Extreme Selling Leads to Rare & Immediate Reaction
After already discussing the legendary selling wave stocks experienced this month through December 24th, one of the sub models within our big stock market model triggered a scenario based on historic levels of overdone selling that has only been seen a handful of times since 1980. Each and every time, stocks saw significant gains almost immediately, even when in the context of a bear market. You can see all of these on the charts below with the arrows pointing to […]
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Date: December 25, 2018
The REAL Santa Claus Rally
All month I have heard the pundits say that the Santa Claus Rally has failed or that Santa failed to call so bears will come to Broad and Wall, popularized by Yale Hirsch of Stocks Trader’s Almanac fame. What incenses me is that those people just blurted and babbled nonsense. The Santa Claus Rally (SCR) doesn’t begin until the last five days of the year and continues for the first two days of the next year. In other words, it […]
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Date: December 24, 2018
From Lower Levels, a Bottom Coming
After last week, I am running out of adjectives to describe the stock market decline since December 3. Relentless seemed like the best word a week ago, but now it’s almost an understatement. Although I thought I had written my last long update before the Fed meeting, I had also thought that stocks would at least see a temporary low. I was wrong on both counts and am working on another update now. Almost every day last week looked similar. […]
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Date: December 23, 2018
Relentless Selling Wave Continues
It seems like every time I sit down to start a new post over the past few weeks, I am looking at the same data, indicators and price behavior. Stocks closed the day before lower and look like they have a chance to bounce but end up closing lower yet again. I thought when I started writing about relentless selling, it would end sooner than later. And here we are again; stocks fell hard on Thursday with the glimmer of […]
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Date: December 21, 2018
The Absolute Arrogance, Ignorance & Incompetence of the Fed
Here we go. Cue the media’s hype. “The single most important Fed meeting, perhaps of All-TIME!” Oh brother. Model for the Day Let’s start with the model for the day. As with every Fed statement day, 90% of the time stocks stay in a plus or minus .50% range until 2pm before the fireworks take place. With pre-market action indicating a much higher open, the opportunity is there for a momentum trade to the upside from the open until 2pm […]
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Date: December 19, 2018
Ugliness for the Bulls Rolls On. May Need More Panic
Most of the past few weeks when I sat down to start a new post I thought, “well, yesterday wasn’t very nice for the bulls”. Today, as I sit on the train to New York, I am thinking that Friday and Monday were downright ugly for the bulls. The bad Friday, bad Monday combination, regardless of whether this remains a bull market or not is something typically seen near lows which is where I think the market is. Similar to […]
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Date: December 18, 2018
Is It a Bear Market???
In rare fashion, the bears are certainly in charge this quarter, but especially this month. Historically, it’s very difficult to see stocks under constant pressure during Q4, let alone December. The usual catalysts for decline are typically seasonally absent. While that doesn’t mean that stocks can’t decline this late in the year, a decline of the magnitude we are currently experiencing is very rare. 2002 saw a 6% decline in December and 1968 and 1957 had 4% declines, but that’s […]
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Date: December 17, 2018
Bulls Just Can’t Get Going
Something is clearly wrong with the bulls this month. With two reversal days out of three ending this past Monday, stocks should have been a lot higher than they are right now. Every single rally is being met with selling and that is a giant change in character. I have pounded and pounded the table that the bull market remains intact. And while there is still enough evidence to suggest that, I have to be open to the idea that […]
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Date: December 14, 2018
Looking Under the Hood of a Midday Waterfall Decline
This is going to be a little different kind of article that focuses on the minute to minute moves in the stock market. People often ask what happened or why something happened in the middle of the day which seemed rather large and out of the blue. Last week’s 800 point down Tuesday had two very obvious things occur so I am going to share. Below is a chart that I found very interesting. Each little red or green bar represents […]
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Date: December 14, 2018
Unusual Volatility
December and Q4 continue my longstanding theme of increased volatility. It’s definitely unusual for stocks to be this volatile this late in the year and without doing my homework, 2008 and 2000 come to mind. Of course, this looks nothing like 2008, but 2000 does have vaguely similar comparisons. Stocks are certainly pricing in a much more negative outcome than we have seen in a while. As I have said before, I definitely did not see the magnitude of the […]
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Date: December 13, 2018
