Stocks Trade Down
The Dow Jones Industrial Average closed at 18,123.80, down -88.68 or -0.49%. S&P 500 closed at 2,139.16, down -8.10 or -0.38%. Nasdaq Composite closed at 5,244.57, down -5.12 or -0.1%.
Long Term Market Timing Signals- Spoiler:
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The chart above shows a red arrow when the Trend Momentum is going down and the rank crosses 0 from a bull market to a bear market. A green arrow is shown when the Trend Momentum is going up and the rank crosses 0 from a bear market to a bull market.
Market conditions are Bearish in a Bull Market as of 2016-09-16. This means traders and investors should consider trading with a Bearish bias by raising stop levels on winners and selling losers. Aggressive traders should consider buying put options or shorting stocks with 10% or less of their portfolio. The rank of the Bull Market is 4.428 which indicates the current market conditions are Extreme, Risk of a reversal is high.
Short Term Market Timing Signals- Spoiler:
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The short term market timing portion of the newsletter shows a combination of all three indicators on one graph, the momentum, breadth and sentiment indicators. The red and green arrows on the chart above the indicator chart will show each time these indicators gave confirmation or confluence that meet the buy or sell criteria. When market conditions are at extreme levels this group of indicators will find reversal ranges. If you see multiple arrows stacked one on the other each represents the day that the confirmation signal was still in place.
- Sell Signals are generated when sentiment is above breadth and Breadth is above momentum and all are above 90.
- Buy signals are generated when momentum is lower than breadth, breadth is lower than sentiment and both breadth and momentum are lower than 40.
- Values shown for Momentum, Breadth and Sentiment on the above charts do not match those of the ones below, data has been normalized here. Evaluate those charts individually.
Momentum Indicator- Spoiler:
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The Momentum Indicator is currently at -206.09 indicating a bearish trend in stocks, but with extreme short term bullish risk. This means the risk of the current bearish short term trend reversing or stalling is very high. Extreme measures of this trend range are -140 to -200. This indicator's trend cycle extremes take place every 3 to 6 months.
The vertical buy and sell lines will only show a new line if a subsequent buy or sell signal has already been generated. For example, the indicator may be showing that it is in the buy range but there will not be a new buy Signal vertical line on the chart if there has not yet been a sell signal.
Breadth Indicator- Spoiler:
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The Breadth Indicator is currently at 30.87 indicating the breadth of stocks moving higher is neutral. Risk of a trend reversal low. This means the current trend is likely to continue. Extreme measures of this trend range are 30 to 65. This indicator's trend cycle extremes take place every 3 to 6 months.
The vertical buy and sell lines will only show a new line if a subsequent buy or sell signal has already been generated. For example, the indicator may be showing that it is in the buy range but there will not be a new buy Signal vertical line on the chart if there has not yet been a sell signal.
Sentiment Indicator- Spoiler:
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The Sentiment Indicator is currently at 96.64 indicating the sentiment in the stock market is showing extreme complacency. Risk of a long term bearish trend reversal is extreme. This means the current long term bullish trend is NOT likely to continue. Extreme measures of this trend range are 95 to 100. This indicator's trend cycle extremes take place every 18 to 24 months.
The vertical buy and sell lines will only show a new line if a subsequent buy or sell signal has already been generated. For example, the indicator may be showing that it is in the buy range but there will not be a new buy Signal vertical line on the chart if there has not yet been a sell signal.