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Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
February 21, 2017
The U.S. stock market: price, volume, and breadth remain bullish.
Preview from my weekly report*
Contrary Thinking: investors remain bullishly complacent. The stock market tends to swing from one extreme to the opposite extreme as human emotions swing from greed to fear and back again. The current data shows that the $VIX Volatility Index indicates bullish complacency, and the Equity Put/Call ratio now reflects below-average put activity and above-average optimism. The latest AAII survey shows a shift away from bullish excess, however, with 33.09% Bullish, 34.55% Neutral, and 32.36% Bearish. The CNN Money Fear & Greed Index shows increasing greed at 77 on Friday, up from a neutral 50 on 1/31/17, and down from an extremely greedy 88 on 12/13/16. For details, see http://money.cnn.com/data/fear-and-greed/
Widely-diverging investor opinions about the probable direction of the stock market going forward would be more bullish than the current state of increasing optimism. When nearly everyone is extremely bullish, we have to worry about a significant market top. Currently, we are not there yet, although there are fewer and fewer under-invested skeptics available to be converted into fully-invested bulls. Still, some investors don't like or trust President Trump, and others are worried about already high stock price valuations. These holdouts may be allowing their biases to overwhelm objective and obvious evidence of the stock market's major uptrend.
The trend is our friend. Although markets never offer any guarantees, the trends in multiple time frames put the probabilities in our favor. Economic growth prospects appear to be picking up, and investors are looking forward to President Trump's promised "phenomenal" comprehensive tax plan, including tax cuts for individuals as well as businesses. Time will tell whether reality can live up to hope--but, for the moment, the Path of Least Resistance is up.
The full report offers clear and unbiased guidance on the following each week:
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• The Defensive stock sectors
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• The Cyclical sectors
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• U.S. bonds and notes
• Commodities (Oil, Metals, Agriculture)
• Objective Quantitative Rankings for hundreds of Exchange Traded Funds
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My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
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