Rising Bullish Divergence Spotted...

Welcome Back from the Christmas Long weekend!

Hope you guys all had a great holiday season whether or not you are religious. Its still a great time to just relax and have fun.

Well, last week, the market did exactly what I expected it to in a Santa Clau Rally, upwards. This is New Year week, another long weekend week, how will the market typically behave in a New Year week? Well, New Year week behavior has been less certain than Christmas week, particularly in the years leading into and in a market crash. This means there isn't a significantly strong enough abnormally to really make a strong stake. This is compounded by the fact that the market is once again up against the 30MA resistance level. However, I spotted a very powerful bullish reversal signal, which is a series of rising bullish divergences made on the fast stochastics against the declining price troughs. This has typically preceded significant and powerful bullish movements, such as the reversal in June 2012 and February 2010 and much much more. Weighing the typical resistance power of the 30MA and the reversal power of such a bullish divergence, I would put the short term odds in favor of a breakout of the 30MA and a retest of the 2100 level. This scenario is also in line with the year end window dressing abnormally. What the market does at that level is another story entirely.

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Lets look forward to an exciting 2016!

Market Crash Timer: ORANGE

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

Window Dressing Week...

3 Days from Christmas!

Exactly as I have predicted on Sunday night, Santa Claus has been so far, unstoppable, yet again. Yes, if there is one person we never want to go against, is Santa Claus. Not even branding Santa Claus as heresy has allowed the V to eradicate this holiday symbol.

So far this week, economic numbers have been shaky but the market just kept rising. What exactly is the logic behind the Santa Claus rally that allows the stock market to diverge from the economic fundamentals?

Well, a large part of it is what is known as "Window Dressing". That's what professional fund managers do towards the end of the year where they simply buy in order to firstly meet their holdings mandate and then which also inevitably raise stock prices, making their portfolio look good for year end reporting. Such an action is largely for the sake of looking good and is rarely sustainable, which is why it is known as "Window Dressing".

So, its window dressing time within a bearish framework. What does it all mean to traders and investors who wants to make a real profit? Well, it simply means not to fall for the bull trap especially since its going to be a holiday shortened week. Lets take our minds off the market for a while and enjoy the holiday season.

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Market Crash Timer: ORANGE

For now, the market remains in all out neutral trend.

Santa Claus Rally Coming?

Welcome to Christmas Week!

With the completed triple declining peak that I mentioned last Thursday, the market continued its way downwards last Friday, with the S&P500 ditching 1.78%, taking back all of last week's early gains to make a new low close for the month. In fact, this is the lowest close in two months. Me and my Master's Stock Options Picks subscribers watched happily as the put options positions that we placed last week continue to make a profit, did you miss this move? (Join my Master's Stock Options Picks service now!)

Bond yields were down and total equities put call ratio began trading in favor of put options. A completely bearish day. So far, December has been negative as in the case of almost all Decembers before a market crash. All indications continue to point strongly to more downside so far as we go into this Christmas week. So how did Christmas week typically turn out?

As it turned out, Christmas week was typically a feel good week with almost all Christmas weeks closing positive even during the market crash years. Yes, the proverbial Santa Claus Rally. This put the odds of this short trading week in favor of a higher close. Again, not surprising to see some accumulation at this point after two beat down days either. Indeed, I never want to bet against Santa Claus, even with my doom and gloom outlook. So, lets hope for yet another happy Christmas week and remember, this week, is our Annual Christmas Sale! Sign up for any of my products or services at Mastersoequity.com and get an immediate 50% instant refund! Hurry!

Bears Strike Back as expected...

The market gave up all of its gains on FOMC announcement day today exactly as I predicted it yesterday in my report to paid subscribers. This was what I said:

"However, the S&P500 is once again up against the 30MA which is currently expected to be the short term resistance level and how the market behave around this level should be taken as the final verdict on this rate hike sentiment. I expect to see some profit taking around this level which will then test the resolution of the herd. Failing at this level means a third declining peak, which is extremely bearish. The current market formation and business cycle still favors to downside despite the strong day today. The overall market trend currently remained a neutral one in which I continue to favor accumulation of put options on every of these strong day" 

(Yes, I only publicly post my report here 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!)

Once again, the 30MA proved to be a strong resistance level for bearish inclined markets as always. Economic data was pretty much mixed with good showings on some and bad showing on the Philley Fed. However, the bad Philley Fed report, which is actually an important market moving indicator (so is the leading indicator which actually turned out better than expected), could have contributed to this but I continue to attribute today's market action largely to the existing bearish inclined sentiment in the market which resulted in a bearish inclined framework in the charts. Its like good news rarely do much to please a grieving family. Today, the S&P500 completely took back all of yesterday's gains and more. I truly  hope you readers who were not subscribed to my report did not jump in on this bull trap.

The S&P-500 completed a third declining peak formation with today's decline, which is as I said yesterday, a very very dangerous bearish formation. Such a formation usually precedes a significant bear trend. The last time such a strong declining peaks formation was seen was back in October of 2012 when following the third declining peak, the market slumped over 5%. Early that same year we saw a twin declining peak resulting in a 7% slump. A series of declining peaks also heralded in the 2008 market crash. As such, this is one formation to be very careful of.

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Market Crash Timer: ORANGE

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

Rough Week Ahead...

As I mentioned last week, I expect the chances of a downside breakout of the 2100-2050 price channel to be higher than the chances of an upside breakout and it was indeed so last Friday.

