It was another good session that was more impressive internally. Major stock market averages rallied today on below average volume. The rally was good enough to send the DJIA and SPX into new all-time high ground. Our models are switching on these two averages from a soft-NEUTRAL to a BUY. The other indexes remain under an operational NEUTRAL mode. The best news overall for bulls is that the market continues to work off the recent extreme overbought conditions in a very overall constructive manner.
I see some sentiment items that have peaked my interest lately. The Yale School of Management 1-Yr confidence of individual investors on stock prices over the next year is at 1989 lows! So no matter what the short-term AAII data tells us, the longer-term crowd is very bearish here. On top of that, we have received a couple of Hindenburg Omen signals. These have not fared well post-Fed intervention so once again it is just another talking point. Then there is the Put/Call ratio which just hit 1.8. This is the highest level since May 2012.
On top of this, I continue to run into people in my own personal life that believe stocks are going to crash. Who are these people and why do they think stocks will crash? Then there are the traders I know that were going to invest in stocks only when the sell off got really ugly in October. Those that believed further downside was to come, have completely missed out on this rally. So sentiment isn’t as bullish as the II/AAII surveys suggest. The point is that there are bearish sentiment measures out there to justify a further rally based on psychology alone. Combined with all of our technical breakouts, it can be put to good profitable use.
We had another two stocks trigger our Buy Stops today but I must admit I should have taken them off as both stocks are breaking out from too short or improper consolidation patterns. My haste might cost me a little bit. For now, both are working. We also had a long-term position trigger intraday. This is our first LIVE long-term newsletter position. Our first test signal is working well and now we will see how the second one (first LIVE signal) does. On an EOD basis, we only had one new long position. Still there were plenty of other candidates to choose from tonight. They just did not pass enough of our test to make it into our portfolios.
It’s not like we can do much more anyways. We remain nearly fully invested and our accounts continue to hold near its 2014 highs. The best news about today’s small gains is that we only had 1 full sell signal and 0 partial sell signals. The full EOD sell signal already triggered its intraday Sell Stop on our end on Tuesday so tonight’s signal is just semantics.
If you would like to learn our process and make some money while protecting your capital along the way, feel free to take a free trial. Trust me, you will not regret it. To see our Top Holdings returns make sure you check our weekend updates. Thank you. Aloha from Maui.
