ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
As I feared might happen, the stock market has already fallen back into oversold territory as measured by the percentage of stocks trading above their 40-day moving averages (DMAs). This indicator, T2108, dipped under 20% and closed at 18.5%. This is the third oversold period in just a month, and this third time is not … Read more
Toyota (TM) filled the headlines of business news for several weeks as it struggled with seemingly unending revelations about its poor product quality. After about a month, sellers finally exhausted themselves, and TM began an impressive bounce. This bounce only lasted the same amount of time as the overall sell-off. TM peaked in late March, … Read more
I spent a lot of time over the past oversold period studying rules and guidelines for trading the (inevitable) bounce out of the selling pressure. The oversold period ended inconclusively, but my rule for buying the ETF for Brazil, iShares MSCI Brazil Index Fund ETF (EWZ), definitively worked for a second time. When EWZ started … Read more
T2108, the percentage of stocks trading above their 50-day moving averages (DMA), hit 21% on Wednesday. This milestone finishes nine days of technically oversold trading conditions as defined by T2108 dropping to 20% or below. I am reposting below a chart of the historical distribution of durations for oversold periods as a reminder that the … Read more
Sellers stepped out of the way today. Although volume was generally low on the major indices, stocks managed large gains that made up for yesterday’s ugly close and much more. In fact, today was the kind of day I was anticipating for yesterday’s trading. Stocks in my listing of potential buy candidates for this oversold … Read more
(This is a guest post written by “Chenzo” of forexcharts.net) If any lesson was clear during the past few turbulent weeks of trading, it was that our markets are more closely entwined than ever. Perhaps this is a sign of our continuing globalization path, but the waves created by any financial event are traveling across … Read more
The stock market is now on day #6 of this oversold period and a powerful resolution to the upside is beginning to look less likely. Asia and Europe led off with powerful rallies. However, the U.S. follow-through stalled out and fell short. Although the indices faded hard and ended notably down, the percentage of stocks … Read more
After a disappointing Monday, bulls got a good scare on Tuesday’s open as the S&P 500 marginally cracked the February lows. However, buyers stepped up in force and bid the index higher for the rest of the day. Buyers have now stepped up in force for the last two up days. With this oversold period … Read more
Until the ugly close on the stock market, Day #4 of this oversold period was as lackluster as I expected. T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs), nudged up a bit to 11.7%. For a while there, it seemed as if the latest dire headlines from Europe – this … Read more
On Friday, CNBC’s Fast Money asked the question “Has Goldman Bottomed Out?” The answer to these kinds of questions is always a “maybe” or a more resolute “perhaps/perhaps not” but I was a bit amused at the reasoning provided for guessing that Goldman Sachs (GS) has reached a bottom: It acted well on Wednesday by … Read more