|technical analysis, trading systems, investing, market-timing methods, stock market, money management
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
October 26, 2020
Stock Market Outlook: the short-term trend
might be described best as indecisive.
Preview from my weekly report*
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To summarize the current situation, looming uncertainties are contributing to mixed-up stock-market behavior.
On the bullish side, our Colby Economic Expectations Index shows that most of the actual data releases beat lowered expectations since May, 2020. In addition, commodities that are sensitive to global economic conditions most recently appear to be offering encouragement about economic prospects going forward. Some market breadth measures suggest underlying firming for the smaller smaller-capitalization stocks that lagged the large-capitalization stocks until September.
On the bearish side, October seasonal tendencies suggest volatility with a risk of sharp price drops. Investor sentiment has moved toward bullish optimism in recent weeks, despite an indecisive stock market price trend. A bullish consensus of market opinion suggests caution, according to The Art of Contrary Thinking: when everybody thinks alike, everyone is likely to be wrong.
Over the past 51 days since the intraday peak at 3588.11 on 9/2/2020, the S&P 500 is down just -3.42%. Short-term price momentum appears to have run out of steam and appears indecisive. The medium-term trend appears uncertain, and the long-term major trend remains debatable.
In conclusion, in the face of looming uncertainties and indecisive stock-market behavior, a defensive approach probably remains most prudent.
Our full report reviews indicators that we monitor every day and offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
Objective Quantitative Rankings for hundreds of Exchange Traded Funds
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Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
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See The Colby Global Markets Report (click here).
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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.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
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