December 2, 2016

Through the Looking Glass and What Wall Street Found There

As Josh Brown tells us:

The media is interested in the question of how The Street’s chief strategists can now be selling President Trump as a reason to be so bullish after telling us that President Trump was likely to lead to a crash or correction. 
The answer to this question is sentiment, which always follows price. Prices went up, so sentiment changed. What once was bearish and scary is now bullish and exciting. 
Animal spirits have been awoken in the US stock market. It may not last long, but it’s undeniable. The initial burst of re-certainty after the election consolidated, and in its wake, a new leg higher emerged – mostly predicated on the idea of massive tax cuts and stimulus plans. If only the President had the ability to wave a wand and make both things happen all at once…

September 13, 2016

More Pain Ahead for the Market?

Michael Kahn, CMT, Barron's resident Technical Analyst certainly thinks so:
Stocks moved higher Monday as rate fears subsided a bit – ironically, on the view that the Fed will not raise rates in September due to Friday’s selloff itself. However, with history as a guide, the explosion out from the tight summer range points to more pain ahead.
I happen to agree. If we don't take out Monday's highs (and today's selloff does not augur well in that regard), the trend is down.

February 20, 2016

What Say You, Market? (the 02/19/2016 Edition)


(Click to enlarge weekly chart of the S&P 500 Index as of yesterday's close)

Not much to say. Support above 1800 for the S&P 500 Index is still holding on a weekly basis (the index closed at 1917). The major resistance above is around 1950 reached 02/01. (To be updated as needed).

February 11, 2016

Update

The S&P is again testing support. If it breaks (this week's close will be key), the Bears will have won and my previous analyses will be good for the dust bin. Today's and tomorrow's sessions should be interesting, to say the least. 1800 is the key level of support for the       S & P 500.

I'll have a more in-depth analysis this weekend.

Trade very very carefully as volatility is reflecting panicky sentiment.

February 10, 2016

What Say You, Market? (the 02/10/2016 Edition)


It looks like the 1810-1830 support band for the S&P 500 has been tested successfully again.
That's the 5th time since April 2014, which reinforces it as support. The Bears have to decisively pierce this 1800-ish support level to have their views vindicated. The onus is on them.
Granted the Bulls have a lot of resistance levels above too (More on this in future posts), but don't let yourself be scared out of your long-term investments by the voices of doom. They're always loudest near significant bottoms.
To add meat to my analysis, I'll make a probabilistic prediction (which should be the only kind of prediction when it comes to markets, as they are dynamic and chaotic): I give the S&P 500 a 65% chance of rebounding from here.
I will of course update this as more data becomes available.
Make sure to do your own due diligence before trading in these treacherous times.

Don't forget that Technical Analysis is a great descriptive tool of the markets but NOT a great predictive tool in the deterministic sense. What it allows you to do in the predictive realm is assign probablities to various scenarios. Markets are never 100% predictable. 

But if a technique allows you to give a given scenario a 70% chance of happening (for example), I say it's a pretty useful one.