Market Indicators (week of April 29)

Each weekend, I will list signals from the most popular market indicators. *

(A full list of the major indicators with signals can be found in my book, All About Market Indicators (McGraw-Hill).) I’m also the author of the best-selling Understanding Options (McGraw-Hill), Understanding Stocks (McGraw-Hill), and Start Day Trading Now (Adams Media).

AAII survey (4/24/2013)

28.3% bullish. 38.8% bearish.

Sell signal: Over 60% bullish.

Buy signal: Over 50% bearish.

 

Investor’s Intelligence (4/24/2013):

44.3% bullish. 19.6% bearish.

Sell signal: Over 50% bullish.

Buy signal: Over 50% bearish.

 

CBOE Put/Call Ratio: .65

Sell Signal: Lower than .75 is a sell.

Buy signal: Higher than 1.0 is a buy (more puts are being bought)

 

VIX: 13.61

Sell signal: Lower than 12.

Buy signal: Over 40.

 

Moving Averages: S&P 500 above the 50-day, 100-day and 200-day MA.

 

Sell signal: Index crosses below 50-, 100-, or 200-day MA.

Buy signal: Index crosses over MA.

 

MACD: MACD is above the zero line and even with the red 9-day signal line. (Note: I’m using the settings, 19,39,9, recommended by Gerald Appel, MACD’s creator.)

 

Sell signal: MACD line (black line) crosses below zero line. MACD line crosses below 9-day (red or gray) signal line.

Buy Signal: MACD line crosses above zero line. MACD line crosses above 9-day signal line.

 

Comment: Chartists pointed out a bearish head and shoulders pattern has formed on the S&P. Another negative signal: Barron’s latest headline is: Dow 16,000! Over 70 percent of professional money managers are bullish. In summary, the signals are mixed, and the market continues to surprise. The markets could go either way, so probably best to sit tight until we see what is in store. S&P dropped to its 50-day MA and bounced higher, a positive sign. Lesson: Follow the trend until it ends. 

Bearish possibility: Market moves higher but fails to follow through, and retreats. That would be negative, and signals that institutions are selling. 

Bullish possibility: Market moves higher without retreating, and shocks the bears. 

Since no one knows what the market will do, all we can do is watch. The market is really at a crossroads, and you could make a case for either direction. If you’re a beginner, this is one of those times you sit back and learn. It is not the time to be a hero. 

 

* Note: These signals are not actionable trades, but only guidelines. Always use other indicators, and your own research, to confirm before buying or selling.

Market Indicators (week of April 22)

Breaking News: One of the stocks I wrote about, Lumber Liquidators (NYSE:LL), gapped up over 5 points today. As you know, it’s not a bad idea to sell stocks when they gap up on positive news. 

Each weekend, I will list signals from the most popular market indicators. *

(A full list of the major indicators with signals can be found in my book, All About Market Indicators (McGraw-Hill).) I’m also the author of the best-selling Understanding Options (McGraw-Hill), Understanding Stocks (McGraw-Hill), and Start Day Trading Now (Adams Media).

AAII survey (4/17/2013)

26.8% bullish. 48.2% bearish.

Sell signal: Over 60% bullish.

Buy signal: Over 50% bearish.

 

Investor’s Intelligence (4/17/2013):

47.4% bullish. 20.6% bearish.

Sell signal: Over 50% bullish.

Buy signal: Over 50% bearish.

 

CBOE Put/Call Ratio: .85

Sell Signal: Lower than .75 is a sell.

Buy signal: Higher than 1.0 is a buy (more puts are being bought)

 

VIX: 14.97

Sell signal: Lower than 12.

Buy signal: Over 40.

 

Moving Averages: S&P 500 firmly above the 100-day and 200-day MA, but slightly above 50-day MA. 

 

Sell signal: Index crosses below 50-, 100-, or 200-day MA.

Buy signal: Index crosses over MA.

 

MACD: MACD is above the zero line but is below the red 9-day signal line. (Note: I’m using the settings, 19,39,9, recommended by Gerald Appel, MACD’s creator.)

 

Sell signal: MACD line (black line) crosses below zero line. MACD line crosses below 9-day (red or gray) signal line.

Buy Signal: MACD line crosses above zero line. MACD line crosses above 9-day signal line.

 

Comment: It was a rough week for the country, gold, and the stock market. Last week, all signals were go, but now we’re teetering on the edge. Nearly all indicators went from bullish to neutral. The S&P 500 is resting slightly above the 50-day moving average. If it breaks below, that would be a negative short-term signal. MACD also turned slightly negative. These could be early signals the trend is about to change for the worse.

Going into this week, the indicators are saying, “Be cautious.” Maybe it’s not the time to make a major bet on either side. And yet, it’s not time to panic, either. Here’s one way to think about it: What is more probable? Dow 16,000 or Dow 13,000? The answer will dictate how you trade in the near future. Bottom line: Market was roughed up but still hanging in there for now. 

