Investors’ Worst Enemy is Here

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 28. 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).

What is investors’ worst enemy? Banking crisis? War? Rising interest rates? Inflation?

I don’t think it’s any of the above. We’ve essentially seen all of them in the past year, yet stocks haven’t gone anywhere for 10 months.

Here’s an interesting chart: S&P 500 performance over the past 11 months. The blue lines highlight the monthly closing levels for January (2 month ago), November (4 month ago) and May (10 month ago).

The percentage change, or rate of change (ROC), for the past 2, 4, 10 months has only been 1.20%, 1.28%, 2.53% (as of yesterday’s close). That’s a tiny range over multiple time frames!

When we zoom out, it’s not surprising that this trading range is occurring near the center line of a massive 14-year trend channel and that this – and I’m just eyeballing – is probably one of the biggest – even not the biggest – trading range of the 21st century.

Let’s forget about eyeballing things and look at it purely rules based. Going back to 1957, I was wondering how many other periods showed a similar tiny 2, 4, 10 month rate of change (ROC).

There were only 5 other times, that’s pretty rare. When looking at the S&P 500 forward returns following those 5 precedents, I noticed an interesting pattern.

This pattern was discussed in yesterday’s Profit Radar Report update (you can test drive it here).

If you’ve been reading this newsletter, you know that updates have been sparse with no directional predictions. I even admitted the vague nature of my forecasts due to the conflict among indictors, but I also stated that: “I am fairly certain that any upcoming losses will be erased again.”

That just happened again on a short-term time frame, and it likely still applies to a longer-term time frame.

The media is only interested in capturing your eyeballs and monetizing your clicks … and they will do anything to get your attention (including outrageous headlines), which in turn may result in poor investment decisions.

I simply speak the truth based on the weight of evidence, even if it’s boring and infrequent.

If you see the benefits of this approach and appreciate purely fact based 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.”

Are Stocks Breaking Out? Part II

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on February 2, 2023. 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).

What last week’s Market Outlook suggested is now official. The S&P 500 broke out. The weekly chart below shows the breakout and target (open chart gap, dashed purple line).

People don’t give chart gaps enough credit (I love it, because little known indicators are the most effective ones).

Back in August, I wrote via the Profit Radar Report: “The S&P 500 reacted to the purple diagonal resistance and gapped lower. Regardless of how much lower the S&P goes immediately, we can almost be certain that the open gap at 4,218.70 will be closed.”

Last week’s free Market Outlook also stated: “Perhaps more important is the dashed purple line. It’s an open chart gap left by the 8/19/22 drop. Ever since then I’ve been talking about that chart gap being closed (most recently here: 2023 S&P 500 Forecast).”

In terms of Elliott Wave Theory, the break above the purple line (which coincided with the black trend channel, see chart below) was important. Why?

The January 22 Profit Radar Report wrote that: “It looks like the wheat will be separated from the chaff rather soon (this or next week). Wheat and chaff, in this case, represents a bullish (green labels and arrow) or bearish (red labels and arrow) Elliott Wave Theory (EWT) option (see chart below). The bullish option (move above 4,016) would keep the pressure to the up side for the next weeks, perhaps longer.”

I’ve been a big critic of Elliott Waves, because many tunnel vision analysts have solely focused on their dangerous uber-bearish EWT interpretation and mislead investors.

But in that case, EWT allowed us to pinpoint an inflection point to separate the ‘wheat from the chaff’ (bullish from bearish path), and it worked beautifully. EWT is a great tool if used responsibly. The next inflection zone is the open chart gap and August high (4,218 – 4,325).

2023 S&P 500 Forecast

The 2023 S&P 500 is now available! It includes 24 charts and covers the following indicators and topics:

– 2022 Review

– Supply & Demand, Breadth

– Support/Resistance Levels

– Elliott Wave Theory

– Inflation

– Socioeconomic Peace & Prosperity

– Investor Sentiment

– Seasonality & Cycles

– S&P 500 Barometers

– Valuations

– Money Flow

– Risk/Reward Heat Map

– Summary

– 2023 S&P 500 Projection

Some of the discussed indicators come with a 90% and 95% accuracy track record. All indicators and data points are combined into one forward projection (the S&P 500 is tracking it well thus far).

