Some more good guidance last week puts us in an unscathed or even profitable position after another bloodbath in the markets.
In fact, the first half of today’s stocks are all from last week where I review what I said and then what actually manifested.
Of course we can’t always be right, but we do get it right the vast majority of the time, and all I’m using is the tools I make available to you.
Even the oil stocks – which I’ve said were overbought – collapsed this week. Remember, that when inflation gets under control, if the economy is shot, then commodities then collapse too. That will lead to more opportunities which we will be on top of in due course.
In today’s OVI Market Review I have a quick rant about the paucity of professional advice for retail traders, including a couple of recent anecdotes that have peeved me!
And then we get onto lots of stocks that are interesting for various reasons.
Current Market Behavior:
A few months ago I was making reference to the markets being on a high wire. Today I say a “low wire”, meaning that there is still room to the downside, but there are signs that we’re in for a breather any time soon.
First, in the Dashboard we can see simply too much red in the pies for trends, OVI, Key Levels, momentum, earnings, you name it … That alerts me that we are likely oversold for now.
And then you’ll see large green pies for reversals.
The only question mark is that Monday is a holiday meaning there’s an extra day for more paranoia to set in, or for some optimism to creep in.
Either way, a pause of sorts is likely very soon, and could easily result in many stocks bouncing sharply as shorts cover.
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Having said that, my Longer Term Market Timer, the OVIsi is now firmly ensconced in its red zone, which means that any bounce should be put into a strictly short-term context if the OVIsi stays red. Time will tell.
Back in 2007-08, the OVIsi went red for a while as the market had already taken a good 20% hit. Then followed a few months of green before the big drop to March 2009. In today’s context with so many issues to resolve, it means this could just be the beginning of a much steeper drop to come. We just have to be open-minded and not try to be soothsayers.
For now we look like having a short term bounce soon. Beyond that … let’s wait for the signals when they happen. This is where options can be so helpful, both in terms of portfolio protection and for taking advantage of bearish markets.
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Another reason for the suggestion of an imminent pause is that we’re deeply oversold in the short term. Of course we’ve seen how stocks can continue to drop from oversold levels, but the indices do tend to revert to the mean periodically.
In terms of our other Market Timers, the Medium Term Swing Timer is oversold (it can remain oversold for a while, remember), while the Short Term Timer can be ignored if it contradicts the OVI or if it’s blank. The OVI is of course rather red for the SPY right now.
All indices are miles below their Key Levels.
Market Outlook:
Make no mistake, this is a bearish market, but I do expect some respite for the indices and leading stocks, soon.
Stock Selection:
It’s super fussy time. There are a decent number of consolidations, but most are at oversold levels for a continuation to occur without the clear risk of a whipsaw.
Application:
This week I’ve focused on filters including consolidations, Railroad Tracks and short squeeze potentials, as well as my static watch lists.
Software Upgrades
Many more important upgrades to follow in late summer / early fall. I am in active discussions with a broker for an API directly from our charts, and how we can get at least 15-minute delayed data (live if you have a broker account with them) as soon as possible.
Combined with our imminent News Feed and other charting goodies, we’ll get to a position where everything you could need is on our platform, while still focusing on what we’re best at.
I’ll confirm next year’s Miami dates in the coming days. It’s very likely to be April 22-23, and 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!
This year’s Stocks Summit is confirmed for 3rd December at the London Courtyart Marriott Heathrow, as per last year. More details to 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.
