Strategic Stock Trade
SST Email For 2/11/2019:
“Nasdaq on the cusp of a speedy bear market exit.” – Wall Street Journal
That’s the kind of Old Wall Street headline you want to see if you were shorting the SPY last Tuesday of shorting some of the extreme overbought stocks. It is also what you want to see if you have been buying the dips in Gold or the miners this past week.
In as much as The Machine perpetuated crashes in major U.S. stock indices and heavy inflation weights like Oil to immediate-term oversold lows, it has a critical contribution to epic bounces to lower highs. That is what we have seen this past week.
With some highly levered CEO’s going as far as to say things like “the bottom of the cycle is here on Q1”, how can you blame anyone who does not have an accurate measuring and mapping process for believing them?
Alleged speedy bear market exits happen…
from peak cycle U. S Corporate Profits back in 2000, the S&P crashed -29.3%, then ramped +22% from March to May, then collapsed again.
from peak cycle U.S. GDP in Q3 2018 to December 2018, the Nadaq crashed -23.7%, then rallied +22%.
from peak cycle U. S. Inflation in Q3 2018 to its December 2018 low, Oil crashed -41%, then rallied +23%.
What’s up with these +22-23% ramps? Are they sustainable? Would you have had them without Growth Slowing, Inflation Slowing, Profits Slowing?
And, the Fed going Dovish 2 times in 3 weeks following the aforementioned lows for the aforementioned reasons?
In as much as The Machine perpetuated crashes in major U.S. stock indexes and heavy inflation weights like Oil to immediate-term oversold lows, it has a critical contribution to epic bounces to lower highs.
Turning to the SST Charts, we now have 3 of the 4 indexes deep overbought on the Weekly time frame. Again, this is where we make our strategic decisions. I am optimistic that the massive market bounce since the December lows will continue much longer.
There are 20 Weekly Industries that are now extreme overbought versus 4 that are extreme oversold. The complete opposite has taken place since the December lows.
In addition, the SST Bounce signal that is now 42 days old is in the process of going to Neutral from the Buy Signal.
Finally, and perhaps most important, the VIX closed red for the 7th WEEK in a row this past week. That has not happened in more that 10 years.
It will become extreme oversold on the Weekly time frame if it opens red on Monday.
The SST Monthly NH / NL Index closed with a +188, Quarterly = +230, Yearly = +40, and Weekly = +336. All 4 look-back windows that we track are no longer bullish.
Stay cautious and defensive. I am looking for more shorts. My only longs will be intraday trades from the extreme oversold condition on the hourly time frame.
The SST Daily Index Numbers Closed Trading As Follows:
NAZ = 59.85
DJIA = 52.75
IWM = 63.95
S&P = 53.93
The SST Weekly Index Numbers Closed Trading As Follows:
NAZ = 97.53
DJIA = 79.19
IWM = 97.91
S&P = 95.82