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Stock Trading Alert: S&P 500 Gets Close To Record High As Investors' Sentiment Improves

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Posted by Paul Rejczak - Sunshine Profits

on Thursday, 05 January 2017 08:27

Stock Trading Alert originally sent to subscribers on January 5, 2017, 6:56 AM.

Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,330, and profit target at 2,150, S&P 500 index).

Our intraday outlook remains bearish, and our short-term outlook is bearish. Our medium-term outlook remains neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The main U.S. stock market indexes gained between 0.3% and 0.6% on Wednesday, extending their short-term uptrend, as investors' sentiment remained bullish following Tuesday's rally. The S&P 500 index continues to trade relatively close to its December 13 all-time high of 2,277.53. For now, it looks like a flat correction within an uptrend off last year's early November low. But will the market extend its year-long uptrend even further before some more meaningful downward correction? The nearest important level of resistance remains at around 2,280, marked by record high, and the next resistance level is at 2,300 mark. On the other hand, support level is at 2,250, marked by recent resistance level. The next support level remains at 2,200-2,220. The index continues to trade along its medium-term upward trend line. It also trades within a few-week-long consolidation, as the daily chart shows:

1

Expectations before the opening of today's trading session are virtually flat, following yesterday's move up. The index futures are



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An Institutional Buy/Sell Overview ...

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Posted by Marty Chenard & CNNMoney

on Tuesday, 03 January 2017 06:58

Institutional Selling trend lines showed that it has been trending lower. (Note that less selling is a positive and more selling is a negative.) The top part of the chart showed a small up tick in Upper-Q4 negative territory.

Sounds like good news except that Institutional Buying and Selling activity just showed the first day of Institutional Distribution on Friday's close.

What now?

This needs be a test day because Institutional Selling had an up tick but it did not make a higher/high tick yet, so Institutional Selling is still technically in a down trend.

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...for more on the CNN Fear & Greed Index go HERE



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Stocks & Equities

2016: A Year for Contrarians; 2017 Shaping Up That Way as Well

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Posted by Gary Tanashian - NFTRH

on Thursday, 29 December 2016 08:12

2016 was the year I finally decided to codify my niche as a psychology-focused market contrarian, putting the Alice, Red Queen and Rabbit components of NFTRH’s logo right there on my inner forearm, forever.

This is because I love the imagery and themes of NFTRH’s guiding metaphorical story, Alice in Wonderland, and because the weird technical tools I use are generally in service to one thing; being right when the herds are going the wrong way.  The concept originally came to me as the markets were beginning their descent into the crash of 2008 as the newly launched market management service needed a view that was apart from the emotional herds then preparing to go down the drain.  Alice’s quote (Lewis Carroll), a portion of which occupies my other inner forearm was perfect in this regard…

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”

2016 was a year that fit NFTRH’s niche to a tee and it is no coincidence that it has been a good one, performance wise (though in full disclosure, the last couple of weeks have taken a chunk of profits back as I give the markets some leeway through the ‘Santa’ seasonal).  Let’s take a stroll through 2016 before taking a brief look ahead to 2017.

The year started with the topping pattern (that wasn’t, or isn’t yet) in the S&P 500.  For all the world it looked like a top, walked like a top and quacked like a top.  But it wasn’t a top!  That was proven when SPX rebounded from its lower low to the 2014 and 2015 lows and then rose to cross the 20 and 50 week exponential moving averages back up again.  This was similar to the 2011 whipsaw, but on a grander scale.  Now of course, the would-be topping pattern may be a left shoulder to a bearish Head & Shoulders pattern in construction.  But even if so, the ultimate high could be well higher (ref. the 1998-2000 situation).  As of now, the market is bullish.  Period.

 

spx1

But considering that Casino Patrons are momo’ing the market and dumb money is strongly over bullish, and the market is over valued (one important valuation metric being the greater interest being paid on ‘risk free’ Treasury bonds vs. the S&P 500) as the media TRUMPets a new promotion; namely bond-eroding inflation as far as the eye can see due to coming fiscal policy changes.  The Treasury bond bull market is DEAD trumpet the mainstream financial media.  Well, for another view, let’s compare what the public was doing last summer during the NIRP! hysteria vs. today.



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An Institutional Buy/Sell Overview - Market Sentiment

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Posted by Marty Chenard & CNNMoney

on Tuesday, 20 December 2016 07:57

The chart for Institutional Buying and Selling activity for last Friday's close is now posted. If you look at the chart you will see that Institutional Buying had a an up tick and Institutional Selling showing an up tick.

Note the vacillation going on with the up and down Accumulation and Distribution movement.

While Institutional Investors were in Accumulation they were also selling, so be cautious.