Below is last year’s projection compared to the actual S&P 500 performance.

The full 2022 S&P 500 Forecast is available here for your review.

Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:

– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”

– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”

– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”

– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”

– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”

– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”

– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”

To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the

Continued updates and factual out-of-the box analysis are 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.”

Are Stocks Breaking Out?

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 26, 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).

Stock market bears are getting squeezed again this week as the S&P 500 grinds higher. And, for the first time in a year, the S&P closed above the descending trend line. The color of that trend line is now green, because it’s support. As long as this support holds, price can continue higher.

This week’s push above last week’s high eliminated the most bearish of Elliott Wave patterns (a nested wave 3 decline proclaimed by a number of Elliotticians). The red lines show other highs. Every time one of those highs is eclipsed, bears’ hopes sink.

Perhaps more important is the dashed purple line. It’s an open chart gap left by the 9/13/22 drop. Ever since then I’ve been talking about that chart gap being closed (most recently here: 2023 S&P 500 Forecast).

Unlike the S&P, the recent IWM peaks are all clustered in the 189.50 neighborhood. IWM needs to break above this zone – confirmed by RSI-35 – to allow the S&P to move higher as well. Without IWMs support, risk of a pullback remains present.

I stated in the December 28 Profit Radar Report that: “TSLA has been in crash mode, with the December meltdown likely being part of a wave 3. The long-term chart shows there’s no significant support near current price. Perhaps a temporary bounce and eventual drop to 100 +/- could set up a more sustainable bounce.”

Shortly thereafter, TSLA fell as low as 101.81 and is up over 50% since. While this bounce could be only a wave 4, it’s likely a larger degree bounce with higher targets (as long as price stays above the green support line).

2023 S&P 500 Forecast

This is the time of year where I’m working on the full year S&P 500 Forecast. This forecast includes the most pertinent facts and indicators and an actual price projection based on those indicators.

The proof is in the pudding and the chart below plots my 2022 S&P 500 projection (yellow line) against the actual price action (you can see the original projection at the bottom of this page).

The full S&P 500 Forecast is available here for your review.

Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:

– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market deterioration is a concern and a warning sign.”

– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”

– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”

– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”

– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”

– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”

– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”

To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based 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.”tock

2023 S&P 500 Forecast

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on January 12, 2023. 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).

I’d like to ask you to participate in a brief mental exercise as you read these lines:

How often have you read or heard the words or phrases recession, economic contraction, stock market crash, inflation is bad for stocks, etc. in the last few weeks? Ok, think about it for just a moment …

Now, did stocks perform as you thought based on the news you heard?

The simple chart shows that the S&P 500 today is trading exactly where it was on May 9, 2022. Nine months with progress (or crash).

We live in a world where boring doesn’t sell, and the media wants to capture your eyeballs at all cost. The most effective way to do that is with sensationalistic headlines. Truth and analytic integrity are at best secondary considerations.

Unnecessary sensationalistic stock market analysis irks me to the core. That’s why my Profit Radar Report is different. You read what I see, and I haven’t had to stray from the BORING assessment shared in the November 13 Profit Radar Report, which was:

“Chart gaps at 4,083.67 and 4,218.70 remain open. The next serious resistance zone is around 4,100. Short-term support is around 3,900. A pullback can happen any moment and price action may well be choppy in coming days/weeks, but odds of further gains following pullbacks are good.”

You may recall that I added the following in my last free Market Outlook (from December 16, 2022):

“I’d like to point out that support around 3,900 has become quite obvious, which makes a seesaw across it more likely, and today’s drop created another chart gap at 3,965.65 which should be closed in the not so distant future.”

As anticipated, the S&P seesawed across 3,900 (multiple times), moved back above it, and closed the open chart gat at 3,965.65 (dashed purple line) yesterday.

