FullyInformed.com

Market Timing And Weighing The Predictions – DOWN?

May 3, 2012 | Stock Market Outlook

Market timing is not a science but after using it for years I have found that often just one or two indicators tend to be the more accurate. This is the reason in my market timing tool chest I keep the MACD Histogram (Moving Average Convergence / Divergence), Ultimate Oscillator and both Slow and Fast Stochastic indicators to assist in predicting market direction.

Over the years I have found that my market timing indicators have been right on market direction more often than wrong.

These indicators are prime market timing and market direction tools that have given me warning in advance that a change in market direction may be in the works. I add to these tools the Rate of Change and Momentum, but I put more credit in MACD Histogram, Ultimate Oscillator and the Slow and Fast Stochastic indicators and then look to the other two market timing tools to confirm what these four indicators are saying.

Tonight is one such example. We all know the expression Sell In May and Go Away. Indeed the Trader’s Almanac has an excellent track record study showing that over a period of 6 decades this strategy has paid handsome returns to those investors who only invest from November to April. Indeed even in 2008, if an investor had left the market on April 30 2008 and not re-entered until Nov 1 he would have been spared a lot of grief. He would have had losses but surely most investors would have realized in April 2009 that they should stay in longer for the rally.

The Trader’s Almanac also points out that election years tend to be different for the market. As a market timing tool both may be lacking somewhat but there is some truth to both theories. Election years tend to see a weak April and early May and then the market takes off into the summer before slowing down. The stock markets then pick up in the fall as the nation goes to the polls.

But will this election year be a bit different? My market timing indicators for this evening are showing a market perhaps ready to experience a bigger pullback than most investors realize. A lot of this is just guessing on my part but I was surprised to see that the market timing stochastic indicators are both showing a market direction change. Indeed the slow stochastic flashed a market change on the NASDAQ on May 1.

NASDAQ Market Timing Tools Show A Market Direction Down Call On May 1 2012

May 1 2012 the market timing slow stochastic flashed a market direction down call.

Today, May 3rd,  the NASDAQ Stock Market has the market timing indicators of Slow Stochastic, Fast Stochastic and Ultimate Oscillator flashing warnings that the market is about to pullback.

NASDAQ Stock Market Timing Tools Indicate Market Direction In Lower

Today May 3 2012, the market timing tools on the NASDAQ indicated that the market direction is lower.

Missed Market Timing Slow Stochastic Yesterday

Yesterday I missed the S&P 500 slow stochastic indicator warning of a change in trend. Today though the fast stochastic is signalling market down and the slow stochastic is confirming it. The Ultimate Oscillator is barely positive as is rate of change and momentum but MACD Histogram which is a very important momentum indicator is still positive although it has fallen from yesterday’s reading.

Stock Market Timing indicators for the S&P500 shows market direction is changing

Stock Market Timing indicators for the S&P500 shows market direction is changing

Market Timing Also Includes New 52 Week Stock Highs

Another good market timing indicator is the number of new highs. While the market is meandering back and forth and stuck in a tight range many stocks are making new highs. You would think this is bullish and in theory it is, except when new highs are made in strong bull markets, the market itself is also experiencing new highs. This is not happening and often new highs in stocks not being confirmed by the overall stock market trend is a market timing warning worth watching.

So yesterday my market timing indicators showed market still up and today two important ones, the slow stochastic and fast stochastic are decidedly saying market down. To add credibility to their prediction is the NASDAQ stock market which as explained also shows market direction down.

Market Timing Summary – Be Careful

The worry now is which prediction is correct. As far as market timing indicators go I put a lot of value in MACD, Ultimate Oscillator, Slow Stochastic and Fast Stochastic. Two are decidedly negative on the S&P 500 and three are bearish for the NASDAQ. The NASDAQ has been a leader of this entire bull market since March 2009.

Weighing the prediction I believe is easy. The market direction might be about to change. I may soon see my SPY PUT back in action. It will be interesting to see what the market timing indicators say for tomorrow after the market closes.

