My market direction outlook for today was for more weakness in general although no big move lower. The market direction remains solidly bullish. Today’s numbers from both housing and consumer confidence opened a gap up at the start of the day and the market direction has not looked back intraday. In May alone today’s intraday move pushes the index up 4.7% which marks the seventh month of straight gains which is the longest winning streak since September 2009.
Housing Pushes Market Direction Higher
While it may be obvious to investors that the Fed will probably begin to curb their quantitative easing program, investors also are of the opinion now that the recovery is in full swing and no recession will be seen this year or probably next. Housing prices rose by the most in seven years gaining momentum to the upside. Case-Shiller property index showed an increase of 10.9 percent just from March 2012 marking the biggest 12 month gain since April 2006.
Consumer Confidence Jumps
Consumer confidence rose to 76.2 percent which is the strongest reading since February 2008 and beat all estimates as to upside potential. This is the strongest reading since February 2008.
Energy Jumps
My XOM Stock puts are out of the money once again as energy is up 1.7 percent and XOM stock is pushing back to $93.
Market Direction and Put Selling Stocks
This remains one of the best environments for Put Selling stocks. The key is still Put Selling on any sign of weakness as the medium-term trend remains bullish for stocks. The dip caused by Ben Bernanke’s comments last week seem forgotten this morning which should be telling investors that this is a strong bull market.
Negative News Tossed Out
When negative news is tossed aside such as Bernanke’s comments last week and this morning news of further Middle East escalation of the Syrian civil war, it is a signal to investors that the bulls are firmly in charge. That means to keep the watch list of your favorite stocks close and look for opportunities such as we saw all last week.
Chance Of A Market Direction Crash
Too many investors are still worried about a market direction crash. It is important to understand that weakness does not lead to a market direction crash. There must be other fundamentals in place. Market crashes are not common events whereas weakness at times is. Therefore, Put Selling on weakness and then closing those naked puts to lock in profits remains the best method to continue to trade the momentum to the upside.
Market Direction and the Trend
Stay away from trying to bet against the market direction trend but stay with the trend until it firmly changes. I do not gamble but follow clear indications. Many investors are emailing me advising they are buying Spy Put Options which is not a wise move in my opinion as they are gambling they will be right. Investing is for long-term based on clear signals. There is no clear evidence of a market direction break to the downside just weakness here and there. When the trend down become clear that would be the only time to consider Spy Put Options for a market direction correction and there has not been any clear signals to advise that the trend up has yet been broken. Forget death crosses and the like but stay with the overall underlying trend by watching the moving averages. This little correction bounced off the 20 period moving average, a clear signal of strength. Once the 50 period, 100 period and then 200 period moving averages break, those are the signals to begin preparations for more downside action and there are no indications of any such break in the market direction yet.
Market Direction Intraday Outlook And Strategy for May 28 2013
I had expected more weakness today with a sideways movement. That is obviously not happening, but the strategy remains the same. Put Selling on weakness and locking in profits on strength.
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