S&P 500 & Nasdaq Analysis and Trends

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>>> The call for this week <<<
By: Jeffrey Saut | October 29, 2018

We look for a short-term trading bottom this week given the oversold nature of the equity markets. The ideal pattern would be for a sharp throwback rally that fails, leading to new short-term lows around the mid-November energy peak that should mark a major low with stocks trading higher into next year. While I abandoned trading positions on the October 2 “sell signal,” I have not disturbed long-term investment positions, believing we remain in a secular bull market that has years left to run. As our pal Leon Tuey (retired technical analyst extraordinaire) wrote last week:

Great news! The market is grossly oversold and the sentiment indicators are giving super bullish readings (excessive pessimism). On October 8, I opined that the peak selling intensity has been witnessed and the healing process has commenced and investors were advised to redeploy cash, particularly on further weakness. The world is unfolding as it should! Ignore the black headlines and redeploy cash.

On a separate note, and to respond to numerous emails, as of now there has been NO Dow Theory “sell signal.” For that to happen would require the D-J Industrials to break below their March 2018 closing lows, and the D-J Transports would have to confirm with a break below their November 2017 closing lows. This morning, the preopening S&P 500 futures are better by some 10 points on takeover news, as traders play for the expected Monday rally and October performance gaming.

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