Stock Market Analysis

Monday, August 31, 2015

Dead Cat Bounce Completed?

The US market closed slightly negative today in what seemed like the completion of that "Dead Cat Bounce" I spoke of last week. Were you one of those who jumped on this "Bull Trap" (A small rebound within a bear trend that lures traders with a bullish outlook in just to be slaughtered when the bear trend resumes) or were you one of the smart ones who were prepositioned today for the coming downside like one of my Master's Stock Options Picks Subscribers?

With extremely heavyweight economic data coming this week in the form of the ISM index tomorrow and the Jobs report on Friday, we could see significant volatility in the market and if the recent trend in economic data is any guidance, this week's reports could turn out slightly disappointing, thereby hastening the completion of the dead cat bounce and the confirmation of this intermediate bear trend and hence, in my personal opinion, the bear market aka market crash.

In fact, Jim Cramer himself also warned investors to be prepared for more downside this week. Looking at the behavior of the ISM index, a lower month usually gets followed up by another lower month and with last month's lower number, odds are that tomorrow's ISM index might turn out disappointing especially with consensus expecting a higher number. That could just start the market sliding once again.

Bond yields were also once again at recent highs, reducing the incentive for investors to continue going into equities. Total equities put call ratio continue to be persistently bearish. Under such conditions, the odds are clearly stacked against the bulls but how should a trader turn this into executable information? How do you actually profit from this? Hurry and join my Master's Stock Options Picks service now!

Market Crash Timer: Orange

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

Wednesday, August 26, 2015

600+ Points Sideways Day?

Exactly as I have said in my report to paid subscribers yesterday...

"Even though this is in all possibilities the classic start of a market crash, it still needs to be completed by how it behaves around key resistance areas when the inevitable dead cat bounce starts. A turn back around at those levels would complete the primary bear trend and confirm the market crash."

US market was higher sharply today even though there continue to be strong signs of selling into the strength. In fact, I took this as an opportunity to start pre-positioning my Master's Stock Options Picks subscribers with put options positions in order to benefit from the next leg down which will complete the bear market (Not pre-positioned? Don't know how to do so? Join my Master's Stock Options Picks Service now!)

Yes, today's trading was still largely technical in nature with investors continuing to reallocate back into the lower equities from the battered bond yields, aka, Dead Cat Bounce. Dead Cat bounces are basically oversold rallies caused by a limited number of remaining bulls which will no doubt run out of steam quickly as the mass continue to sell off on the then slightly higher price. Also, even though today's closing looked impressive, with the Dow gaining a MASSIVE 600+ points, its really just been trading all day within yesterday's trading range, which in technical analysis, we call it just a sideways day. Yes, its a 600+ points sideways day. That should tell you how volatile the market is right now.

I maintain my previous outlooks for now.

Market Crash Timer: ORANGE

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

Monday, August 24, 2015

Global Market Crash! 267% Profit Realised!

Global markets crashed today immediately following my downgrading of the Market Crash Timer from Yellow to Orange last Friday! This allowed us and my Master's Stock Options Picks Subscribers to realize a total profit of 267% on our SPY position in just 4 days! (see how this trade was done!)

Was the market crash as completely unexpected as everyone made it to sound? Not so. I have talked about it since weeks ago and have been pre-positioning for it since two weeks ago and if you have followed my posts so far, it should not come as a surprise either. Global markets tanked on Monday without any strong reasons or obvious trigger, why is that so? Well, its really a build up of pessimism in the market that has been going on for months already. It looks like the pessimism build up has reached a critical mass at last, leading to an explosion of bearishness that swept across the globe.

However, if you are just contemplating jumping in on this with put options now, don't. Again, its too late, at least for the short term. If you are not on my Master's Stock Options Picks service since two weeks ago, you would have missed this for now. However, this is not to say that the market is no longer going to go down but that it requires once again expert timing to get on the next big move. Like I always said, everything overdone in the market is never a good thing. Today's move was seriously overdone and the inclination now is that we should see a little pull up from here. The intraday buying which lifted the Dow off its over 1000 points drop in the morning showed that there are still plenty of investors willing to buy in at this level, which should form the support needed to prevent further downside at least for a few days.

Will you be pre-positioned for the next move? Sign up for my Master's Stock Options Picks Service now!

Market Crash Timer: ORANGE

For now, the market turns a short term and intermediate term bearish trend within a primary bull trend. 

Friday, August 21, 2015

Over 100% Profit in 3 Days!

What a day today! The US market slumped for a second day in a row, making me and my Master's Stock Options Picks subscribers over 100% profit on the SPY put options that we have prepositioned three days ago! Yes, over 100% profit in just three days! Are you missing out on such profit? Sign up now for my Master's Stock Options Picks Service!

This truly look like the start of the market crash that I have been talking about but if you are going to jump in on put options on Monday, it is already too late. This is exactly why it is so hard for amateurs and beginners to make money in the market... when things begin to look obvious, its already too late. Next week, we should see the market rebound and test the critical moving averages again next week, like it always did before as there will always be investors who still think this bull has legs to go and this is a great level to buy into. However, it would most likely fail around the moving averages a few times before it go into an all out bear trend, this process could take months.

For now, the deterioration in the economy can no longer be ignored and strength in the housing market seems to be shaking a little bit. The recent devaluation of the Chinese RMB only added to the problem, making US exports to China more expensive, widening the trade gap and hitting the economy in general. It just takes a spark to start the whole mess... perhaps a spark called "Rate Hike"?

