ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary Investopedia defines the Santa Rally very precisely: “A Santa Claus rally refers to the sustained increases found in the stock market during the last five trading days of December through the first two trading days of January.” Based on this definition, Santa is failing…and just as the stock market risks a January … Read more
Stock Market Commentary The dust is settling ever so slightly on the stock market’s post-Fed plunge. The stock market shifted from euphoria to oversold on a day that woke up everyone to a potentially new market reality. I say “potentially” because all year the market has been hit with bearish catalysts and quickly bounced back … Read more
Stock Market Commentary If you followed December’s deterioration in market breadth and/or paid attention to the inflation numbers and the smoke signals from the Federal Reserve, today’s market sell-off does not surprise you. What surprises me at the time of writing is the complete collapse in market breadth. The stock market essentially plunged from euphoria … Read more
TSLA Revs Higher Incredibly, Tesla Inc (TSLA) has nearly doubled since a loud thud greeted the company’s robotaxi rollout. That bearish breakdown below support at the 50-day moving average (DMA) (the red line in the chart below) now looks quite quaint. Since then, a 21.9% post-earnings gain and an initial 14.8% post-earnings pop have ignited … Read more
Stock Market Commentary It probably seems odd using “turnaround” as a descriptor for December’s trading. After all, the S&P 500 and the NASDAQ continued their respective melt-up trading action. Yet, small caps diverged and trickled downward all week. So I am intrigued by a collection of stocks that are making and often completing turnarounds from … Read more
Stock Market Commentary Holiday trading last week was deceptively lazy. The indices did a lot of churning, yet the S&P 500 and the ETF of small caps each made all-time highs at some point. A good number of individual stocks developed and followed through on bullish setups. For example, all week long, new highs greatly … Read more
Stock Market Commentary The stock market has a natural law of “physics.” Overly enthusiastic trading, whether up or down, eventually meets an opposite and sometimes equal force. This natural instability of extremes forms a basis of my market breadth trading rules. The enthusiastic post-election surge exhausted buyers enough to create a post-election reversal. Moreover, my … Read more
Stock Market Commentary The Federal Reserve took the stage right after the U.S. presidential election. The Federal Reserve and Fed Chair Jerome Powell delivered as expected. The unrelenting bulls had no reason to stop the momentum from the post-election rally. Powell stuck to the Fed’s script and unrelenting bulls kept charging. The uneventful meeting had … Read more
Stock Market Commentary Fades were on display, especially on Thursday, as the stock market showed signs of exhaustion. Bad news in and for the semiconductor industry seemed to motivate sellers. For example, earnings for Microsoft (MSFT) and Meta Platforms (META) seemed to release some steam on hyped expectations for the AI chips both companies will … Read more
Stock Market Commentary Bearish engulfing patterns flag potential tops at the end of uptrends. They represent the potential exhaustion of buying power as price first opens above the previous day’s high and then closes below the previous day’s close. Thus, the latest round of bearish engulfing patterns in major indices and major stocks should be … Read more