Higher Rates Are to Blame. Lower Rates Are to Blame
Everywhere I turn, there seems to be another reason for this correction. Slowing in Europe, China falling off a cliff, tariffs, soaring long-term interest rates, yield curve inversion, deceleration in the U.S. economy. I have heard it all. The problem is that none of these reasons can easily be tied to the decline directly, nor should they be. And every once in a while, declines occur and the reasons are not apparent until well after the fact. Let’s look at […]
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Date: December 12, 2018
Lots of Sectors Resist Decline & Many Seasonal Stats Point Higher
The correction in stocks technically continued through last week although I remain firm in my opinion that this is all part of the bottoming process that began in October. With each passing week, more and more bulls turn to bears and I feel like I am almost alone in my forecast that new, all-time highs will be seen in 2019. While higher prices will be accompanied by unusually high volatility, I do not believe that a rising tide is going […]
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Date: December 11, 2018
Ugly & Ugly
On Monday, I wrote about the fireworks I saw coming at the open and not to get sucked into the media’s and pundits’ hysteria. Smart money would be selling not buying.Well, frankly, I wish I did some selling into that bull trap as Tuesday was downright ugly and this morning is looking even uglier to begin the day. I definitely did not see a decline of this magnitude coming. As I always say with outsized opens, where stocks close matters […]
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Date: December 6, 2018
Fireworks at the Open
No one was surprised that positive news came out of Trump’s meeting with Jinping over the weekend. That’s been his m.o. all along. And stocks are set to react in a big way, at least at the open, with the Dow looking up 400-500 points. After last week’s huge surge this just continues the dominance by the bulls as I have been writing about. For the Dow, the next big hurdle to clear is closing above 26,300 which was the […]
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Date: December 3, 2018
Whining & Crying Over Interest Rates
After Wednesday’s huge surge, stocks were quietly digesting on Thursday, somewhat as you would expect. With the initial blastoff from the bottom over which typically lifts all ships, especially those that were hit the hardest, it’s now time to start stalking emerging leadership. I am going to reserve judgement at this point since, frankly, I do not have strong conviction other than the transports are one sector acting very well. I want to see what the defensive groups do over […]
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Date: November 30, 2018
Bulls Drive Ahead But More Stocks Down
The bulls did a nice job on Monday and Tuesday after laying an egg during Thanksgiving week. I don’t think Wednesday will be quite as easy during the afternoon. While the major stock market indices scored gains on Tuesday, there were almost 700 more stocks going down than up. That’s not exactly the pillar of strength which leads to immediate gains. Frankly, it’s a little disappointing. The vast majority of our work turned positive at the end of last week […]
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Date: November 28, 2018
The Makings of the Bottom
Coming back from being out of the office for over a week is never easy although I received a few emails doubting I was actually away since I sent so many updates last week. It’s not that hard when your kids like to sleep in and you don’t. I got a lot done before any of them, including my wife, starting stirring in the morning. Stocks came back from the Thanksgiving feast with the bulls firmly in charge early on. […]
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Date: November 26, 2018
What Happened to the “Easy” Week?!?!
I hope you had a meaningful and terrific Thanksgiving! I cannot believe the amount of food I consumed although without the traditional bottles of wine, I guess there was a lot more room. Having been out of town since last Thursday, I am looking forward to getting home today, seeing my pets and sleeping in my own bed. This week was supposed to see a mild drift higher, especially after Monday. You know, it was one of those “easy” weeks […]
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Date: November 23, 2018
Bears Maul Seasonal Tailwinds
Two weeks ago in Battle Lines Drawn, I showed four horizontal blue lines which I thought would dictate market behavior for a while. There wasn’t anything secret or proprietary about them, just four price areas that seemed to garnering a lot of attention. When the masses focus on certain prices, the market will usually do its best to exceed them and make the most people look like fools. In this case, soon after stocks exceeded the closest blue line, they […]
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Date: November 21, 2018
OUCH!
The bears absolutely mauled the seasonal tailwinds I mentioned yesterday. Remember, seasonal trends are just helpers and usually do not begin or accelerate a trend. Nonetheless, Monday was very ugly for the bulls and Tuesday looks to be equally nasty or worse. This is unusual behavior for Thanksgiving week, but not without precedent. The bulls are now in “hope” mode as liquidity is beginning to dry up and they will need a herculean effort to accomplish some time kind Turnaround […]
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Date: November 20, 2018