Search

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Recent Outlooks

Stock Market Outlook for Tue Jan 21 2025 – Unconfirmed MACD Up Signal

Prior Trading Day Summary: Friday’s rally was ended with the second best rally of the week. The SPX rallied 59 points to end the week at 5996 but intraday it moved back 6000. Volume was higher than usual for the …

Morning Investing Strategy Notes for Fri Jan 17 2025

For FullyInformed Members the morning Investing Strategy Notes for Fri Jan 17 2025 review the choppy trading on Thursday and outlook for Friday. Stocks discussed include UnitedHealth Group Stock (UNH), 3M Company Stock (MMM), Charles Schwab Stock (SCHW) and more …

Stock Market Outlook for Fri Jan 17 2025 – A Little Weakness But Still Higher

Prior Trading Day Summary: Thursday saw investors taking profits after Wednesday’s huge rally. In the final hour of trading the SPX was positive until sellers pushed back, taking profits and sending the SPX lower by 12 points to end the …

Morning Investing Strategy Notes for Thu Jan 16 2025

For FullyInformed Members the morning Investing Strategy Notes for Thu Jan 16 2025 review Wednesday’s massive rally and outlines the outlook for the rally and handling trades over the next several weeks. Stocks discussed include Taiwan Semiconductor Stock (TSM), UnitedHealth …

Stock Market Outlook for Thu Jan 16 2025 – Higher Still

Prior Trading Day Summary: On Wednesday everything fell into place as the oversold market staged a strong rally as bond yields dipped on the back of slightly weaker core CPI numbers and exceptional earnings from the first round of bank …

Morning Investing Strategy Notes for Wed Jan 15 2025

For FullyInformed Members the morning Investing Strategy Notes for Wed Jan 15 2025 review Tuesday’s volatile day of trading along with the outlook for Wednesday’s trading. Stocks discussed include TQQQ ETF, Taiwan Semiconductor Stock (TSM), UnitedHealth Group Stock (UNH), Bank …

Stock Market Outlook for Wed Jan 15 2025 – All About Bank Earnings

Prior Trading Day Summary: On Tue Jan 14 2025 stocks once more gyrated between gains and losses. The S&P was as low as 5805 and as high as 5871 before closing up 6 points to 5842. Volume dipped lower on …

Morning Investing Strategy Notes for Tue Jan 14 2025

For FullyInformed Members the morning Investing Strategy Notes for Tue Jan 14 2025 review Monday’s market action which ended with a slight gain. Stocks discussed include TQQQ ETF, Citigroup Stock (C), JP Morgan Chase (JPM), Wells Fargo Stock (WFC), Goldman …

Stock Market Outlook for Tue Jan 14 2025 – Second Bounce Likely

Prior Trading Day Summary: On Monday stocks opened lower but all 3 indexes managed to close the day higher. The SPX fell below the 100 day moving average in the morning but managed to find buyers to help push the …

Morning Investing Strategy Notes for Mon Jan 13 2025

For FullyInformed Members the morning Investing Strategy Notes for Mon Jan 13 2025 review Friday’s sell-off, the outlook for today and the week. Stocks discussed include TQQQ ETF, Walt Disney (DIS), JP Morgan Chase (JPM), Wells Fargo Stock (WFC), Citigroup …

Stock Market Outlook for Mon Jan 13 2025 – Still Bearish – Bounce Attempt Likely

Prior Trading Day Summary: On Friday investors sold stocks lower following a stronger than anticipated December jobs report which showed over 100,000 more jobs created than estimated. Many investors looked at the jobs numbers as possibility inflationary and a reason …

Morning Investing Strategy Notes for Fri Jan 10 2025

For FullyInformed Members the morning Investing Strategy Notes for Fri Jan 10 2025 review Wednesday’s market action and the outlook for Friday. Stocks discussed include Delta Air Lines Stock (DAL), Broadcom Stock (AVGO), Constellation Brands Stock (STZ), Apple Stock (AAPL) …

Stock Market Outlook for Fri Jan 10 2025 – All About The December Employment Numbers

Prior Trading Day Summary: On Wednesday stocks traded between losses and gains but by the close the SPX was up 9 points to 5918. Intraday the index slipped to a low of 5874 which was not as low as Jan …

Morning Investing Strategy Notes for Wed Jan 8 2025

For FullyInformed Members the morning Investing Strategy Notes for Wed Jan 8 2025 review Tuesday’s sell-off and discuss the outlook and when we may see another rally attempt. Stocks discussed include Walt Disney Stock (DIS), Microsoft Stock (MSFT), Advanced Micro …

Subscribe For The Latest News