Stock Market Analysis

Wednesday, September 30, 2015

Pre-ISM Rally... As usual...

In almost the same fashion as last month, investors priced in the possibility of a better than expected ISM index and Jobs Report today especially after the better than expected ADP employment report, increasing the possibility (however slightly) of a better than expected Jobs Report this Friday.

This is also in line with my expectation that following the big down day two days ago, we should get a few sideways or slightly positive days as investors accumulate into the lower prices. However, what I failed to anticipate was the pricing in effect ahead of the heavy weight numbers, leading to a much stronger positive day than the just “slightly positive” that I expected.  The good thing is, inline with my expectation, I have already ordered my Master's Stock Options Picks subscribers to take a 61.2% profit on our put options positions in ESV yesterday before we get caught in a dead cat bounce like this one. See how we did it!

So, what does a day like this typically mean? 

Well, it typically means that even if the heavyweight numbers do turn out to be better than expected, the positive effects would have be extremely limited. In fact, if the numbers turned out to be only very slightly better or just in line with expectations, the market could actually start to sell off and take back the priced in good news, which was what we saw over the past few months. In fact, due to good numbers increasing the possibilities of a rate hike, whatever rally that results from a far better than expected release would also be short lived. In fact, the only thing I think will turn this bear trend back into a bullish trend is for the rate hike to actually happen and then gradually allow the positive effects of such a fiscal policy to start showing in the economic data… this is a process that could take months after the rate hike actually happens and this bear market runs its course. Until then, with the rate hike hammer hanging over everyones heads and economic conditions generally weaker than ideal, this market remains one in which betting to downside continues to be the smart move. 

The internals today did not convince me that it is a truly positive day today either. Bond yields barely moved and total equities dived in favor of call options (learn about what Call Options are for free)... these are usually indications that put the odds in favor of today being a fakeout rather than a reversal. In fact, I would use this as an opportunity to get into more puts. (Don't know what puts to buy in this condition and when? Join my Master's Stock Options Picks service now!) 

Market Crash Timer: ORANGE

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

Monday, September 28, 2015

Market Takes A Beating... As Expected...

US market tanked today on a slew of worse than expected economic data exactly how I have expected last week. This was what I said to paid subscribers last Friday...

"If such an impressive GDP number failed to turn things around... what can? If not, how bearish can the way ahead be? That's the thing that is breaking the stock market now... every bad economic data depresses the market and every good economic data increases the probability of a rate hike and end up depressing the stock market as well. Under such circumstances, how could the market be reliably bullish?"

(Yes, I only publicly post my report every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!)

and exactly like I have predicted last week, the market went generally sideways for a few days before the bear trend resumed and tanked today. Like I said last week again, I hope nobody was caught in the few intraday bull traps last week. (My Master's Stock Options Picks subscribers on the other hand profited greatly today because of the remaining put options positions that we have prepositioned early last week! Join us now!).

As in every classic oversold day, bond yields tanked across the board and total equities put call ratio surged in favor of put options. Whenever that happens, especially within the framework of this being the 5th consecutive down day so far, I would be very careful about trying to be newly bearish because this is usually when the market "find value" and turn bullish a little bit. In fact, this is when I would be taking profit on a few profitable put options positions. This week is also going to be really volatile due to the two heavyweight economic number that we get every first week of the month; ISM index and the Jobs Report. Like I have said all week, I suspect the bullish impact of these numbers even if they turned out really well could be really limited due to how generally economic data has been less than ideal lately as well as how every strong number really does nothing but increase that rate hike fear. Either way, its not a good thing for the market. This is when I would be really careful about putting on new positions, whether bearish or bullish.

Market Crash Timer: ORANGE

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

Thursday, September 24, 2015

Uncertainty Ahead of GDP...

