• 681 days Will The ECB Continue To Hike Rates?
  • 682 days Forbes: Aramco Remains Largest Company In The Middle East
  • 683 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,083 days Could Crypto Overtake Traditional Investment?
  • 1,088 days Americans Still Quitting Jobs At Record Pace
  • 1,090 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,093 days Is The Dollar Too Strong?
  • 1,093 days Big Tech Disappoints Investors on Earnings Calls
  • 1,094 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,096 days China Is Quietly Trying To Distance Itself From Russia
  • 1,096 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,100 days Crypto Investors Won Big In 2021
  • 1,100 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,101 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,103 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,104 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,107 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,108 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,108 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,110 days Are NFTs About To Take Over Gaming?
Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Stock Barometer

Stock Barometer

Stock Barometer

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend. Our goal is to…

Contact Author

  1. Home
  2. Markets
  3. Other

Rubber, Meet Road

5/21/2014 7:13:08 AM

Good morning traders,

The consolidation continues as the market momentum aligns for a potential move lower as it appears. Let's take a look at what I'm talking about with two of our basic indicators:

QQQ Timing Indicator Chart

And given the divergence in the NYSE, let's take a look at the SPY:

SPY Timing Indicator Chart

This is usually where it sits right before a large move lower. So as divergence exists, the Nasdaq is gaining relative strength, so the real sell off may be in the NYSE.

As for the barometer:

Daily Stock Barometer Primary System Chart

Consolidations are a part of trading. You could look at this price action as a head and shoulder pattern, or a rising wedge. Either way, we have some pretty significant downside targets. If we do get bearish, I think we move aggressively towards the neck line, the consolidate again into July.

On the correction, there are not many calling for one, which is also a bearish sign:

Investors Intelligence % of Advisors Calling for a Correction Chart

As part of this service, we monitor hundreds of indicators daily for extremes or correlations with the market. This one is worth noting.

On the commodity front, our OIL Call Options are doing well in our oil options trader newsletter. Our PUTs for the move lower gained over 100% and our Calls should be on their way with yesterday's push higher.

As for gold, we've been waiting for this consolidation to end, and we believe it could get ugly for gold pretty soon:

GLD Options Open Interest Chart

We'll likely start issuing GOLD PUT recommendations when this indicator breaks lower. It's not quite done yet. I think gold will try to suck in some more bulls before taking them deep...

That's it for today. We get fed minutes which will give the markets something to digest. Remember, it's not so much as to how the market acts on the day of the release as hedgies push around the intra day trade, but on the days following, as larger institutions meet to consider their reactions. If they initiate sell programs, we'll be able to see it in our data and a bear market will commence. But I'm getting way ahead of myself - the market has been handling the recent action well.

Regards,

 

Back to homepage

Leave a comment

Leave a comment