Stock Market Analysis

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.


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