Market Timing Fast Stochastic, Slow Stochastic and Ultimate Oscillator Indicate Extreme Oversold

Market timing indicators yesterday showed a market on the verge of a major spill. After the market close today, the three market timing indicators, fast stochastic, slow stochastic and the ultimate oscillator all are signalling extremely oversold. So oversold in fact, that if stocks don’t bounce here they are going to tumble big. The market must bounce from here. The Euro problems are pounding the indexes with the S&P 500 breaking solidly through the 200 day moving average today. It was an incredible day for my spy put trade with a return of 22%. You can see today’s spy put trade here by scrolling to May 17 2012 in the table.

Market Timing Signals

The most important market timing information today comes from the fast stochastic, slow stochastic and ultimate oscillator and to a lesser extent rate of change.

Momentum continues falling. MACD (Moving Average Convergence / Divergence) is still falling. The Ultimate Oscillator is now extremely oversold and normally I can count on that indicator to be good for a bounce.

However the rate of change indicate yesterday moved higher than the previous day and today despite the selling it moved higher again. While not as accurate for this type of short-term market timing, the rate of change is reflecting what the Ultimate Oscillator is telling investors.

Finally the slow stochastic with its reading of %K 0.87 and %D 2.94 is normally telling investors that with a rating of %D 2.94, that today the market may have seen the brunt of the selling and a bounce could be in order.

Fast stochastic is flashing the same signal. %K is at 0.00 with nowhere else to fall. %D is at 3.80 which again marks another sign of a bounce. With selling so heavy today %D should be a lot higher if there it was signalling more selling to come. However with a reading of just 3.80 the market is due for a bounce.

Market timing indicators show market ready to bounce

Market timing indicators show market ready to bounce

Market Timing Summary for May 17 2012

I don’t need to say a lot more about the market timing technical indicators. If only the fundamentals would play along the market could get a few days of a bounce back. Everything is set. The Ultimate Oscillator, Slow Stochastic and Fast Stochastic are flashing extremely oversold indications and the rate of change for two days has indicated that the market direction should be ready to change.

But while the market timing technical indicators are predicting market bounce, often the fundamental indicators play a bigger role and presently eEverything hinges on more bad news from Europe, which has become the gift that just keeps on giving and giving….

  • Alicejens59

    Do you still think a bounce is coming after last Friday’s performance? Thanks.

  • Yes but it could be a lot smaller than most think. I am expecting at least an attempt to protect the 200 day moving average which broke late last week.