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.

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