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.

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