Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 24, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Last week’s Free Market Outlook discussed how the ‘death cross’ – which triggered on March 14, when the S&P 500 traded 320 points lower – is actually bullish for stocks.
The Sunday, March 13 Profit Radar Report stated that: “In terms of timing, early this week is likely the best window for a low.”
On Tuesday, Wednesday, Thursday, Friday (March 15 – 18), the S&P 500 gained more than 1% each day. There have only been 4 other times (since 1970) where the S&P 500 gained more than 1% on 4 consecutive days. Those 4 times are highlighted below.
So far so good, stocks bounced when they were ‘supposed to.’ The S&P 500 has now reached the bottom of the ‘where the rubber meets the road’ zone.
This zone is likely where we will find out if the bounce has legs or will roll over.
I have a clear preference, which is based on hundreds of indicators making up the Risk/Reward Heat Map.
Here is the latest study to be included as part of the Risk/Reward Heat Map:
It looks at the years where the YTD performance is most similar to 2022 and how the S&P performed those years.
This study was published in Sunday’s Profit Radar Report update.
For a continuous flow of fact-based analysis, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 17. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
It became clear last week that the S&P 500’s 50-day SMA was about to fall below the 200-day SMA, it’s called a ‘death cross’ (I didn’t come up with that), and the media makes a big deal about it. Here are some headlines from Monday (when the death cross happened):
– Bloomberg: Watch S&P 500 falls into ‘death cross’
– MarketWatch: Death cross crystalizes … in a bearish sign for the stock market
– Yahoo Finance: Investors now expect a bear market in 2022
I didn’t even mention the death cross. Why? Unlike catchy headlines, the facts show that the ominous label is downright misleading.
Since 1970, the death cross + (with filter) triggered 8 other times. The added filter requires for the signal to be the first in at least 10 month, and to happen after a minimum loss of 3% over the previous 4 weeks.
The chart below shows the trajectory 40 days prior to the signal (dashed red line) and the performance after the signal.
The astute reader will notice that only 7 signals are shown. Why?
Because this chart was original published in the March 30, 2020 Profit Radar Report. The death cross discussed at the time triggered on March 27, 2020, when the S&P 500 closed at 2,541.47.
The March 27, 2020 death cross triggered an avalanche of bearish headlines, but this timely study unmistakable showed that the death cross is not bearish, but quite the opposite.
Now you know why the Profit Radar Report relies only on facts, not popular opinion (and why the Profit Radar Report has one of the highest renewal rates in the business).
Of course, the so called death cross was in conflict with our assessment. Last week’s free Market Outlook stated that:
“The S&P 500 is getting closer to a potential bounce in terms of timing. I would still like to see one more nasty washout day that meets certain requirements to pull the trigger.”
We did not get that nasty washout day (Monday’s drop didn’t meet my requirements), but the S&P 500 appears to have completed a the purple contracting diagonal shown last week … and the S&P has soared more than 200 points since the death cross.
Resistance is nearby, but as long as diagonal support holds, we are looking for higher prices. Gains don’t have to be explosive, but further up side seems more likely than a breakdown (triangle support can be used as point of ruin).
Crude oil: The March 2 PRR warned that: “RSI-2 is over-bought and resistance created by the May 2011 highs is nearby. This is not the time to chase oil.“
Oil fell as much as 28.42% from its high, but found support around 95. More important support is around 86.
There are so many unprecedented variables right now, but that’s what people said during the March 2020 drop and pop.
Fact-and-data-based analysis worked during the unprecedented pandemic and has the best odds of working again today.
Defeat analysis paralysis, get an edge on the crowd, and invest based on facts not tales. Sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 10, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Oil prices have gone parabolic and in California (even at Costco) we’re paying almost $6 for a gallon of gas.
I remember back in 2008, the last time oil soared like this, the pervasive narrative was that rising oil kills the economy (and stocks). This narrative resurfaced in 2011 and 2017.
Do rising oil prices really kill stocks and the economy?