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also current market sentiment:

Screen Shot 2016-12-20 at 6.46.37 AM

Screen Shot 2016-12-20 at 6.51.04 AM



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Stocks & Equities

Trump Rally and Irrelevant Dow Theory; what’s next Stock Market Crash

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Posted by Sol Palha - Tactical Investor

on Friday, 16 December 2016 08:39

Uncertainty and mystery are energies of life. Don't let them scare you unduly, for they keep boredom at bay and spark creativity. R. I. Fitzhenry

In September we penned a second article in the Alternative Dow theory series, titled “Dow theory no longer relevant-Better Alternative exists where we stated that the Dow theory as it stood was no longer relevant.  Here is a brief excerpt from that article. 

The transports topped out in November of 2014, and according to the Dow theory this is a big negative;  the Dow industrials should have followed suit. Instead, the Dow soared higher paying no heed to this theory proving to a large degree that this theory has lost its value. After all, it is a theory and the definition of a theory is “a supposition or a system of ideas intended to explain something, especially one based on general principles independent of the thing to be explained.

That is why way back in 2006 we offered a Dow theory Alternative that has proved to be far more accurate and reliable than the Dow theory.  Just to let this sink in, the transports topped out almost two years ago and instead of trending lower the markets have surged to new highs. If you look at the above chart, the Transports appear to be finally gathering momentum and to break out. In the Dow theory alternative, we stated it was the Utilities that lead the way as opposed to the Dow transports, well let's see if that holds true. 

Instead of the markets breaking down, due to the negative divergence between the Dow transports and the Dow industrials, the market after experiencing a very brief shock due to a Trump win, recouped and went on to soar to new highs. For the record, we predicted in September that a Trump win would prove to be an excellent buying opportunity in advance of the development.  

From a pure trading perspective, a Trump win would provide contrarian players with an incredibly attractive buying opportunity.  Like Brexit, the crowd is bound to overreact as they stampede for the exits, creating opportunity instead of disaster.  The experts were dead sure that Brexit was going to create chaos; turns out that the only mess it created was amongst the experts when they were forced to eat their rubbish.  Before Brexit, we stuck to our theme that any correction should be viewed as a buying opportunity. Just as Brexit was all bark and no bite; the same phenomenon is likely to play out if Trump wins. All the Naysayers from every crack and crevice will emerge screaming the end of the world and when the world does not end they will be forced to crawl under the rock again.  It would be good to keep this saying in mind if Trump wins dance when the crowd panics and standstill when they jump up with joy”.  Regarding who is the better candidate, we will let our readers make that call. Tactical Investor  

Now to the million dollar question; is the stock market ready to crash and has the Trump effect run its course? 

The simple answer is no; the stock market is not ready to collapse. It is, however, ready to experience a correction in the not too distant future. The correction could range from mild to slightly sharp, but a crash is not imminent. Human nature is such that, it does not favour simple answers, it looks for complex answers even if they are unwarranted. 

Let’s start with the Trump effect 

The only reason we brought Trump up in the article we penned in September was because the sentiment was intensely negative;  we knew that if he won, it would create a shock effect, similar but stronger in nature than Brexit. As the trend was up, such an event had to be viewed through a bullish lens.  The Trump effect falls more along the lines of Gossip, so we are not going to delve into it much 

There is a mania gripping the markets, which is almost irrational in nature to some degree.  Some Individuals seem to have assigned Trump with a demigod status, and they believe that he can solve all their problems. This is an impossible task for anyone, so there is bound to be some disappoint going forward. Whether the disappointment will be mild or extreme is something that time will tell.  He has done a few things that seem to resonate well with his followers so until they abandon him; it is likely the Trump effect will run for a bit longer. If he sticks to his promise of getting rid of red tape, lowering corporate taxes and getting rid of two rules for every new rule created, it should provide an environment that is conducive for business.  The markets are forward looking beasts, and they view Trump through a bullish lens; never fight the trend, unless you want to experience the bitter feeling of defeat. 

Is the Dow Theory irrelevant and what lies in store for this market going forward?

We still lean to the argument that there is a better alternative than the Dow Theory and in fact, we think the Dow theory as it stands is entirely irrelevant.  You can read the article we listed above if you want to find out why we feel this way.  Regarding the second question, we briefly addressed above, and as stated while the Crowd is not as nervous as it was back in October and early November; the masses are not euphoric. Current sentiment data seems to confirm this outlook. However, the main reason the markets will not crash is that the trend is still up and until the trend changes direction; all sharp pullbacks should be seen through a bullish lens. 

As we alluded to in the alternative Dow Theory article, the Dow utilities lead the way up and or down. 

du

It looks like the Utilities are coiling up to break out again. This suggests that the Dow industrials will follow in their footsteps.  If you look at the utilities, you will see that in general, it tends to lead the way up and down and is a better barometer of what to expect from the markets than the Dow transports. The utilities are coming out of a correction, so this means that the Dow is likely to experience a correction sometime in the 1st part of next year before rallying higher. The correction should fall in the 5-10% ranges. We use the utilities as a secondary indicator. Our primary indicator is the trend, and as the trend is up, we would view a strong pullbacks as a buying opportunity. 

Tactical Investor Proprietary Sentiment indicators 



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