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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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Stocks & Equities

How Much Can a Day Trader Make?

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Posted by Tyler Bollhorn - StockScores Newsletter

on Wednesday, 14 December 2016 09:13

Screen Shot 2016-11-28 at 2.56.07 PM

perspectives commentary

In This Week's Issue ending December 12, 2016:

  • Weekly Commentary
  • Strategy of the Week
  • Stocks That Meet The Featured Strategy
  • Stockscores' Market Minutes Video - Why Trade Normal
  • Stockscores Trader Training - How Much Can a Day Trader Make
  • Stock Features of the Week - Intraday Pullback Day Trade

Note: some of you have received a course email from us by mistake today, please ignore.

Stockscores Market Minutes - Why Trade Normal?
Stocks that go up consistently over time usually start their trends with abnormal price and volume action. This week, I describe this concept and how it can help you trade better. Plus my regular weekly market analysis and the trade of the week on $NE. Click Here to Watch
To get instant updates when I upload a new video, subscribe to the Stockscores YouTube Channel

Trader Training - How Much Can a Day Trader Make?
How much can you make trading the stock market? This is the question I get asked the most. It is not a whole lot different to how much does a doctor or lawyer make? How much does a professional athlete make? The answers to these questions have a huge variance depending on the situation and it is no different for traders. The short answer is that it depends on market conditions, trader skill and capital available. However, I can give you some greater detail to help you understand the economics for my approach to active trading.

To give you the long answer to the question, there are a few concepts that have to be defined. First is reward for risk, the metric that I use to measure profitability.



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Stocks & Equities

The second most overbought market since 1980

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Posted by Steve Saville - The Speculative Investor

on Tuesday, 13 December 2016 06:33

By one measure, the Dow Industrials Index is now at its second-most ‘overbought’ level since 1980. The measure I’m referring to is the 14-day RSI (Relative Strength Index), a short-term momentum oscillator shown in the bottom section of the following Dow chart.

Dow LT 121216

Being the most something-or-other (the most overbought/oversold, optimistic/pessimistic, etc.) since a distant past time often isn’t as important as it sounds. For instance, the only time since 1980 that the Dow’s daily RSI(14) was as high as it is today was in November of 1996 (interestingly, almost exactly 20 years ago), but nothing dramatic happened during the days, weeks or months that followed the November-1996 momentum extreme.

As illustrated below, a pullback to the 50-day moving average (MA) got underway within a few days of the momentum extreme, after which the Dow resumed its long-term advance. There was a more significant short-term pullback (to the 200-day MA) a few months later and an intermediate-term correction a few months after that (more than 8 months after the momentum extreme), but the bull market continued for another 3 years.



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Stocks & Equities

The Trump Rally Will Morph

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Posted by John Mauldin - Mauldin Economics

on Monday, 12 December 2016 08:22

“Price is what you pay. Value is what you get.”

– Warren Buffett

“There is no safe store of value.”

 – Alan Greenspan

“In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long-run, the market is a weighing machine.”

– Attributed to Benjamin Graham by Warren Buffett in a 1993 Berkshire Hathaway letter

The actual quote, from Graham’s 1934 book Security Analysis, is:

In other words, the market is not a weighing machine, in which the value of each issue is registered by an exact and impersonal mechanism, in accordance with its specific qualities. Rather we should say that the market is a voting machine, whereon countless individuals register choices which are partly the product of reason and partly the product of emotion…. Hence the prices of common stocks are not carefully thought out computations, but the resultant of a welter of human reactions. The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.

Stock Valuation in the Age of Trump



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