I am upgrading the market crash timer and downgrading the primary trend today...

Market Crash Timer: ORANGE (Yellow/Red)

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

Monday, August 17, 2015

Why Did The Market Turn Positive?

US market reversed early losses due to a much worse than expected Empire State Index to close higher by 67 points today .

The Empire State Index today was surprisingly disappointing. In fact, it is the worst reading since the market crash, resulting in the market opening deep in the red. The Empire State Index is a measurement of manufacturing activity in the New York region which then reflects on the health of the economy in general. However, the reading is too surprisingly bad that it actually looked suspicious. Anything too surprising or overdone in the market tends to mean the opposite. This is perhaps why investors didn't actually follow through with the negativism but actually lifted the market back upwards as the housing market continue to meet expectations.

Housing market continues to be an important driver of the stock market this year and today was no exception. This is perhaps the only good thing in the economy right now, which is why the possibility of a rate hike is so scary for the stock market. A rate hike hits every single aspect of the entire housing market chain; Higher rates makes building new projects harder, which means lesser projects and therefore lesser business for the construction sector, higher rates also mean less buying since loans would be higher, higher rates also hit existing variable rate loans, increasing the possibility of bad accounts which will adversely affect the banking sector. However, a rate hike seems to be definitely on the horizon and can actually be a good thing for the economy in the long run. Yes, anything good for the long run is usually painful in the short run and could even spark that dreaded market crash experts have been talking about for so long.

Internally, today's positive market didn't look so positive... Bond yields were still down and total equities put call ratio was still in that uncertain zone. This means that overall, sophisticated investors aren't showing the kind of bullishness they do in really strong markets. As such, I would be very careful buying into this even though on the technical side, it does look like a very nice reversal off the 30MA with a nice bottom hammer candle marking the pivot. In fact, I would continue to be careful even if the next few days turn out to be positive. As such, this is one such condition in which if you wish to profit to upside, you should already have entered today or enter resolutely tomorrow without waiting for more evidence, because the "evidence" you are looking for might just be the whole move this leg.

All in all, its still an extremely tricky market which is more suited to profit from using my volatile/neutral multidirectional strategy, the Ride The Flow system, which has managed to continue making a nice 7% average monthly return over the past quarter even though the market remains unpredictable.

Market Crash Timer: YELLOW

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

Tuesday, August 11, 2015

Called The Dead Cat Bounce...

This was what I wrote to my market analysis subscribers (for only $5 a month!) yesterday...

"Which means, I am of the opinion that this is nothing more than a dead cat bounce which you should be using to exit any call positions that you may still be holding. Supporting my sentiment is a HUGE dip in the total equities put call ratio from 1.23 to just 0.56. This is saying that options traders turned from very bearish to extremely bullish in just one day, which, in the historic behavior of this indicator, simply means its overdone.

This means that tomorrow will most likely see the market take back alot or all of these gains. In fact, major index futures are already pointing downwards."
And as expected, the market did take it all back... and more... index futures are already pointing downwards sharply. Were you stuck in that dead cat bounce? Or did you take advantage of it like my Master's Stock Options Picks Subscribers did and pre-positioned for the downside?
In fact, today's market action made that dead cat bounce yesterday look like it never existed; bond yields were back down, total equities put call ratio are back up... everything looked like yesterday never happened. Exactly how I expected it to be. In fact, such a failure further reinforced the bearish sentiment in the market and made it more likely that the market is going to slip into that valley from this point forward. 

Market Crash Timer: YELLOW

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

Sunday, August 09, 2015

Bearishness Prevails...

US market was rocky last week due to worsening economic data and the prospect of a rate hike amidst such rocky numbers.

Even though payroll numbers last Friday came in slightly better than expected, its still on the way down and investors certainly took it very badly, taking stocks down hard and running back to bonds, depressing bond yields across the board. Options traders continued to keep total equities put call ratio in favor of put options trading, confirming the severe bearish sentiment in the market. Yes, it just take common sense to know what is going to happen when you hammer a weak economy with a rate hike. Even though scientifically, it might be a good thing for the economy in general, investors and traders are not going to risk it especially after so many years of winning. The last time the market made this kind of bending over downwards after spending many months in a sideways channel was in 2011 which resulted in a huge intermediate correction. So, is this going to be another intermediate correction or an all out bear market? Either way, you want to be prepared to profit in either scenario.

The bearish feel in the market continue to be steady and when it happens, my Master's Stock Options Picks subscribers will already be prepositioned to downside... are you?

Market Crash Timer: YELLOW

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

Monday, August 03, 2015

Once Again In Danger Zone

ISM Index failed to live up to expectations today, causing an immediate knee jerk sell off reaction with investors continuing their run back to bonds, further depressing the already depressed bond yields. Even though total equities put call ratio did drop a little, its still pretty much in the uncertain zone so nobody's really feeling optimistic this week. In fact, the general market feel is getting more and more like what I suspected last week... this could be the foreplay for the market crash of 2016.

The SP-500 flirted with the 30MA line once again today. This is an extremely dangerous behavior especially with the declining top formed with the July peak. This shows that investors are now very unwilling to take the market to new highs so every bit of bullishness gets greeted by merciless selling. If the SP-500 should cross below the 30MA line this week, I would be very very careful and would actually start to prepare my Master's Stock Options Picks subscribers to downside strategically.

Market Crash Timer: YELLOW

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