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.
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.
posted by Jason Ng at 7:36 PM
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