What started out as a very negative day turned out to be not all that bad as the market recovered lost ground by the end of the day with the SP-500 closing just 0.34% lower. In fact, today's market outcome was largely expected. This was what I wrote to paid subscribers yesterday:

"I suspect the number only led to the market closing negatively in what would have been a couple of
generally sideways days anyways"

Today was just one of those couple of generally sideways days that I have anticipated following the big down day two days ago. (Yes, I only publicly post my report every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!)

It was interesting to see how negative investors were off the bat today even though early morning economic data did turn in generally better than expected! Investors only started buying after the New Home Sales data beat consensus and showed that the general uptrend in new home sales remains intact. Indeed, housing continues to be the only good news in the economy right now but even that is showing signs of deterioration. This is why none of these housing data was able to turn the tide around and today didn't even end as a positive day. Why? Because the third estimate of second quarter GDP will be coming up tomorrow, on Friday, and that can be a real market mover. As such, investors were largely uncertain today, resulting in a classic hammer candlestick. Now, the significance of a hammer candlestick pointing this way and occurring at this level is completely from the significance of that hammer candlestick that I have reported on over the past few reports, which started this new leg downwards. A hammer candlestick at this level usually says "Uncertainty". It means investors are waiting for something to make a final decision. This final decision could be upwards or downwards from here (Which is why I am calling a profit taking on some of the put options positions that I have pre-positioned my Master's Stock Options Picks subscribers with since last week). This is why such a hammer candlestick isn't necessarily a reversal signal. In fact, it has been quite a reliable continuation signal as well.

Bond yields were down in response to the bearish sentiment but total equities put call ratio remained largely in the uncertain zone for a second day as traders reflect that uncertain sentiment that things can go either way from here.

However, by "can go either way", I don't mean that this bear trend could end right here, not at all. By being able to go either way, I mean even if it goes upwards, it would only be for a few days before the overall trend take over once again. It takes alot more than just one or two numbers to reverse a general intermediate bear trend. So, make sure you are not trapped in the ensuing bull trap if tomorrow's GDP number turned out fantastic.

Market Crash Timer: ORANGE

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

Tuesday, September 22, 2015

Evening Star CONFIRMED!

Yes, even candlestick formations as strong as an evening star formed around the 30MA within the framework of an intermediate bear trend needs to be confirmed before one can be truly committed to a trade (Ok, even so, you won't be 100% committed because there simply isn't anything that's 100% in the market. So, how do you deal with such risk? This is why professionals are not called "traders" but "risk managers". We adjust the amount of fund commitment according to the assessed risk. Don't know how much of your fund to use under each risk profile? Join my Master's Stock Options Picks service and leave that to us!).

So, what does it mean for a candlestick formation to be "confirmed"?

A formation is "confirmed" when the ensuing days of trading actually move in the direction pointed by the formation. That is the line that determines if the formation/signal is a real one which will trigger a continuation of a trend or a trend reversal. So, it can actually be dangerous jumping straight into a signal without confirmation no matter how strong the signal looks.

With today's down day, the evening star created two days ago is now confirmed, which means this is the high probability start of a more significant downwards movement. Now, significant in my world means any move that takes the market in one direction 5% or more, regardless of how many days it takes to do it. Even if its a huge one day move.

Supporting today's move was more disappointing economic data in the retail sales and manufacturing sectors as both Redbook and Richmond Fed turned in worse than expected. Housing prices took an about turn but that didn't convince investors that the housing sector is getting better either due to the recent numbers. Bond yields dropped across the board as investors returned to the safety of bonds and total equities put call ratio persisted in the bearish region.

If you have been following my every report as a subscriber (Yes, I only publicly post my report every other day at best but paid subscribers get my reports DAILY for LIFE... sign up now! Only $99 for LIFE! And it takes only one winning trade to make that back and MORE, you know it!), you would know that I hadn't qualified any of the days recently, no matter positive or negative days, as truly bullish or bearish due to conflicting internals. Today, however, is a truly bearish day where generally everyone thought and behaved bearish, no conflicts. Such a strong follow up only tells me that there are more to come, which is why I have already prepositioned my Master's Stock Options Picks subscribers with bearish position over the past few days. (Yes, in most cases, being PRE-POSITIONED makes the difference between whether you profit from the same move or are you too late! Join my Master's Stock Options Picks service and stop getting in only when its too late!)

