FullyInformed.com

Market Timing Indicators Warn Market Direction At Tipping Point

May 16, 2012 | Stock Market Outlook

MARKET TIMING indicators today are at the tipping point. I have seen these readings before and either the market must rally or there will be a tumble ahead. My market timing indicators have never failed when giving this type of reading. The sentiment of investors is now so soured that either they will step up from here and start to dump stocks or they will turn the market direction around as they have done before and try to bounce back.

Let’s look at the market timing indicators first and from there we can make an informed decision on market direction.

Market Timing

Indicators For May 16 2012

Yesterday’s market timing column was anything but happy. Today the results reflect the continuing fear among investors as market direction slides ever lower. Europe dominates and everything else is being tossed out.

Market timing momentum indicator is lower than yesterday reflecting the continued selling. The rally in the morning was wiped out by the afternoon which is typical of a severe correction. MACD histogram is falling lower which continues to give market timing signals that the overall trend is down.

The Ultimate Oscillator is oversold but still falling and there is room for it to fall further.

The rate of change though is higher than yesterday. It is still negative but does reflect that there was some interest in buying during the day.

The most important market timing tools for today are the slow stochastic and fast stochastic. Both show the S&P 500 has reached extreme oversold conditions. The fast stochastic is reading 0.01 which is almost as low as the reading can get. In the past this reading has been the tipping point. Either the market bounces or it takes a strong tumble.

Market Timing Indicators For May 16 2012

Market Timing Indicators for May 16 2012 warn the market is at a tipping point. It must rally or it will tumble from here.

Market Timing Chart For Past 12 Months

The market timing chart below for the period from May 2011 to May 2012 below show the extreme readings from the fast stochastic market timing tool and the subsequent results. In the cases where the stock market was already in a large decline the market bounced higher. However in the case where the market was selling from a top, the market tumbled and quickly. In early August last year the market fell apart after putting in a double top in July.

With the S&P 500 now breaking through 1325 the 200 day moving average is ready to break. Should this happen, the fast stochastic is indicating a major tumble lies ahead. In my market timing column yesterday I mentioned how if the 200 day moving average broke investors will begin to dump stocks. They are already nervous and all they need is a catalyst to push them into panic mode.

Market Timing Chart 2011 to 2012

Market Timing Chart 2011 to 2012 shows the various extreme Fast Stochastic readings and subsequent events

Market Timing Shows A Better Chance Of A Fall Than A Bounce

Market timing indicators and the market timing chart from the past 12 months, I believe are indicating there is a better chance of a fall from here than a rally back up. There could be a bounce but unless there is enough volume, the market is set to tumble and if sellers panic they could push the stock market back to the 1200 level wiping out the Spring rally gains. If this happens, as a market timing signal, it would be a very bad sign indeed.

Search

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Recent Outlooks

Stock Market Outlook for Thu Mar 28 2024 – Choppy – Dips Likely – But Higher

Prior Trading Day Summary: On Wednesday investors returned and snapped up stocks that had drifted lower. The SPX bounced at the open and by the close it was up 45 points to close at 5248. The NASDAQ rose 83 points …

Morning Investing Strategy Notes for Wed Mar 27 2024

For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 27 2024 discuss the outlook for Wednesday and comments on a possible correction and what it might entail. There are a number of trade ideas outlined including FedEx Stock …

Stock Market Outlook for Wed Mar 27 2024 – Unconfirmed MACD Down Signal

Prior Trading Day Summary: I lost my power shortly after the markets closed. Articles this evening will be shorter if I can post any. On Tuesday trading volume picked up as stocks fell for another day. The SPX closed near …

Morning Investing Strategy Notes for Tue Mar 26 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 26 2024 discuss the outlook for Tuesday. As well there are comments on support levels to watch in the SPX for the week. There are a number of trade …

Stock Market Outlook for Tue Mar 26 2024 – Still Bullish

Prior Trading Day Summary: On Monday low trading volumes hindered the chance of a positive close. The SPX saw just 3.4 billion shares traded. This matches the volume on last Friday. While poor , it is also bullish as it …

Morning Investing Strategy Notes for Mon Mar 25 2024

For FullyInformed Members the morning Investing Strategy Notes for Mon Mar 25 2024 discuss the outlook for Monday and the shortened week ahead of the Easter holiday. There are a number of trade ideas outlined including FedEx Stock (FDX), Nike …

Stock Market Outlook for Mon Mar 25 2024 – Dip Likely But Higher Close

Prior Trading Day Summary: On Friday investors took profits ahead of the upcoming shortened Easter week with indexes sitting at all-time highs. On Friday the SPX closed down just 7 points to 5234. For the week the index was up …

Morning Investing Strategy Notes for Fri Mar 22 2024

For FullyInformed Members the morning Investing Strategy Notes for Fri Mar 22 2024 discuss the outlook for Friday. There are a large number of trade ideas outlined including FedEx Stock (FDX), Nike Stock (NKE), Lululemon Athletica Stock (LULU),  and more …

Stock Market Outlook for Fri Mar 22 2024 – Choppy – Dips Possible But Still Up

Prior Trading Day Summary: On Thursday all 3 indexes closed at new all-time highs for a second straight day. Volumes remained decent but stocks are seeing some selling as investors are taking a few profits with the indexes at new …

Morning Investing Strategy Notes for Thu Mar 21 2024

For FullyInformed Members the morning Investing Strategy Notes for Thu Mar 21 2024 discuss the outlook for Thursday following Wednesday’s FOMC interest rate decision and Fed Chair Powell’s news conference. There are a large number of trade ideas outlined including …

Stock Market Outlook for Thu Mar 21 2024 – Higher Still

Prior Trading Day Summary: On Wednesday the SPX, Dow Jones and NASDAQ indexes all closed at new all-time highs. Comments from Fed Chair Powell reaffirming 3 rate cuts in 2024 were still “on the table” was all that investors needed …

Morning Investing Strategy Notes for Wed Mar 20 2024

For FullyInformed Members the morning Investing Strategy Notes for Wed Mar 20 2024 discuss the outlook for Wednesday and the latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chewy Stock (CHWY), SPY ETF, …

Stock Market Outlook for Wed Mar 20 2024 – All About The Fed – Bullish

Prior Trading Day Summary: On Tuesday the morning started with a dip down to 5131 but buyers were waiting for the dip and volumes picked up. Deep dips in a number of big caps like NVIDIA Stock (NVDA) found ready …

Morning Investing Strategy Notes for Tue Mar 19 2024

For FullyInformed Members the morning Investing Strategy Notes for Tue Mar 19 2024 discuss the outlook for Tuesday following Monday’s rally and before Wednesday’s latest FOMC interest rate decision. There are also a number of trade ideas outlined including Chevron …