The chart below plots oil prices against the S&P 500 and highlights periods of rising oil. While this did eventually have an effect on stocks in 2008/09, it didn’t matter in 2011, 2017, 2020/21.
Let’s zoom out further and use a rules-based approach to identify similar precedents of rising oil prices. On Tuesday, crude oil closed 60.61% above its 200-day SMA. This is not the highest ever reading, but it’s up there.
The chart below identifies all other times when oil prices traded more than 40% above their 200-day SMA. There are 4 distinct clusters. Around 1990, 1999, 2008, 2020.
2008 was the only instance with an immediate effect (the decline, however, started already earlier and was triggered by the financial crisis).
The first signal in 1999 was followed by one more rally leg to new S&P highs.
Perhaps more interesting is that crude oil prices (gray graph) didn’t do that well after similar situations.
The Profit Radar Report was bullish oil for 2022, but the developments in Russia/Ukraine intensified the move we expected.
Sunday’s Profit Radar Report highlighted resistance (red lines, shown in the first chart) and warned that now is not the time to chase price (crude oil has fallen as much as 20% in the last 3 days).
As regular readers know, I’ve been following the expanding diagonal pattern, which was first published on February 3, again on February 24 and March 3.
Thus far, the pattern (and its down side target) has not been invalidated.
Regardless of the pattern, I warned in the February 6 Profit Radar Report that we are entering a period of extreme choppiness.
This was emphasized again in the February 20 Profit Radar Report, which stated that: “In terms of timing, a low in March would be preferred, which could mean a stair-step decline lower).”
The S&P 500 is getting closer to a potential bounce in terms of timing. I would still like to see one more nasty washout day that meets certain requirements to pull the trigger.
To find out what my S&P 500 buy limit is and to get a continuous flow of fact-based quality research, sign up for the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 3, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Last week we looked at the S&P 500 diagonal. This diagonal pattern has kept us on the right path for several weeks and has provided a down side target which has not yet been reached.
This week we’ll look at more traditional technical analysis.
1) The S&P 500 tagged support around 4,1130 and closed the open chart gap at 4,116.93
2) There was a bullish RSI-35 divergence at the February 23 closing low
3) The S&P 500 is now back a black trend channel resistance
4) The S&P 500 is above the first diagonal resistance line
5) The S&P 500 is about in the middle of the recent trading range
6) There is another open chart gap (and support) at 4,020.63
… And there is war in the Ukraine, inflation, and a pandemic
What does all this mean?
Thus far the S&P bounced from support and is now butting up against initial resistance, nothing unusual. However, price is getting close to invalidating the diagonal (I drew two potential diagonal resistance line, one solid and one dashed, both in purple and descending). The RSI divergence could mean a low (of some sort) is already in.
In other words, all the technical analysis in the world does not provide a big edge at this time. This is not unexpected. I warned in the Profit Radar Report that we are about to enter such a time:
“Last week’s (S&P 500) price overlap eliminated one clear Elliott Wave Theory pattern. We are left with either:
– A messy pattern
– A mid-term bullish pattern which would soon project another pullback
– A bearish pattern which would project a sizable bounce
Regardless of which path the market chooses, choppiness appears to be ahead. A decline should be followed by a bounce and a rally would likely to be followed by a pullback.”
I don’t pretend to know when I don’t, but knowing when to expect an untradeable environment is also helpful (unless you enjoy getting whip-sawed).
Based on the diagonal pattern, I’ve been looking for overall lower prices for about the past month. This pattern is not yet dead, but it’s getting stretched.
Although it’s difficult to find a low-risk entry at this time, the most promising approach looks to buy if and once we see new lows.
Whether the ensuing bounce will challenge or surpass the prior all-time highs is not clear, but it should be tradeable.
On that note, crowd psychology is providing very interesting feedback.
At least once a month, the Profit Radar Report provides an in depth look at investor sentiment. Here is what was published on February 27:
The first chart plots the S&P 500 against 9 different sentiment gauges. At first glance this chart probably doesn’t tell you much.