A word of caution: The fledgling 2023 rally has pushed the S&P 500 into the next resistance cluster. I consider this an inflection zone that needs to be watched carefully.

2023 S&P 500 Forecast

This is the time of year where I’m working on the full year S&P 500 Forecast. This forecast includes the most pertinent facts and indicators and an actual price projection based on those indicators.

The proof is in the pudding and the chart below plots my 2022 S&P 500 projection (yellow line) against the actual price action (you can see the original projection at the bottom of this page).

The full S&P 500 Forecast is available here for your review.

Below are some of the warning signs mentioned in the 2022 S&P 500 Forecast BEFORE the stock market fell into a pothole:

– “The bearish divergence (NY Composite a/d lines) reappeared again at the January 2022 S&P 500 highs. This internal market 

deterioration is a concern and a warning sign.”

– “The 6-month average of Titanic signals exceeded 25. It’s been a good bear market indicator. Although the majority of breadth studies are positive, this is one that should not be ignored.”

– “We’ll focus on the commonality of all 3 (Elliott Wave Theory) scenarios: Up side is limited and down side risk is increasing.”

– “Trend line resistance is around 4,915. We do not expect the S&P to break above this trend line in 2022.”

– “Short-term, the January 10, 2022 low at 4,582 is important. Failure to hold above this level would be a warning signal with the potential for a quick drop into the 4,200 – 4,300 range. If the 4,200 – 4,300 support zone fails, a test of the 4,000 zone (as low as 3,700) is possible.”

– “2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.”

– “Since the Fed is planning to unwind and reduce purchases (and shrink its balance sheet) in 2022, the risk of a more serious correction this year is much greater than in 2021.”

To receive the 2023 S&P 500 Forecast and for continued updates and purely fact based research, sign up for the Profit Radar Report and become the best informed investor you  know.

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.”

S&P 500 on Schedule into Inflection Zone

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on December 1, 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).

It’s been a while since the last Free Market update, but no updates were required as the market continues to follow my ‘keep it simple’ blueprint (almost like painting by numbers).

The complexity of current world events confuses many analysts and investors. I try to ‘de-confuse’ and simplify this incredibly complex environment … and the market is allowing me to do this (it’s not always this way).

The November 13, Profit Radar Report outlined our most recent ‘keep it simple’ blueprint:

“Chart gaps at 4,083.67 and 4,218.70 remain open. The next serious resistance zone is around 4,100. Short-term support is around 3,900. A pullback can happen any moment and price action may well be choppy in coming days/weeks, but odds of further gains following pullbacks are good.”

The blue box pinpoints the price action since November 13. Within a choppy environment, the S&P 500 first tested support around 3,900 and today closed the open chart gap (dashed purple line) at 4,083.67. Resistance around 4,100 is just ahead.

What caused this rally to 4,100? “Seasonality and the weight of evidence favor higher prices, which is our base assumption,” is what I told subscribers weeks ago.

There was also an absolute investor sentiment oddity, which I first pointed out in the November 9, Profit Radar Report: “According to the CBOE, the equity put/call ratio soared to 1.30 yesterday, which is an absolute panic reading that even exceeds the COVID extreme. If this data is correct, it should be a positive for price.”

The fifth graph in the chart below shows the bullish (for stocks) put/call ratio extreme, which means that option traders panicked more in the second half of November than at the 2020 meltdown low. Hard to believe, but that’s the CBOE data. The spike in the CBOE SKEW (blue graph) sent a similar message.

What’s next though?

The weight of evidence and seasonality are still supportive of higher prices, but something changed: The S&P 500 has now reached an important resistance and inflection zone.

This is a price zone where risk management takes on a more important role and prudent investors should consider reducing exposure or setting stop-losses below support.

Inflection zones are like traffic lights, they don’t have to be red, but if a car is going to have to stop, it’s likely at a traffic light.

King dollar … de-crowned?

