*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.
SEASONALITY: THE LATER HALF OF THE WEEK IS GENERALLY BULLISH
According to the Stock Trader’s Almanac:
- 04/15 income tax deadline, Dow down only 5 times since 1981.
- April expiration day, Dow up 11 of last 13.
CYCLE ANALYSIS: CYCLE TOP COULD BE AROUND 04/11 TO 04/15
See 04/08 Market Recap for more details.
INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD
Nothing new, according to the II Survey, too many people expected a correction, so the stock market should rise to a new high first before actually pulling back. Basically, my guess is that we’ll repeat the year 2004 roller coaster pattern. See 03/19 Market Recap for more details.
SHORT-TERM: A STRONG EARNINGS OFF-SEASON USUALLY MEANS A WEAKER EARNINGS SEASON
See 04/09 Market Recap, the statistics about the Earnings Season plus the cycle analysis and plus too many bearish extremes accumulated in the table above, so my guess is that we’ll see typical sell on news in the coming earnings season.
A new record again today – the ISEE Equities Only Index closed at a new record high. The reading 348 means for very 3.48 calls bought there’s 1 put bought, this is way too bullish. The last time when ISEE Equities Only Index kept going to record high was around the 2007 bull market top.
The official definition of the T2105, take a look if interested.
T2105 High Low Logic Index
Developed by Norman Fosback, the Index is computed as the lesser of the number of new highs or new lows divided by the total number of issues traded. Daily or weekly NYSE data typically is used in the calculation.
The concept behind the indicator is that either a large number of stocks will reach new highs or a large number will establish new lows, but normally not both at the same time. Since the High Low Logic Index is the lesser of the two ratios, high readings are infrequent.
When a high indicator reading does occur, it signifies that market internals are inconsistent with many stocks reaching new highs at the same time that many stocks establish new lows. Such a condition is considered bearish for stock prices.
Extreme low indicator readings reveal a uniform market. They are considered bullish for stock prices.
STOCK SCREENER: For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.
Looks like it’s too late to long stocks now as the market is way too overbought. Waiting for a better chance.