US Market Sentiment: Risk Model
General Market Update
Stock market uptrend continues to show strength and shrugged off Big Tech losses.
The stock market made a show of strength by surging despite disappointing Big Tech earnings reports. But it is still too early for investors to be getting excited, with another Federal Reserve meeting rapidly approaching.
The Nasdaq composite turned in a 2.9% gain for the day and is on track to end October with a 5% gain. It still sits 1.9% under the key 50-day moving average, a key resistance area to watch.
The S&P 500 turned in a 2.5% gain for the day. Using the SPDR S&P 500 ETF (SPY) as a proxy, it is up 8.9% for the month with one more session left in October. The index has made a move above its 50-day line, an encouraging sign.
Breadth was also positive, with advancers outnumbering decliners by about 3-to-1 on the NYSE and by more than 2-to-1 on the Nasdaq. Volume fell on the Nasdaq, and early data showed lower NYSE volume.
Blue-chip stocks also excelled, with the Dow Jones Industrial Average popping 2.6%. Its 14.4% gain so far for October is on track for its best since January 1976. t closed above the 200-day line for first time since Aug. 1
However: The coming week will be crucial, with speculation rising that the Federal Reserve may be considering slowing the pace of rate hikes. Investors should remain wary until this meeting is behind us.
Update Risk Model:
Several technical indicators significantly improved their reading in course of last weeks' trading sessions. The following critical indicators are now showing green light:
- New 52w Highs / Lows
- Stocks above / below their 200d MA
- Up/Down volume
- Advance/Decline-Line
Additionally, key psychological / contrarian indicators still showing reading which could suggest that we have reached the bottom already, or are at least close to that. Margin debt is negative which means there is a lot of buying power in the market to push individual stocks much higher. Also, we still habe a very bearish sentiment which is very good considering this being a contrarian indicator - exactly when most investors give up and make more and more bearish comments, the bottom of a correction / bear market might be very close.
Remember, there will be another FED announcement next week. At the very least, we have to expect increased volatility.
Swing-Traders should be invested by 30-50% by now but only further increase exposure on the back of gains in their own portfolio.
While the risk model has significantly improved, we are not out of the woods yet. Stay cautious and remain disciplined!
Stock market uptrend continues to show strength and shrugged off Big Tech losses.
The stock market made a show of strength by surging despite disappointing Big Tech earnings reports. But it is still too early for investors to be getting excited, with another Federal Reserve meeting rapidly approaching.
The Nasdaq composite turned in a 2.9% gain for the day and is on track to end October with a 5% gain. It still sits 1.9% under the key 50-day moving average, a key resistance area to watch.
The S&P 500 turned in a 2.5% gain for the day. Using the SPDR S&P 500 ETF (SPY) as a proxy, it is up 8.9% for the month with one more session left in October. The index has made a move above its 50-day line, an encouraging sign.
Breadth was also positive, with advancers outnumbering decliners by about 3-to-1 on the NYSE and by more than 2-to-1 on the Nasdaq. Volume fell on the Nasdaq, and early data showed lower NYSE volume.
Blue-chip stocks also excelled, with the Dow Jones Industrial Average popping 2.6%. Its 14.4% gain so far for October is on track for its best since January 1976. t closed above the 200-day line for first time since Aug. 1
However: The coming week will be crucial, with speculation rising that the Federal Reserve may be considering slowing the pace of rate hikes. Investors should remain wary until this meeting is behind us.
Update Risk Model:
Several technical indicators significantly improved their reading in course of last weeks' trading sessions. The following critical indicators are now showing green light:
- New 52w Highs / Lows
- Stocks above / below their 200d MA
- Up/Down volume
- Advance/Decline-Line
Additionally, key psychological / contrarian indicators still showing reading which could suggest that we have reached the bottom already, or are at least close to that. Margin debt is negative which means there is a lot of buying power in the market to push individual stocks much higher. Also, we still habe a very bearish sentiment which is very good considering this being a contrarian indicator - exactly when most investors give up and make more and more bearish comments, the bottom of a correction / bear market might be very close.
Remember, there will be another FED announcement next week. At the very least, we have to expect increased volatility.
Swing-Traders should be invested by 30-50% by now but only further increase exposure on the back of gains in their own portfolio.
While the risk model has significantly improved, we are not out of the woods yet. Stay cautious and remain disciplined!
Combing the BEST of two WORLD's: Cathie Wood & Mark Minervini
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