Market Direction and Stock Trends

[DiscoverGold]

>>> The call for this week <<<
By: Jeffrey Saut | November 12, 2018

When the SPX traded into our target zone of 2800 – 2820 last week we wrote:

“Don’t look now, but the huge rally we’ve seen in U.S. equities over the last few days has actually left the S&P 500’s 10-day advance/decline line at its most overbought level in the past year! So while the S&P’s price is still below its 50-day moving average, very near-term internals suggest that we’re actually due for some downside mean reversion again at this point.”

Keep in mind that the aforementioned quote is merely a “trading call” because as often stated in these reports, we think the lows were made on October 29, 2018, given the extreme readings registered in late October. As one Wall Street wag writes:

[In late October] the 14-week stochastic closed the week at an extreme that has marked important bottoms. Ten of the eleven such signals took place close to intermediate-term lows. . . . Historically, sharp ramps in the VIX to above 20 associated with a 10-week rate-of-change above 90 have also taken place within earshot of an intermediate-term low. . . . The Tick Index represents the number of NYSE securities trading on an uptick minus the ones trading on a downtick. This reading reached an extreme of +1400 and -1400 in late October. Such readings have coincided with significant lows over recent years.

This morning the preopening futures are flat on no real overnight news. On Friday the SPX bottomed at 2764.24. Its 20-DMA is at ~2763, which is obviously an important support level.

Read More »»»

• DiscoverGold

Click on "In reply to", for Authors past commentaries