A constructive post-holiday week for the markets with some notable winners that I highlighted last week, further underlining my theme that we could be seeing the first signs of a stock market starting to base.
If you didn’t read that post, please do acquaint yourself with it as it contained crucial insights as to how to read the markets for timing.
Another important insight I made from last week was the concept of how confirmation bias skews even the best of traders out there.
I am always conscious of confirmation bias, and hopefully you can see that my weekly commentaries are a testament to the fact that I have no agenda for the market to go one way or the other.
Far better to focus on “See What You See” which has proven to provide consistently accurate insights which you can benefit from, either by making hay during easy trading conditions, or not losing during tougher conditions.
Current Market Behavior:
Same as last week in that I see evidence that the market is tentatively trying to start putting in a base. The dangers I mentioned still loom large, which is why this base may take a while, and in the short term we have earnings to navigate, starting this coming week.
At first glance the Dashboard looks rather bearish. But then consider the small pies for trend and OVI averages. The vast majority of consolidations without a flagpole. Low numbers of stocks hitting Key Levels. Low number of Friday’s momentum stocks.
You get the picture … Earnings is causing the market to hold its breath, and in the meantime the overall picture shows the market in the beginning stages of a basing period that could last up to months.
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My Longer Term Market Timer, the OVIsi remains firmly in its red zone, which tells me that earnings is likely to be a mixed bag at best. New lows are possible, but I still believe the most severe of this cycle’s downward moves has already occurred.
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The Medium Term Swing Timer is nicely in positive territory, while the Short Term Timer produced an up-bar that is high risk due to a still unconvincing OVI reading for the S&P.
All the main indices remain below their 50-day Key Levels, while the QQQ is right on that level.
Market Outlook:
With earnings in the short term, it’s a coin toss. Let’s see how the first week goes. I’m unlikely to play with pre-earnings setups this time around.
Over the medium term I expect some further choppiness while the markets base over the next few months, while the next cycle’s leaders emerge over the next few weeks.
Stock Selection Using Our Fast Filters:
Today, I have focused on Big Money Footprint setups in both directions, consolidations, Implied Volatility Bullish Divergence (with bullish Big Money Bias and positive OVI), and short squeezers with bullish Big Money biases. Also my static watch lists.
While there are plenty of bearish setups, they are either very oversold, gappy or not hugely convincing, while the more bullish setups are neater (unsurprisingly) and easier to spot.
Software Upgrades
We have some very big news coming in the next few weeks … make sure you keep reading my regular reviews as it’s going to make a very big difference, as well as pave the way for huge upgrades in the future!
That’s on top of the many more important upgrades to follow in late summer / early fall.
Events
Next year’s Miami is confirmed for April 22-23, and as mentioned above, due to a partnership with a Latin American based outfit, the live tickets will be snapped up quickly, so we will give first dibs to our regulars!
We should be sending out discounted hotel links this week.
This year’s Stocks Summit is confirmed for 3rd December at the London Courtyart Marriott Heathrow, as per last year. More details will follow shortly.
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Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.