I am more convinced than ever that this is the start of the 2016 market crash which myself and many other experts have been predicting for a long time. I am just one step away from dialing my market crash timer all the way up to RED.

Market Crash Timer: ORANGE

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

Friday, September 18, 2015

Bearish Evening Star Completed!

Exactly as I have mentioned yesterday in my report to paid subscribers yesterday, the market turned around powerfully today following yesterday's extremely dangerous inverted hammer candle. If you don't know why yesterday's candle was such a dangerous one, you really need to sign up for my daily market forecast for only $5 per month or $99 for a lifetime and stop missing actionable analysis and information! If you wish to be on my list for life, please sign up HERE for just a ONE TIME investment of $99!

This is a small part of what I said in yesterday's report to paid subscribers:

"Such a candle suggests that the last of the bullish buying dried up intraday to be taken over by strong
decisive profit taking. This is the kind of candle that usually ends dead cat bounces, especially when the following day is negative as well."
 Yes, the completion of today's market action in combination with yesterday's inverted hammer candle forms another extremely dangerous pattern... an Evening Star formation, which is extremely dangerous when occuring around key resistance levels, which in this case, is the 30MA. What made today's market action all the more negative is the fact that Quadruple Witching days (read more about what Quadruple Witching is about) are typically small candle days with limited range but huge volumes. It is usually not a significant negative day due to all the expiration actions pulling stocks in both directions. The fact that such a day turned out to be strongly negative right off the bat suggests that the market is extremely bearish at this point and this definitely looks like the start of a significant bear trend which, on hindsight, could be labelled the start of the 2016 market crash that might follow a Fed rate hike. 

Investors rushed for safety like scared cattle, depressing bond yields across the board, options traders also completely turned around, bringing total equities put call ratio back in favor of the bears from yesterday's bullish stance. 

More than ever, this is a bearish inclined market, no doubt about it. So, how do you take advantage of such a market for profit? What exactly should you trade and when? Join my Master's Stock Options Picks Service now!

Market Crash Timer: ORANGE

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

Wednesday, September 16, 2015

Investors Cheered... to what?

Investors cheered today as the housing market index turning in better than expected, encouraging them to turn the tide on the declining market after its release at 10am. This is also the first piece of good news today in a week full of much worse than expected economic data.

If you ask me, the rally yesterday and today are all really bets on tomorrow's Fed decision. So, whats the big deal about tomorrow's Fed decision?

Investors want to know from tomorrow's announcement whether the Fed is still on track with rate hikes in September (bad) or actually deferring it to December (good). Frankly speaking, from an economics point of view, it really makes little to no difference to the economy whether it happens in September or in December. However, the real effect would be on the stock market as investors act ahead of the chain effect that I mentioned a few weeks back. Either way, September or December, with global market and economic data so shaky, investors are still going to be largely bearish by the time it happens, I am sure the Feds know that and that it makes little sense to prolong the agony on something they are so bent on doing. Looking at the internals, we can see that bond yields merely nudged upwards by a tad while total equities put call ratio actually rose in favor of the bearish camp. These are not signs we see on a truly bullish day. On the technical front, the SP-500 is now in touch with its declining 30MA, which is usually where it turns downwards from in a bear market. If it does that, it would confirm this as a bearish continuation pattern, i.e, bear market.

On the sidenote, I am truly happy for the great response to my daily forecast this past few weeks and I am actually getting people asking me for lifetime subscriptions! Yes, if you noticed, I don't post my daily analysis here everyday. Those days you don't see me posting, I email to paid subscribers. So, if you wish to be on my list for life, please sign up HERE for just a ONE TIME investment of $99!

