Market Indicators (as of March 23)

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 Understanding Options (McGraw-Hill),Understanding Stocks (McGraw-Hill), and Start Day Trading Now (Adams Media).

AAII survey (3/20/2013)

38.9% bullish. 33.3% bearish.

Sell signal: Over 60% bullish.

Buy signal: Over 50% bearish.

 

Investor’s Intelligence (3/20/2013):

47.4% bullish. 18.6% bearish.

Sell signal: Over 50% bullish.

Buy signal: Over 50% bearish.

 

CBOE Put/Call Ratio: .69

Sell signal: Lower than .75 is a sell.

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

 

VIX: 13.57

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 but has crossed slightly below the red 9-day signal line. (It’s too early to say if it’s significant but it could be an early sell signal.)

(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 trend is still up. The market ignored negative news from Cyprus, which was a positive sign. Moving averages bullish but MACD needs to be watched. The bullish sentiment indicators decreased a bit, which is also a positive sign. No correction yet, but be on guard. My view: It’s going to take a major event to change the direction of this bull market. 

Followup: Amy Smith, who mentioned Lumber Liquidators (NYSE: LL) and HomeAway (Nasdaq: AWAY) as stocks that reflect the CANSLIM philosophy, has been right on target. Both stocks (especially LL) have had phenomenal runs since she spoke about them in my MarketWatch columns. In my next column (April), Amy will give her next stock idea. 

* 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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