Market Summary

Information overload is a chief reason for making bad trading decisions in the markets today. This is well realized by the brokerage firms who freely give out a plethora of trading tools to the public. Conflicting opinions by so called experts and gurus adds to the confusion. And coupled with the lack of the right information it is no wonder why so many lose at this game of trading the markets.

Trying to keep it all in perspective is what I am trying to do here. Hopefully I am well informed yet not easily swayed by news stories. I bring a heavy reliance on technical analysis to tell me what “is” and I try to root out my own biases one way or the other to what I think things should be. I must be willing to change my mind when conditions indicate that my position was not correct. To do this quickly is how to succeed.

There are several reasons why I now see and believe that the market will go higher. Chief among these is the relative strength of the S&P500 compared to the other world markets. The S&P500 index is currently doing better than all other major market indices save the Canadian TSE index. And all the world’s indices are in negative territory over the last few months. The US dollar has broken out to the upside and is a chief reason why the price of commodities have fallen. Should oil get below $100 per barrel the stock market could really take off to the upside.

I have added a couple more ETFs to the table below to follow. One is the EEM, the iShares Emerging Markets. The other is the US Gasoline Fund ETF. While we can follow the price of gas at the pump this will also help give us get some perspective. Click on table to enlarge.The US dollar is another one to follow as it has broken out to the upside. This will mean lower commodity prices as the dollar increases in value. Click on charts to enlarge.Finally, I want to show a weekly chart of the S&P500 which shows a candlestick formation called a “Hanging Man.” It is the last candle on the right in the chart below. The Hanging Man is a bearish reversal pattern that can also mark a top or resistance level. Forming after an advance, a Hanging Man signals that selling pressure is starting to increase. As with the Hammer, a Hanging Man requires bearish confirmation before action. Such confirmation can come as a gap down or long red candlestick on heavy volume.
I placed a bet on the market going lower by buying a put option on the SPY before I changed my mind about the direction of the market. Because of this I have created a checklist to be sure and do my due diligence before I take a position in the future. The checklist can be found HERE. Should the market gap lower on the open on Monday I will keep this position otherwise I will close it soon.