Since September 28, when the US Dollar Index hit a 20+ year high, the USD dropped from 114.7 to 105. On that day, September 28, I happened to share the following chart and warning via the Profit Radar Report:

“The US Dollar Index has been on a tear, rising almost vertically. Normally I would draw ‘bowl’ support (previously used to predict major drops for TSLA and Bitcoin, see January 10, 2021 PRR), but currencies are prone to trend longer than equities. For this reason, the USD should be given a longer leash, but the parabolic rise combined with trend channel resistance suggests that at minimum a temporary pause and/or pullback is getting close and chasing the USD carries a fair amount of risk.”

Price got repelled by one trend channel and is now also trading below the other trend channel (currently at 107.5). This is now resistance and as long as price stays below resistance it can continue to work lower.

We live in uncertain, complex and confusing times. Get access to straight-forward, purely fact based research, and become the best-informed investor you know! 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.”

2022 S&P 500 Path Remains on Track

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on October 13, 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).

For months, the S&P 500 has been following the expanding diagonal pattern. This has been a surprisingly easy way to navigate an uber complicated political and economical environment.

If you haven’t read about the pattern that’s almost worked like painting by numbers, you can check it out here:

S&P 500 Path Deceptively Simple

As shocking as the 2022 stock market performance has been to most, it is actually very much in line with another historic pattern; the 4-year presidential election cycle:

“2022 is the mid election year, which is the weakest of the 4-year presidential election year cycle. Historically (going back to 1950), the S&P 500 declines on average about 20% into the mid-term election year low.

The following year (the pre election year, 2023) is the strongest year of the election year cycle as incumbent presidents prime the pump to increase the odds of reelection. Historically, the S&P 500 gains on average about 50% from the mid election year low to the pre election year high.

Cycles project a fair amount of political and economic turmoil starting in Q1 of 2022. Based on seasonality and cycles, 2022 will be a tough year to navigate where high stocks prices early in the year should be used to raise cash for a better buying opportunity later in the year.”

Some may say; ‘hindsight is 20/20, it’s easy to point this out after the fact,’ but I wrote the above in my 2022 S&P 500 Forecast, published for Profit Radar Report subscribers back in January.

The S&P 500 mid election year seasonality chart that accompanied the above commentary highlights the tendency of a Q4 low.

Is it a fools errand to write about a buying opportunity in a bear market? That’s an interesting question, and my answer along with an interesting statistic is available here.

Does the expanding diagonal pattern and election year cycle guarantee that stocks will rally? Of course not. There are no guarantees in life or investing.

But, and that’s a big but, the odds of an upcoming rally are much higher than many believe them to be.

Of course I’m not recommending to buy blindly, but I am keeping my eyes peeled for breadth and sentiment extremes or divergences that tend to be seen near meaningful lows. I discussed one divergence, that happened this week for the first time in 2022, in yesterday’s Profit Radar Report update.

Since then, S&P 500 Futures dropped as low as 3,502 and soared 150 points over the last 3 hours.

The above long-term support chart may be helpful in identifying a buying opportunity (or failure of one).

If you want to be the best-informed investor you know, and have access to always relevant and purely fact-based 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.”

S&P 500 Path Deceptively Simple

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on September 29, 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).

The expanding diagonal pattern, first identified in the July 31 Profit Radar Report, continues to play out. The pattern is outlined via the purple lines below.

This pattern has been a surprisingly simple way to navigate an incredibly complex investing environment (I wrote about this here).

To continuously validate the pattern, I’ve also provided ‘the trend is down as long as’ resistance levels, such as the following:

September 18, Profit Radar Report: “Bears have the upper hand as long as the S&P 500 does not sustain trade above 3,920.”

September 21, Profit Radar Report: “Trade below 3,790 is another simple ‘line in the sand for short-term bearish risk.”

The ‘the trend is down as long as’ resistance levels are shown in red below. Neither of those level has been broken to the up side, so the trend continues down towards an eventual wave 5 low.

It’s beautiful when a pattern works out like ‘painting by numbers,’ but the market never consistently rewards one trick pony analysts.

