by phil - October 23rd, 2014 7:56 am
We decided to give yesterday a pass.
Though the indexes failed to hold our strong bounce lines (well, 3 of 5 did), we can blame Canada for that one as a gunman shot up Parliament yesterday afternoon and the "terrorist attack" news sent our markets lower. Other than that (and these things are unavoidable when you sell 500M guns to 400M people in North America), it wasn't a bad day for the markets, so we're going to wait and see what actually sticks. Our watch levels remain:
So the Dow fell almost exactly from it's strong bounce to it's weak bounce yesterday. Aside from confirming the 5% Rule™ is firmly in charge, holding the weak bounce line is bullish – IF it holds. The S&P and Nasdaq held their strong bounce lines (thanks to AAPL) while the NYSE stayed in it's range but the Russell was a big disappointment and failed the weak bounce – a very bad sign if they can't take it back today.
by Greg - October 22nd, 2014 5:40 pm
Join us for the PSW Conference where you'll learn:
- To BE THE HOUSE – Not the Gambler!!!
- How to critically analyze today's markets and economy
- What strategies to apply to the current market conditions
- When to hold your trades and when to fix them for bigger gains
- How to use futures to leverage portfolio returns
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- The investing trends that will matter next year
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by Option Review - October 22nd, 2014 5:38 pm
by phil - October 22nd, 2014 8:07 am
What an amazing recovery!
Just one week ago the World was coming to and end and now everyone has their rally caps back on. Investors really are sheep – except I think sheep have better memories… We're still right on plan of dropping 10% and then bouncing 4% (strong bounces) by Wednesday (today) that was initiated on October 6th by our friends at the Fed (see yesterday's post for the summary). For those of you keeping score, our strong bounce predictions for today were:
The Dow is just 17 points away from our goal and we'll just need the NYSE and the Russell to confirm their bounce lines and THEN we can get bullish again. Meanwhile, we actually got a bit more bearish in our Short-Term Portfolio (also in yesterday's post) as our Long-Term Portfolio popped right back to up 18.1% for the year so we wanted to lock those gains in with the STP, which finished the day up 81.8%, down from 92% in the morning as the markets rocketed.
by phil - October 21st, 2014 8:23 am
It LOOKS impressive, doesn't it?
As I said to our Members this morning in our Live Chat Room, all is going according to plan, as we expected to see strong bounces in our indexes by Wednesday – no matter what news or earnings turned out to be. If the powers that be want the market to bounce – it bounces.
Our general rule of thumb is that dip buyers only learn their lesson after they have been burned 3 times and, so far, only the August dip buyers are being relly burned but a failure to retake that line and a move lower – that might get them to think twice about mounting another rescue effort next time we test 1,050 on the Russell.
On this next chart, you can see how the various Fed speakers were used at key inflection points to guide the markets exactly where they wanted them to go.
As you can see from this S&P chart with Fed notes attached, the manipulation we told you about on 10/6 (see: "Market Mayhem – 12 Fed Speeches in 5 Days Causes Chaos") is merely playing out according to plan and this is why we were able to take full advantage of both the dip (see: "Money-Making Monday: How to Profit from a Market Correction") and the bounce (see: "Wednesday Market Weakness – Oil Collapses to $80, Good or Bad?").
In fact, the TNA Oct $58/60.50 bull call spread that we pointed out last Wednesday at $1.12 closed on Friday morning at $2.40 – up a very nice 114% in 48 hours for those of you who get our morning newsletter (which you can subscribe to here). Our suggested roll to the Nov $56/63 bull call spread at $3 still has to play out but, so far, we're at $4, so up 33% in 4 trading days is "on track" towards our planned 133% gain in 30 more days.
by Sabrient - October 20th, 2014 11:27 pm
Courtesy of Sabrient Systems and Gradient Analytics
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity — i.e., there is no need for investors to be afraid of the very thing they have been hoping for. Also, the charts are looking exhausted to the downside, and our fundamentals-based rankings remain slightly bullish.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
Three weeks ago, the market finished the first week of October oversold, and the following week it became extremely oversold, and then last week it reached severely oversold. Obviously, no matter how overbought or oversold the market gets, it can always get more so. However, investing is about stacking the odds in your favor, and the more severe technical conditions become, the greater the odds of a bounce or outright reversal.
As of Friday, the S&P 500 closed down -6% from its closing peak on September 18 (but on an intraday basis, the peak-to-trough pullback was -9.8%). The MSCI World Index is down -10% from its September 2 high.
The top performing sectors last week were Telecom, Industrial, and Basic Materials, but these three had fallen the most the prior week. For the month of October, Utilities is up about +2%, which is far more than everyone else. Consumer Goods/Staples is down less than -2%, and the others are worse (Energy is down…