Stock Market Analysis

Monday, August 14, 2017

How Might This Correction Unfold?

Welcome to week 3 of August 2017! This is also expiration week for August options so those of you holding vanilla August options, please take note of this Friday's expiration. (Read more about Plain Vanilla Options)

The market has pulled back into an intermediate correction since I identified the inverted hammer signal on the Dow last week, textbook style. In fact, the Dow closed its most negative week last week since May 2017, closing a -1.06% week. However, even that is nothing compared with the really negative weeks we saw back in 20015. This is still a very very impressive year so far.

In fact, I continue to be surprised with the amount of strength holding up against the correction so far as we can see significant accumulation in the Nasdaq last Friday and slight positive close on both the Dow and the S&P500. This is a sign of strength showing that investors are not afraid to buy into a falling market and holding it across the weekend. In fact, looking at the bond yields and the total equities put call ratio, none of them are shouting out bearish market very strongly at all but continue to be more or less uncertain. All of these supported by the ever strengthening economic numbers  supports my opinion that this isn't the start of a market crash like so many experts out there are predicting but just a largely sideways bearish inclined intermediate correction like we saw back in March.

We should still see a retest of the 30MA this week though and most likely also a crossing under of the 10MA below the 30MA. And that area would be where I would be seeking to identify good call options opportunities for my Master's Stock Options Picks subscribers.

Have a great and profitable week ahead!

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

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