Just last Sunday, I did a deep dive analysis of market breadth and investor sentiment to see if the weight of evidence supports or contradicts the expanding diagonal pattern.

Being aware of a wide spectrum of indicators prevents tunnel vision and getting blind sighted.

Market breadth

Shown below are 6 different breadth measures. Some of them are near their June lows (like the S&P 500) and others are reaching levels where a reversal to the mean becomes more likely.

Investor Sentiment

Only one out of the six short-term sentiment gauges plotted below is at a real extreme, the others still have room to grow.

In addition to just looking at the data, I also identify other times that most closely replicate today’s readings.

For example, there were 3 other signal dates that closely correlate to the market breadth data shown above and 9 signal dates that are closely correlated to current sentiment readings.

Would you like to know how the market reacted to similar conditions in the past?

Those findings, along with purely fact-based 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.”

Is this still just a Bear Market Rally?

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on August 11, 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).

As regular readers know, for weeks my indicators have been saying that stocks should bounce rather strongly.

The May bounce wasn’t ready for the big league yet (which forced me to take a few bites of humble pie in early June), but the rally from the June 16 low surely delivered (the S&P 500 is up over 15%).

The Free Market Outlook from June 21 titled “Blood on Wall Street,” stated there’s panic and blood on Wall Street and that “this is about the time to be rational and go against the trend.”

Even before that, the June 19 Profit Radar Report, published a highly controversial Elliott Wave Theory count. Although the wave count was ambiguous, this was my preferred interpretation.

Based on this count, a 3-wave decline (A-B-C) just ended and the S&P was ready to rally.

This was highly controversial because almost every Elliott Wave analysts expected dooms day scenario-like outcomes (with wave 3 of 3 down about to rip lower).

A few days earlier, in the June 15 Profit Radar Report, I published a bullish wedge which also could unlock much higher targets.

Well, the S&P 500 is now up over 15% and has retraced nearly 50% of the points lost from the January high to the June low.

The S&P 500 has fulfilled my forecast of a significant bounce and (based on price and some sentiment gauges) has reached the zone where a bear market rally ‘should’ soon (not necessarily right away) roll over.

Based on Google searches for ‘bear market rally,’ it seems like that’s what investors expect.

Here is the big question: Is this just a bear market rally, doomed to roll over, or could it be more, perhaps much more?

Last night’s Profit Radar Report featured two historic examples (one of them helped us nail the 2020 low) to help ascertain the odds of a bear market rally.

Last night’s update, an archive of all past research, and continued purely fact-based, out-of-the box analysis are available via the Profit Radar Report Profit Radar Report. Be the best-informed investor you know and don’t get caught following the crowded traded.

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.”

Is it Time to Buy?

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on May 26, 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).

Is it time to buy? Considering the financial/economical/political backdrop, that’s a bold question. The headlines below probably reflect investors angst:

– WSJ: Stock market bottom remains elusive despite deepening decline

– Fortune: It’s looking a lot like the dot-com crash again

– IBD: Market correction worsens as ‘hard’ reality sets in

– WSJ: Conditions are ripe for a deep bear market

Sometimes things are soo bad, it’s worth taking a stab at buying some deeply over-sold stocks/indexes.

Recent Profit Radar Reports featured a number of deeply over-sold and over-hated companies worth a flyer. One of them is one of the largest company in the world, down over 45% from its all-time high, trading below it’s pre-pandemic price tag, and resting at major support.

No, stocks are not out of the woods, but many are at an inflection zone. The odds of a bounce here are better than they’ve been in months.

Yesterday’s Profit Radar Report stated that: “The S&P 500’s close back within the trend channel and above the descending trend line is a short-term positive.”

The DJIA chart sports one reason to be bullish that no one is talking about, but has been infallible over the past 13 years. Can you see it?

It’s said that fortune favors the brave, and perhaps now is the time to be brave. Fortune, or better success, for certain does not favor the ignorant, and now is not the time to be ignorant (not being ignorant also means to see the potential down side risk despite the up side potential and protect against it).