Note: What happened to gold was a good lesson in market psychology. As I said last week, anything is possible in the market, and it’s still full of surprises. Be prepared, as we’ll soon find out if the market is for real, or all hat and no cattle. 

 

* Note: These signals are not actionable trades, but only guidelines. Always use other indicators, and your own research, to confirm before buying or selling.

Market Indicators (as of April 15)

Each weekend, I will list signals from the most popular market indicators. *

(A full list of the major indicators with signals can be found in my book, All About Market Indicators (McGraw-Hill).) I’m also the author of the best-selling Understanding Options (McGraw-Hill), Understanding Stocks (McGraw-Hill), and Start Day Trading Now (Adams Media).

AAII survey (4/10/2013)

19.3% bullish. 54.5% bearish.

Sell signal: Over 60% bullish.

Buy signal: Over 50% bearish.

 

Investor’s Intelligence (4/10/2013):

50.5% bullish. 20.6% bearish.

Sell signal: Over 50% bullish.

Buy signal: Over 50% bearish.

 

CBOE Put/Call Ratio: .70

Sell signal: Lower than .75 is a sell.

Buy signal: Higher than 1.0 is a buy (more puts are being bought)

 

VIX: 12.06

Sell signal: Lower than 12.

Buy signal: Over 40.

 

Moving Averages: S&P 500 above all three moving averages

 

Sell signal: Index crosses below 50-, 100-, or 200-day MA.

Buy signal: Index crosses over MA.

 

MACD: MACD is well above the zero line and is slightly above the red 9-day signal line.(Note: I’m using the settings, 19,39,9, recommended by Gerald Appel, MACD’s creator.)

 

Sell signal: MACD line (black line) crosses below zero line. MACD line crosses below 9-day (red or gray) signal line.

Buy Signal: MACD line crosses above zero line. MACD line crosses above 9-day signal line.

 

Comment: The biggest change for the week is individual investors, who think this bull market is going to end. Because they are so bearish, that is very bullish. Moving averages and MACD are also bullish. You can argue for hours about why the market should not go higher, but it does. The indicators reflect that. Of course there will be a correction one day, and of course we can’t predict Black Swan events, but until then, it appears this market is going higher. 

It’s fascinating to watch what happened to gold. I bought the gold ETF (GLD) for  years. I made a lot of mistakes but one thing I did right was get out of gold when GLD went below its moving averages. There was a bear signal last November, but I got completely out in December. And now, GLD is the opposite of SPX. Once the public realizes that GLD is not going to recover anytime soon, it could get brutal. But gold had a 12-year bull market. And for 12 years, many people hated gold, but it kept going higher.

What have I learned from this? 1. Indicators are more powerful than opinion. 2. Any market can go higher (or lower) than anyone can believe. 

* Note: These signals are not actionable trades, but only guidelines. Always use other indicators, and your own research, to confirm before buying or selling.

Market Indicators (as of April 8)

Each weekend, I will list signals from the most popular market indicators. *

(A full list of the major indicators with signals can be found in my book, All About Market Indicators (McGraw-Hill).) I’m also the author of the best-selling Understanding Options (McGraw-Hill), Understanding Stocks (McGraw-Hill), and Start Day Trading Now (Adams Media).

AAII survey (4/3/2013)

35.5% bullish. 28.2% bearish.

Sell signal: Over 60% bullish.

Buy signal: Over 50% bearish.

 

Investor’s Intelligence (4/3/2013):

52% bullish. 19.4% bearish.

Sell signal: Over 50% bullish.

Buy signal: Over 50% bearish.

 

CBOE Put/Call Ratio: .70

Sell signal: Lower than .75 is a sell.

Buy signal: Higher than 1.0 is a buy (more puts are being bought)

 

VIX: 13.92

Sell signal: Lower than 12.

Buy signal: Over 40.

 

Moving Averages: S&P 500 above all three moving averages

 

Sell signal: Index crosses below 50-, 100-, or 200-day MA.

Buy signal: Index crosses over MA.

 

MACD: MACD: MACD is well above the zero line and is slightly below the red 9-day signal line.(Note: I’m using the settings, 19,39,9, recommended by Gerald Appel, MACD’s creator.)

 

Sell signal: MACD line (black line) crosses below zero line. MACD line crosses below 9-day (red or gray) signal line.

Buy Signal: MACD line crosses above zero line. MACD line crosses above 9-day signal line.

 

Comment: Market indicators still bullish. Market sentiment not quite as bullish last week, especially among individual investors, which is a positive sign. Last week, there were tons of articles about the coming market correction, but the market defies logic, as always. Friday could have been a disaster but market climbed back in the afternoon. You could make a case for either side: a true correction could be near, or the resilient market climbed a wall of worry. Take your pick because no can predict what will happen next. 

In my latest MarketWatch article on how to survive a correction (http://on.mktw.net/XWKLsN) , Amy Smith from Investor’s Business Daily put the airline stocks on her watch list, especially Alaska Airlines (NYSE: ALK). 

* Note: These signals are not actionable trades, but only guidelines. Always use other indicators, and your own research, to confirm before buying or selling.