WEEKLY MARKET UPDATE

The long term up trend remains very much intact as does the weekly.  For the third straight week the SPY closed higher than it's previous all time high made in September.  However, as you can see by the latest price bar the market did not make a lot of headway; closing barely higher than where it opened on Monday and just above where the market closed last Friday.  If you are a student of Japanese candlestick charts you'll recognize this bar as a "near" doji or indecision bar.  Next week's price action will tell us a lot about the future direction of the market on an intermediate term basis.  If the market declines below the low of this week's bar the likely direction of the market will be to at least test the highs made in September.  If that does happen and the market declines below that level, then the market would likely continue down into the trading range between the upper and lower green lines.

CONCLUSION

By next week's post I will begin posting intermediate term signals as they occur based on my methodology.  I should stress that the purpose of this chart should not be whether to decide whether one is 100% in or out of the market; but rather whether or not one may want to consider hedging, increasing or decreasing one's position in the market.  The decision to be in or out of the market should be made based primarily on the longer term trend signals.  Have a great weekend everyone.  GO BLUE!

WEEKLY MARKET UPDATE

The bulls stampede on!  The week previous the market closed strongly above the all time highs made in September and this past week the market closed even higher.  The market has spoken (see weekly SPY chart).

CONCLUSION

I've pointed out in past posts that if on the most recent decline you recently moved most of your 401-K or IRA portfolio into cash; that a prudent strategy would be to slowly dip your toes back into the water, adding more of your portfolio back into the market as it proves it can move higher.

ANNOUNCEMENT

Sometime in November I am going to be adding a feature whereby I will post actual trades based on a few trading strategies I developed based on the broad market indexes and selected individual stocks and ETF's. I am a firm believer that it is not necessary to have one's funds in the market at all times (even if diversified) to significantly outperform the market.  My goal is to prove that over the long run.  Have a great weekend!

WEEKLY MARKET UPDATE

Wow, what a strong up week!  So much for the news dictating what the market "should" do.  Unless you've been living in a cave you no doubt know the shenanigans going on in Washington.  Logic would tell you when the news is bad and the threat of another US credit downgrade would cause the market to fall.  Instead, the market brushed that off this past week and rallied to all time highs at 174.51 (see weekly spy chart).  The market is now above the September high of 173.60 and appears to be headed even higher.

CONCLUSION

As I've stated ad nauseam in prior posts I would still be a bit cautious about going "all in" if you've been 100% out due to overbought nature of the market.  However, I do think it's prudent to slowly commit more capital as the market proves it can move higher.  This next week is a very critical week as it can either confirm that this week was a true breakout or a false breakout.  More on that next week.  Be blessed and have a great weekend.

WEEKLY MARKET UPDATE

The long term trend remains up.  Just as important, this week the intermediate term trend shifted up as well. Below is a chart of the weekly SPY.  On Monday of this past week the market opened lower than where it closed the previous Friday.  Early in the week the market sold off but beginning on Wednesday the market started to rally and had a very strong up day on Friday of this week to close above last Friday's close.  This is VERY bullish price action and was also confirmed by the sentiment indicator that I look at.

CONCLUSION

Based on this week's price action the high of 173.60 is a high probability target.  However, I think that caution is warranted.  As bullish as this past week's price action was; the market is still very overextended to the up side.  If I were out of the market 100% up until now, I would "dip my toes" back into the market with a small position and then monitor what happens when the September high of 173.60 is reached.  Have a great weekend.

WEEKLY MARKET UPDATE

The long term trend remains up but the intermediate term outlook remains muddy.  On Monday of this week the market opened much lower than where it closed on the previous Friday.  While the market closed higher today than where it opened on Monday, it still closed lower than the previous Friday's close.

CONCLUSION

This last week's price action makes it really difficult to tell which direction the market may take on an intermediate term basis.  I stand by the position that I've taken in recent weeks until the market can prove it can break out to new highs.  By almost every metric I look at the market is overstretched to the up side.  I would tend to be more conservative than aggressive at this juncture.

WEEKLY MARKET UPDATE

While the long term trend remains up, the intermediate term picture remains unclear.  I stated last week that if this week's price action declined below last week's low, that there would be a high probability of a further decline into one of the support areas below.  As you can clearly see on the weekly SPY chart; that happened.  The most immediate support level is the August low at 163, then the 40 week moving average at 159.76, then the 156-157.50 level.

CONCLUSION

While anything can happen in the market, after last week's price action, now is not a good time to be establishing a new position in the market if you've been 100% on the sidelines.  And IMHO it's a good idea to either scale out of your positions or hedge if you've had most of your investment capital in the market. Have a great weekend!

WEEKLY MARKET UPDATE

This was a very interesting week.  While the long term trend remains firmly up, this week's price and volume action indicated a mighty battle between the bulls and the bears.  Take a look at the weekly SPY chart.  The market opened higher on Monday than where it closed the previous Friday.  Early in the week it rallied above the high made in August at 170.97.  But later in the week it sold off to close not only lower than the August high, but also lower than where it opened on Monday.  Now take a look at the volume this week compared to the two previous weeks.  It was much larger.  This combination of technical factors tells me that if early next week prices decline below 170 that there is a high probability of a further decline to at least the 163 level; perhaps even lower to the 40 week moving average at 159 or the next lower support level of 155.75 - 157.50.

CONCLUSION

While the long term trend remains up and the last two weeks have rallied strongly, this strikes me as particularly risky time to consider getting back into the market if you have been 100% in cash.  I say that not only due to the factors I've already discussed; but when you add the fact that prices are stretched historically high to the up side, the probability of a negative expectancy is higher than a positive expectancy over the intermediate term.  Have a great weekend.