Last Friday, the market succumbed at last on strong volume, breaking out downwards as prices continually failed to make a new high, resulting in a series of declining peaks since November. Bond yields collapsed across the board as investors rush for the safety of bonds and total equities put call ratio also remained in favor of put options trading. All in all, a truly bearish day, setting the stage for much for downside to come this coming weeks.

This breakout could also be a precautionary move as the market heads into this volatile week. An FOMC announcement and Quadruple Witching week (Learn more about what Quadruple Witching is). However, following such a strong down day, I won't be surprised to see some accumulation on Monday but that kind of accumulation, if it happens, would still be minor in the face of the downside to come... yes, the market is going to go down hard from here... no doubt about this and I see the testing of the October low in the horizon as market crash year looms. This is the time to use every positive day as exit for longs and long calls and to position with put options. Yes, bear markets and crashes are great time to make money with options as volatility surges and put options lifted. However, doing so does take expert timing and most people simply recognize it only when its too late. I am positioned myself and my subscribers to profit from the coming crash. Are you on your own? Join me now! Master's Stock Options Picks service!

Market Crash Timer: ORANGE

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

Still Trapped In The Price Channel?

The SP-500 revisited and tested the bottom of the 2050 price channel once again today in an almost completely technicals driven trading day. Don't know about the price channel? This was what I told paid subscribers yesterday:

"However, the interestingly narrow price channel the SP-500 has recently established between 2100 - 2050 seemed to be at work today as the market rebounded... ... with the odds favoring a positive day tomorrow as the market reach for the 2100 points level once again" 

(Yes, I only publicly post my report here 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!)

After testing the 2050 level again today, the market seems ready for another technical rebound up to retest the 2100 level once again as bond yields barely moved to reflect the negative close in the stock market and total equities put call ratio actually dipped from put options trading majority to call options trading majority (Learn about what Call Options are for Free). Are options traders positioning to profit from another short two or three days visit to the 2100 level? Expectations for tomorrow's jobless claims report is a higher reading whereas going by the tendency of jobless claims to be lower after a higher month, that expectation of a higher reading should be easy enough to take out, encouraging that one or two days move towards the 2100 level, perhaps for the final time. In fact, index  futures are already pointing upwards in expectation of a positive day tomorrow.

However the next two days turn out, it is really of little consequence to the real breakout move, which like I mentioned in my report to paid subscribers yesterday, continue to weigh heavily in favor of a bearish breakout. Today's trading also made a new intraday low for December, which is another point in favor of a bearish breakout on top of all the other reasons I have cited over the past week/s. Yes, Decembers tend to be positive ones, but not those Decembers that led into a market crash... this is looking more and more like one of those.

Market Crash Timer: ORANGE

For now, the market remains in all out neutral trend (very rare, the last time the market was all out neutral was just before the 2008 crash).

No New High?

Welcome back from the weekend! The market did exactly what I expected it to last Friday when the Jobs Report easily beat a very negative expectation, leading to a rally due to both being better than expectation and still low enough to keep the rate hammer off its back. This was what I wrote last week..

"The much lower expectation for this coming Friday's jobs report could also help alleviate some rate hammer fears. As such, tomorrow may be an interesting day in the market and possibly a positive one. However, even if it was a positive one, I won't be the first to speculate on a breakout."

Indeed, even though the market came back strongly last Friday, Monday today proved to be profit taking day once again as the market continue to struggle with the new high resistance level. In fact, unless the Dec 1 peak is taken out, the declining peaks pattern I spoke of last Wednesday stands, and it is a dangerous pattern at this level, at this stage of the stock market cycle and under such geopolitical situation. Failing here could spark that much awaited market crash and from the way global tension and situation is developing, 2016 has a really high chance of becoming that year.

Bond yields continue to flatten and total equities put call ratio traded nicely in the uncertain zone. All in all a bearish inclined uncertain day where there were plenty of buying and selling back and forth. From this point, I don't see how the market can make a new high given the lack of positive developments but plenty of negative ones. Like I said last week, this is certainly not the time for high probability swing trading. This is why my Star Trading System begun to produce single day trading opportunities, allowing us to make a 31.5% profit trade last Friday in just one day (Yes, don't miss these profits! Join my Master's Stock Options Picks Service now!)

Market Crash Timer: ORANGE

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

Cautiousness...

Market closed negative today pretty much exactly how I expected it to. As I mentioned in Monday's report as well as yesterday's report to paid subscribers. As I mentioned, failing at this level once again can be catastrophic for the market. This is compounded by the fact that the SP-500 actually failed to meet the high of November, forming a declining peaks formation. Declining peaks signify declining short term confidence in the market making a new high and given that the market has struggled at this level for the most part of this year, each failure around this level opens up the possibility of a deeper correction. Like I mentioned to paid subscribers yesterday...

"With the new high resistance level and all kinds of uncertainty surrounding this Friday's jobs report, I don't see how anyone can be committed confidently at this level in either direction. This continues to be a market for extremely short term  trading the kind we did with BABA today, taking a 10.7% profit in just 4 trading days. Not bad with the uncertainty raging around in the market. (Check out our Master's Stock Options Picks service now!)"

 I won't be surprised to see tomorrow turning out to be a positive day given the uncertainty around this area as there are still plenty of reasons to be bullish as well as bearish. The bulls and bears will fight around this area, giving and taking lost ground from day to day before eventually one side run out of steam.

Market Crash Timer: ORANGE

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