Stock Market Analysis

Monday, June 18, 2018

Danger Ahead...

Jason's US Market Analysis & Forecast - 18 June

Welcome to a new options trading cycle, the July cycle!

Like I said in my report last week, an options traders' month start from the 3rd Friday of one month to the 3rd Friday of the next month rather than follow the typical calendar month due to options expiration cycle. Last Friday was Quadruple Witching June, which is options expiration for June options. What a month June cycle has been! Market moved almost exactly how I expected it every step of the way and I made in total over $50,000 in profit in just one month. Amazing month and thank God for such a month!

Today starts July cycle for me, my students and my managed accounts clients. So, how might the month be?

Well, technicals and fundamentals have never been better in the world for a very long time, pushing the Nasdaq into new historical highs, leading the S&P500 along with it, still somewhere down there, a distance from new historical highs. This is when it gets VERY dangerous.

A sharp bearish divergence suggest short term overbought condition supported by the rounded top formation created by the S&P500 even though the Nasdaq has been making new highs. This relunctance to follow will ultimately drag the Nasdaq down with it to a more reasonable level which both indices can agree on. Its not data mining, its logic. When a small group of stocks seem to outperform day after day while 500 other stocks doesn't quite follow, those investors of that 100 stocks will start to have second thoughts and eventually sell off to join in with the mass. Its just common sense there.

As such, I won't be surprised to see a very very volatile week ahead as the market continues on the outlook that I have made all these while: slow volatile climb to the January high before everything goes to..... H?

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


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