Stock Market Technical Indicators & Analysis
I had hoped to produce a new video this weekend but was unable to get to it. Thank you for all of your nice comments. If you missed my video on “sell in May”, please go to last Monday’s post and select the link. The GMI remains at 1 and the GMI2 is at zero. It remains to be seen how long this bounce from oversold levels will last. I remain largely in cash in my trading accounts.
The put/call ratio is at an extreme level, about 1.3, implying a bounce soon. It is a contrary indicator such that when there are more puts than calls, like on Friday, the market is likely to rebound. And the T2108 is very low, at 16%. The GMI is now zero for the first time since December 15, 2011. With all of my indicators negative, is this the time to short stocks or the stock indexes? With my son’s help, I have published my first TA video post, on the current market and the infamous “Sell in May and Go Away” mantra. Let me know if you want more videos and any suggestions for making them more useful to you.View it full screen to see my charts clearly.
With the GMI at 1 and the GMI2 at 0 I am very reluctant to hold stocks. My trading accounts have been in cash for over a week. My university pension accounts remain invested in mutual funds, but I am considering raising some cash if we get a good bounce this week (see below). Too many sectors look weak, especially the commodities, suggesting to me a weakening worldwide economy.
The down-trend in gold has also become stronger. As this daily chart of the QQQ shows, the 30 day average (red line) is now curving down and touching the 50 day average (green dots), and the shorter term, 4 and 10 day averages, are now declining below the important 30 day average. Compare the pattern of the past few weeks with that of the preceding time period. It does not take a skilled technician to see that the market is no longer in an up-trend. The AAPL chart is very similar to this one. The leaders are no longer charging ahead. This is no time to be brave……
Nevertheless, the QQQ daily 10.4 stochastic is at oversold levels (just below 20, not shown) and this usually portends some kind of short term bounce in the underlying Nasdaq 100 index, perhaps back to the 30 day average. (The T2108, at 35%, remains in neutral territory and suggests to me that the market is far from a real bottom.) If the QQQ rallies this week, I may take some of my university pension money off the table. We have been taught that we must always be invested and cannot time the market—rubbish!!! All successful speculators found that there was a time to exit the market or to be short. This, I believe, is one of those times. Once a market decline begins, no one knows, except by lucky guess, when and where it will end. Trend followers wait for signs of a turn before they act.