Market Crash Timer: ORANGE

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

Monday, September 14, 2015

Sideways Negative Day...

What a sideways start for the week.

So, why do I say this is a sideways day yet again even though the market was clearly lower? Well, it was a lower day but it was a small negative day compared with recent movements and still largely within the sideways channel and lowering pennant formation so far. In fact, this is such a weak "negative" day, I am hesitant to call it a negative day at all. Volume continued to wane, bond yields barely moved as investors did not take a decisive exit from equities and total equities put call ratio actually dropped into the uncertain zone from a bearish stance. All of these are not the kind of supportive evidence we need for a truly bearish day.

It is understandable why investors prefer to be uncertain this week as this is the week where we are getting both the FOMC announcement and the Quadruple Witching on Friday, so the week ahead could be rather volatile, making it hard to make a decisive stand today.

Days like this means we have to look at the overall market pattern for guidance and the guidance is still clear... the market continues to be more bearish than bullish inclined, especially with the lowering pennant formation nearing completion.   My Master's Stock Options Picks subscribers and I continue to be prepositioned for what is to come... so, what is to come? Join my Master's Stock Options Picks program today!

Market Crash Timer: ORANGE

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

Tuesday, September 08, 2015

Long Weekend Candy...

Global markets were upbeat today, lifting the US market coming out of the labor day long weekend. What a great way for those dying for a little bullish relief to come out of the long weekend. Even though I am not sure what such a relief really do for anyone. Indeed, volume was lackluster and the market really only remained largely within the recent trading range, made it more of a sideways day than a truly bullish one.

The market is obviously in a kind of congestion zone now, an area with plenty of reasons to buy and plenty of reasons to be bearish, leading to more or less a sideways trend. Indeed, following the huge ditch of 24 Aug, one can actually say that there are more upside than downside potential, making this area a good area to accumulate into if this is nothing more than an intermediate correction. However, one can also say that this is the start of a more significant bear trend since all the technical indications as well as stock market cycle is overdue one, making all up days a good area for selling or putting on new shorts.

Looking inside the action, we saw a lack of decisive volume, the huge jump down of the total equities put call ratio from deeply bearish to bullish was equally suspicious. All in all, another suspicious "bullish" day to be taken with a huge pinch of salt. Even that bullish day in the Chinese market that has been cited as the reason for the gains everywhere we saw today wasn't even an impressive or decisive one. In fact, it was really more of a sideways day. My Star Trading System also pointed decisively bearish with much more bearish than bullish candidates.

Like I said before, whether or not this is the start of the market crash and whether or not my market crash timer turn RED depends largely on how the market behave when it tests the declining 30MA. For now, I don't see either the bulls or bears making any quick wins even though the inclination is still clearly bearish.

Market Crash Timer: ORANGE

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


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Thursday, September 03, 2015

Cautiousness ahead of Jobs Report...

US market closed sideways today again ahead of tomorrow's highly uncertain jobs report. Even though the Jobless Claims numbers in the morning turned out to be extremely disappointing, continuing in the recent trend of deteriorating economic numbers, there were still traders willing to buy into this short term oversold market, allowing the market to open higher. Of course, we all know by now they all became food for the smart investors and traders selling on the strength. As I have suggested all week long and also on Tuesday to paid subscribers, every bit of strength in this bearish inclined market is an opportunity to put on new shorts / put options, not to put on new longs / call options.

The bearish sentiment today was clear with bond yields dropping in response to investors reallocating back to bonds from equities and total equities put call ratio persisting in the bearish region.

Consensus is expecting a gain in non-farm payrolls for tomorrow's Jobs Reports and even though economic numbers have been disappointing lately, tomorrow's jobs report might just meet expectations going by how the headline number have generally rebounded after two consecutive lower months and the number has already made two lower months so far. This should give a much needed break for the market but going by the bearish inclination in the market, it is more likely going to just make the bears happy in accumulating cheaper shorts.

Market Crash Timer: ORANGE

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