short term profit coming from this three day rally.

So, some of you are asking me, what about the 2125 resistance level? Well, my mentor used to tell me, there's no such thing as a triple top. When the market tests a ceiling for a third time, it usually means its ready to break it. With all of the above indications and how the short term stochastics are still way off from overbought levels, I would expect next week to be a nice positive week as well, so I won't be too hurried to close my bullish positions.

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

Tuesday, June 16, 2015

Double Dragon Rebound!

US market closed higher today as I have expected and stated in yesterday's email to paid subscribers. So far, the continued growth in the housing market has been the main driver for the stock market and the US economy in general. Indeed, the housing market is one of the main drivers in every economy due to its huge peripheral reach into almost every industry. A growing housing market always bode well for the economy and a slumping one takes everything else down with it. It was a truly strong day today, with bond yields dropping across the bond as investors reallocate back into equities and total equities put call ratio making a healthy move down in favor of call options trading. This is the kind of indications that say it is a healthy strong day, not one that is overdone and ready to fizzle tomorrow. This, along with yesterday's double dragon formation (as I mentioned to paid subscribers), says the market should be able to challenge new highs from this point forward. How about the head and shoulders formation I spoke of few days ago? Well, like I mentioned to paid subscribers again, a double dragon formation is strong enough a reversal formation to beat even a head and shoulders formation.

However, it remains a really volatile week ahead with the Feds are announcing Wednesday afternoon (and I really don't think they want to spoil the tea party) and Quadruple Witching on Friday.

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

Sunday, June 14, 2015

Head and Shoulders...

As I mentioned last week in this post and to paid subscribers, it is extremely dangerous should the SP-500 turn around on the 30MA after a dragontail formation and thats exactly what it did. Such a behavior formed a strong head and shoulders formation with left shoulder on 27 April and head on 21 May. Such a formation usually spell trouble... sometimes trouble as big as October 2014 when the SP-500's dragon tail formation failed at the 30MA almost exactly how it is this time round. In fact, with the market so overdue an intermediate correction and economic indicators continuing to fail expectations, this could be an excellent position for the market to just go into that long awaited intermediate correction so as to set up better entry points for that final bull leg. Adding possibility to this scenario is one of the most volatile weeks of the month coming up ahead... the FOMC announcement, leading indicators and Quadruple witching, all of which will no doubt add uncertainty and volatility to this already shaken market.

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

Wednesday, June 10, 2015

A bullish day...

Even though the market closed marginally negative today, I would still say that this is the first strong bullish day since this drop begun last month. There was plenty of buying throughout the day as investors see value at this level. Some profit taking is evident towards the end of the day but the rise in bond yields across the board and the drop in total equities put call ratio back down in favor of call options trading still made this a negative day with a strong bullish undercurrent.

Looking at the candlesticks charts show dragon tail formations across major indices, which is a very strong pivot formation especially with it occurring around the 100MA.  Even though this formation is a high probability pivot formation, the problem is always the 30MA that hung overhead forming the first resistance level. This is going to be rather tricky especially with the current market condition. The next two days will be critical... if the SP-500 breaks the 30MA, then we could be looking at a new high coming, if it as much as close negative on the 30MA line, we could be looking at a strong intermediate correction like in October 2014.

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

Sunday, June 07, 2015

Tricky Times...

Even though the press deemed the jobs report last week to be a favorable one, it was actually a more mixed one in my opinion. Even though headline numbers far exceeded expectations, unemployment rate continued to flirt around the 5.5% for a 4th straight month instead of getting at least to the 5.3% region. This could have disappointed some investors resulting in a more hawkish day last Friday. However, like I said last week to paid subscribers (as you can see, I don't post here everyday. You can subscribe to my daily analysis for just $5 a month to have my daily analysis sent to your email daily. Hit the subscribe button in the right under my profile picture.), much of the negativity and uncertainty surrounding last Friday's jobs report has already been priced in over the past week. As such, no matter how the numbers turn out, we should not see much downside. As it goes, we did witness strength last Friday in the opening as well as towards the closing, bringing the market off its lows to almost back on par.

This market continues to be tricky for the short term and, as I said last week again, short term is what everyone should be looking at now since the second half of the year leading into 2016 could be dangerous and tricky. I am not getting very clear short term indication of direction on my proprietary indicators but seeing that the intermediate trend continues to favor to upside along with investors continuing to return to equities from bonds on the weakness, the short term is clearly inclined to upside.

Tricky times are upon us, thread carefully.

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

Tuesday, June 02, 2015

Is The Top Near?

A cautious opening in the market today led to a nice intraday rally on the much better than expected ISM index, taking the market back into the positive before succumbing to profit takers towards the final hours of the market.

When you have the market opening negative ahead of a heavy weight economic indicator like the ISM index shows that investors are now preferring safety than risk. Having the market sell off back into the negative following a positive showing on a heavy weight economic indicator also shows that investors now prefer to preserve and take profit rather than to bet for more.

Such behavior usually says one thing; that the top is near (at least an intermediate top).

However, the other good thing about such behavior is that investors usually take such actions ahead of the actual top because they have extremely large fund sizes that cannot exit the market all at once without moving the market negatively. As such, they will have to start taking such actions perhaps months ahead of a predicted top by exiting little by little on every bit of strength in the market. In fact, economic numbers this month seems to be on a positive showing, this might encourage buying through the week until the Jobs report this Friday. If that turns out positive as well, we can be sure investors would be exiting on the strength ahead of the weekend in a way that would not adversely affect the overall market trend.

These, along with my proprietary Put Call Ratio Predictor starting to turn bullish suggests that this may be that final bullish leg I was talking about in my last post. Are you prepositioned for this move like my Master's Stock Options Picks subscribers are?

If this is going to be a final bull leg with limited upside, learn about bullish options strategies with limited upside!

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