Know When to Hold 'em

By: Stock Barometer | Mon, Apr 28, 2014
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4/27/2014 9:09:13 PM

Good evening traders,

The real question is do you know when to run? Yes, the market took a warning shot on Friday as - insert your news story here - made the market - feel - bad...

Sorry for the sarcasm, but the past 14 years of writing this article at has taught us to ignore the news. The market is going to do what it is going to do. It is run by computers. And our job is to figure out what algorithm is driving the market.

Daily Stock Barometer Primary System

The pattern on the Nasdaq is what everyone is writing about. So I might as well join the mix. But often, more often that not, the predicted pattern is not what plays out. So Monday will be critical to our call.

Critical to the market is the action in bonds. They are looking a little bearish in the futures market - which would hold bullish for stocks.

Bond Timing Indicator

Gold is a tough call here. I was all set to position our gold options trader service in some PUTS - but the bounce will get going if there is weakness in stocks. Because of that potential, we will stand put for now.

Gold Timing Indicator

In the longer term, this positioning is short term bearish, but longer term bullish for stocks.

QQQ Timing Indicator

In our oil options service, we are long PUTS, but we need oil to break down here. A break of this trend could be very bearish for oil. But that would support a weak stock market.

Oil Timing Indicator

Our main premise in the market is that there are 3 key components, price, internals and sentiment. This view of sentiment suggests we are working towards a bottom, but not there yet.

Equity Put/Call Ratio

This view of breadth sets up a potentially bearish scenario, where it settles below the 34 day moving average.

NASDAQ Cumulative Breadth

And it is perfectly confirmed with volume. Just remember that this article is a snapshot in time. The markets open 12 hours from now. So much can happen in that period.

NASDAQ Cumulative Volume

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And on the bullish front, the internals are so bearish, that they are approaching bullish. This would suggest that if the markets are going to flip bullish (which would align with our early may reversal) that we could test highs.

NASDAQ Advancing Stocks

That is it for this evenings update. There are some conflicting signal setting up, which usually get resolved by a strong directional move. In the short term, we are over sold based on the internals - but not in the sentiment. They don't have to align, it just makes the call easier when they do. We believe our current position should work out.




Stock Barometer

Author: Stock Barometer

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