The Profit Radar Report looks at all the facts without bias and says it how it is. This includes the reason to be bullish (or at least postpone turning bearish) on DJIA and the over-sold and over-hated mega cap stock at massive support. Find out now and 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.”

Are Things Bad Enough to be Good?

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on May 12, 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).

The S&P 500 reached the 4,000 zone this week, which has been our potential down side target for a while (April 13 Profit Radar Report). The area surrounding 4,000 was an inflection zone where a bounce would become more likely.

Since the S&P did not react to this support zone, price can slice lower into our next target zone. 

Down side momentum picked up and breadth has turned horrible. Is it bad enough where it’s actually good for stocks?

I’d like to share some stats on how the S&P 500 performed in the past when breadth was as bad as last week. This is from Sunday’s Profit Radar Report:

“Another bruising day dropped the S&P 500 right into the 4,000 zone. At the end of the day, the S&P fell 3.20% with only 11.83% of NYSE-traded stocks advancing (on only 7% of volume, based on preliminary data). This followed Wednesday’s 3.56% / 5.30% / 11.87% day.

Most breadth readings are at the lowest level since the pandemic low.

Sunday’s PRR highlighted similar down days. 10 of the 25 signals saw extreme clusters (down volume >93% on 2 of 3 days, orange lines). Even though the 2008 meltdown hosted 3 of those 10 signals, 1, 2, 6, 12 month later the S&P was higher 9 out of 10 times.

The percentage of 52-week highs minus low was at -30.90%. The chart below shows the 64 signal dates with more than -30% while more than 12% from the all-time high.

Similar to prior studies, many clusters fall into the ominous years of 1974, 1987, 2008/09, 2020.

The study below has a shorter history (since 2003) but includes more indicators. Again we see 2008, 2020 and 2012.”

What does all of this mean?

Looking at similar ‘events’ in the past provides a gauge of what would be normal to expect in the future.

A 2008-like event is always an outlier event. Based on the data it’s possible, but such an extended meltdown seems unlikely.

While below 4,000, the S&P can continue lower into our next target range. Some indicators are already in ‘it’s so bad it’s good’ territory, and if stocks fall into the target range, we’ll probably buy to take advantage of a bounce. Whether such a bounce could still set new all-time high would be evaluated at the time

Continuous updates and fact-based, 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 May 5, 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).

Yesterday the S&P 500 delivered the biggest one-day pop since April 20, 2020, that’s more than 2 years ago.

Trading and advising through the 2008/09 meltdown I remember that some of the biggest pops happen during bear markets.

And I distinctly remember that the ‘big pop in bear markets’ notion made a comeback in the post-pandemic rally (it obviously wasn’t true then). So what do big pops really mean?

To find out I isolated dates where the S&P gained more than 2.7% with more than 80% of stocks advancing (on more than 80% of volume) while down more than 12% from its all-time high.

There were 50 signal dates since 1970, all of them highlighted below. More often than not those kind of pops occurred going into or coming out of a significant low. But, there were those 2002, 2008/09 instances that preceded a meltdown.

The S&P is down more today than it was up yesterday, so that will be another interesting study for the next Profit Radar Report: What happens after big up/down days? If you want to find out, sign up for the Profit Radar Report.

The April 13 Profit Radar Report stated that: “The S&P could fall towards and even below 4,000 before giving away whether option 1 or 2 is playing out.”

S&P 4,000 is not far away so we should soon find out.

Last Friday, the S&P closed at the lowest level since May 19, 2021. Since last Friday was the last day of April, it was also the publication day of the monthly Sentiment Picture.

The Sentiment Picture consists of two parts:

1) Charting various sentiment gauges (see chart below)

2) Identifying other times with similar sentiment readings and how the S&P 500 performed thereafter.

As you can see, there were a couple of sentiment extremes, but sentiment indicators aren’t as bearish perhaps the media. Is that good or bad for stocks?

The answer along with usually out-of-the-box but always fact-based 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.”