Your Daily Bit of Wall Street Wit & Wisdom

stock market sentiment chart

h/t SentimenTrader, @sentimentrader

“Nothing like price to change sentiment.”
— Helene Meisler, @hmeisler

Measures of investor anxiety/fear and complacency/greed can provide valuable information in your analysis of the current market condition.  View them as a technical tool to add to your weighing of evidence.

The chart above shows pre-market fear reaching levels seen at bottoms in 2002 and 2008.

This morning, Wall Street bulls are set to try for a market bounce before they bounce out to the Hamptons for their annual holiday weekend.

Enjoy yours!

Best regards,

Steve

Anticipating a Turning Sign

U-Turn sign

U-Turn sign

A week ago, I posted my Analysis and Outlook for the S&P 500 (SPY).  The venerable index was rallying off its Christmastime low and I was anticipating where and when the balance of power was likely to shift.  At the time, I was on lookout for a turn.  That watch is now heightened.  Here’s my update.

As you can see on my daily candlestick chart below, SPY is reaching technical resistance.  Bulls could be slowing their roll.

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On the Lookout to SPY a Turn

Owls looking out

Owls on the lookout, h/t NatGeo

This morning, SPY (S&P 500 ETF) continues its rebound on light trading volume. Buyers are following through from Friday’s strength, extending their immediate-term edge.  But until proven otherwise by price, this may be considered a countertrend rally.  Sellers are laying in wait.

Volume indicates the force behind a price move.  Low volume questions the staying power of this action.  Where can we expect sellers to be enticed?

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King Dollar’s Crown Wobbles

Brian Dykstra portraying King John

Photo by Teresa Wood, Brian Dykstra as King John, h/t broadwayworld.com

by Steven Sarnoff

As the stock market’s decline intensifies, one wonders what central bankers will do.  Will they coordinate to take down the US dollar?  Their objective would be to boost their balance sheets and pump out enough liquidity to prop up ailing share prices.

Will Treasury Secretary Munchkin Mnuchin again call the PTT (Plunge Protection Team)? Stocks are sliding hard.  It will likely take a sizeable sovereign effort to turn the state of the market.

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Animal Spirits In The Stock Market

h/t NatGeo

by Steven Sarnoff

Note: The chart within is updated from my original article, which appeared November 21st on other media platforms.

When I was young my father would enjoy telling me a fable, “The Scorpion and The Frog.” With Financial Talking Heads debating whether stocks are still in a bull market or now a bear, I hearken back to that tale.

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I $SPY Key Resistance, FYI:

ispy

by Steven Sarnoff

Corporate earnings beats, particularly in the Dow industrials, are propelling panic buying. Central bank monetary largesse and money moving out of bonds (pushing 10-year yields up), along with investor hopes for tax cut legislation is also juicing the market.

I try to tune out the noise and focus on what the character of the behavior of market price movement is saying. Note, in my daily candlestick chart below, the appearance of a “hanging man” followed by a strong negative black candle just as the venerable index is nearing the apex of a bearish rising wedge pattern. This is telling us that buyers are approaching exhaustion and sellers are poised to strike back.

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Fibonacci For Traders, Truth Or Fib?

nautilus

by Steven Sarnoff

Since today is Pi Day, and we were honored by our math major nephew dropping by the office during his break from university, I decided this was as good a day as any to get back to blogging with a post about how a trader should regard the influence of a famous Italian mathematician from the Middle Ages on today’s markets. Continue reading

Are Bears Ready To Get Fat Quick?

getfatbear

Bear getting into “get fat quick” phase, h/t natgeotravel

by Steven Sarnoff

When temperatures start to fall, bears are known to move into a “get fat quick” phase.  They gorge on anything edible to fatten up and survive their lengthy winter slumber.

When asked why the market was up or down on a particular day, my dad would reply in his Brooklynese, “Sometimes the bulls gotta get fed and sometimes the bears gotta get fed.” One of the lengthiest bull markets on record has left beleaguered bears hungry for a turn.

Are they ready to feast? Continue reading

Are Central Banks About To Open The Monetary Spigots Even More?

spigot.jpg

by Steven Sarnoff

In response to the 2007-2009 financial crisis, central banks opened up the monetary spigots.  They employed a creative strategy of QE (quantitative easing), the purchasing of financial assets as a way of creating new money in hopes of stimulating economic recovery and keeping the demon of deflation at bay, when their usual monetary policy tools were rendered ineffective.

The overall effectiveness of several rounds of QE as an economic stimulus is debatable.  What is clear is that ballooning central bank balance sheets have been a boost to asset prices. Since 2013, Japan has taken it to a new level. Continue reading

Is A Wedge Being Driven Into Buyers’ Bliss?

wedge

The focus of my studies on markets is to determine which side is stronger (buyers or sellers), along with where and when the balance of power is likely to shift.  We then use my knowledge and judgement based on experience to put the Superleverage power of options to work, helping Options Hotline subscribers stay a step ahead of the crowd as they vie for fun and profit.  Today, I’d like to share my view of the market’s current condition.

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