That’s why I take it a step further. That step is to identify other times with the most similar sentiment readings.
How do I quantify ‘most similar’?
Most similar means when at least 6 (of the 9) sentiment gauges fall within a 10% range of current readings. And that’s where it gets interesting.
The next chart shows that there were 7 signal dates where at least 6 of 9 indicators are within a 10% range. All of them occurred near significant lows (2015, 2016) or after a low was carved out (2020).
The sample size is small, but its curiously unanimous.
Regular readers of the Profit Radar Report know that I apply the same approach to identifying precedents to market breadth, volatility, most closely correlated price patterns, etc.
The result is not always as clear (or small), but it gives us an idea of how markets have reacted in the past under similar circumstances (which obviously don’t include Russia, inflation or a pandemic), but it’s still the best we can do.
Continuous updates and factual out-of-the-box analysis is available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 3, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).
Last week we looked at the S&P 500 diagonal. This diagonal pattern has kept us on the right path for several weeks and has provided a down side target which has not yet been reached.
This week we’ll look at more traditional technical analysis.
1) The S&P 500 tagged support around 4,1130 and closed the open chart gap at 4,116.93
2) There was a bullish RSI-35 divergence at the February 23 closing low
3) The S&P 500 is now back a black trend channel resistance
4) The S&P 500 is above the first diagonal resistance line
5) The S&P 500 is about in the middle of the recent trading range
6) There is another open chart gap (and support) at 4,020.63
… And there is war in the Ukraine, inflation, and a pandemic
What does all this mean?
Thus far the S&P bounced from support and is now butting up against initial resistance, nothing unusual. However, price is getting close to invalidating the diagonal (I drew two potential diagonal resistance line, one solid and one dashed, both in purple and descending). The RSI divergence could mean a low (of some sort) is already in.
In other words, all the technical analysis in the world does not provide a big edge at this time. This is not unexpected. I warned in the Profit Radar Report that we are about to enter such a time:
“Last week’s (S&P 500) price overlap eliminated one clear Elliott Wave Theory pattern. We are left with either:
– A messy pattern
– A mid-term bullish pattern which would soon project another pullback
– A bearish pattern which would project a sizable bounce
Regardless of which path the market chooses, choppiness appears to be ahead. A decline should be followed by a bounce and a rally would likely to be followed by a pullback.”
I don’t pretend to know when I don’t, but knowing when to expect an untradeable environment is also helpful (unless you enjoy getting whip-sawed).
Based on the diagonal pattern, I’ve been looking for overall lower prices for about the past month. This pattern is not yet dead, but it’s getting stretched.
Although it’s difficult to find a low-risk entry at this time, the most promising approach looks to buy if and once we see new lows.
Whether the ensuing bounce will challenge or surpass the prior all-time highs is not clear, but it should be tradeable.
On that note, crowd psychology is providing very interesting feedback.
At least once a month, the Profit Radar Report provides an in depth look at investor sentiment. Here is what was published on February 27:
The first chart plots the S&P 500 against 9 different sentiment gauges. At first glance this chart probably doesn’t tell you much.
That’s why I take it a step further. That step is to identify other times with the most similar sentiment readings.
How do I quantify ‘most similar’?
Most similar means when at least 6 (of the 9) sentiment gauges fall within a 10% range of current readings. And that’s where it gets interesting.
The next chart shows that there were 7 signal dates where at least 6 of 9 indicators are within a 10% range. All of them occurred near significant lows (2015, 2016) or after a low was carved out (2020).
The sample size is small, but its curiously unanimous.
Regular readers of the Profit Radar Report know that I apply the same approach to identifying precedents to market breadth, volatility, most closely correlated price patterns, etc.
The result is not always as clear (or small), but it gives us an idea of how markets have reacted in the past under similar circumstances (which obviously don’t include Russia, inflation or a pandemic), but it’s still the best we can do.
Continuous updates and factual out-of-the-box analysis is available via the Profit Radar Report.
The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.
Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”
iSpyETF 