Todd Market Forecast: Two Indicators Mark a Trading Bottom

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Posted by Stephen Todd - Todd Market Forecast

on Thursday, 10 August 2017 21:39

3:00pm Pacific for Thursday August 10, 2017 

DOW - 218 on 2200 net declines

NASDAQ COMP - 135 on 1700 net declines



STOCKS: What we have seen over the past couple of days is a typical market phenomenon. An overbought market just keeps inching up. It refuses to go down for more than a few hours, driving traders, who want a pullback, to distraction.

Then one day a bearish news event happens. Some call it a "black swan" and the bottom falls out. We're down sharply for a day or three and then we hit bottom.

It wasn't just the N. Korean situation, but also the intraparty tiff between the President and Congress.

I think that this is what is going on here. Of course, seasonality remains a concern

GOLD: Gold was up another $12. The move to safety is clearly the catalyst.

CHART Five day RSI is again oversold and the VIX (volatility index) is above 15. Lately, both levels have marked a trading bottom.

Screen Shot 2017-08-10 at 9.02.31 PM

BOTTOM LINE:  (Trading)

Our intermediate term system is on a buy.

System 7 We bought the SSO at 92.55 so we're sitting on a loss of a little under 2 points. We've been here before.

System 8 We are in cash. Stay there for now.

System 9 We are in cash. Stay there.

NEWS AND FUNDAMENTALS: Jobless claims were 244,000, more than the expected 241,000. The PPI -FD (final demand) dropped 0.1%, below the expected rise of 0.1%. On Friday we get the CPI.

INTERESTING STUFF Whenever you find yourself on the side of the majority, it's time to pause and reflect ---Mark Twain ----------- ---- Additional thought. Isn't it interesting that this problem was understood even in the 19th century, well before the advent of technical analysis for the stock market. 

TORONTO EXCHANGE: Toronto dropped a cool 143.

BONDS: Bonds surged to a new rally high.

THE REST: The dollar inched down. Crude oil got smacked for over 2%.

Bonds --Bullish as of August 1.

U.S. dollar - Bullish as of August 4.

Euro --- Bearish as of August 4.

Gold ----Bullish as of August 9.

Silver---- Bullish as of August 9.

Crude oil ----Bearish as of August 1.

Toronto Stock Exchange---- Bearish as of June 14, 2017.

We are on a long term buy signal for the markets of the U.S., Canada, Britain, Germany and France.

Screen Shot 2017-08-10 at 9.08.42 PM 

 Monetary conditions (+2 means the Fed is actively dropping rates; +1 means a bias toward easing. 0 means neutral, -1 means a bias toward tightening, -2 means actively raising rates). RSI (30 or below is oversold, 80 or above is overbought). McClellan Oscillator ( minus 100 is oversold. Plus 100 is overbought). Composite Gauge (5 or below is negative, 13 or above is positive). Composite Gauge five day m.a. (8.0 or below is overbought. 13.0 or above is oversold). CBOE Put Call Ratio ( .80 or below is a negative. 1.00 or above is a positive). Volatility Index, VIX (low teens bearish, high twenties bullish), VIX % single day change. + 5 or greater bullish. -5 or less, bearish. VIX % change 5 day m.a. +3.0 or above bullish, -3.0 or below, bearish. Advances minus declines three day m.a.( +500 is bearish. – 500 is bullish). Supply Demand 5 day m.a. (.45 or below is a positive. .80 or above is a negative). Trading Index (TRIN) 1.40 or above bullish. No level for bearish.

  No guarantees are made. Traders can and do lose money. The publisher may take positions in recommended securities.  


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