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.

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