Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18
Rising US Home Prices and Falling Sales - 8th Dec 18
Choosing Who the Autonomous Car Should Kill - 8th Dec 18
Stocks Selloff Boosting Gold - 8th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

U.S. Stock Market’s Volume is Low Around Thanksgiving

Stock-Markets / Stock Markets 2018 Nov 23, 2018 - 12:21 PM GMT

By: Troy_Bombardia


Happy Thanksgiving! It’s important to remember that this week’s volume is very light, so don’t read too much into price action. The price can be easily pushed around by a few big players.

Let’s determine the stock market’s most probable direction by objectively quantifying technical analysis. For reference, here’s the random probability of the U.S. stock market going up on any given day, week, or month.

*Probability ≠ certainty.

Lots of New Lows

Lots of issues on the New York Stock Exchange have made new lows. Conventional technical analysts think that this is short-medium term bullish for the stock market. Is it?

Here’s what happens next to the S&P 500 when the NYSE New Lows Index’s 50 day moving average is more than double that of its 200 day moving average.

*Data from 1970 – present

*We look at the distance between the 50 dma and 200 dma instead of looking at the NEWLONYA’s absolute value. This is because as the number of issues on the NYSE increases over time, NEWLOYA will forever make higher highs in the long term.

As you can see, the stock market’s forward returns are no different than random. This is neither consistently bullish nor bearish for stocks

S&P vs Oil

While the S&P 500 has gone down, oil has gone down even more. It seems like just yesterday Jeff Gundlach was calling for $100 oil.

*From what I’ve seen, Jeff Gundlach is good at predicting the bond market, but his equity & commodity predictions are no better than a coin toss. Just shows that everyone has a specialty. Trade only what you are good at.

As a result, the S&P:oil ratio’s RSI has become quite high.

Here’s what happened next to the S&P when the S&P:oil ratio’s 14 weekly RSI exceeded 69

*Data from 1983 – present

As you can see, the stock market tends to go up over the next 6-9 months.

NASDAQ death cross

The NASDAQ will probably make a “death cross” next week, whereby its 50 day moving average falls below its 200 day moving average.

Is this bearish for the stock market?

Here’s what happens next to the NASDAQ (historically) when it makes a death cross.

*Data from 1971 – present

As you can see, the NASDAQ’s forward returns are no different than random. This is neither consistently bullish nor bearish for stocks

Equity Put/Call

While the Total Put/Call Ratio (a sentiment indicator) has come down a little, the Equity Put/Call Ratio remains high.

Here’s what happens next to the S&P 500 when the Equity Put/Call ratio’s 50 day moving average is more than 4% above its 200 day moving average (i.e. Equity Put/Call Ratio is trending up).

*Data from 2003 – present

As you can see, the stock market’s forward returns are mostly no different than random, although there is a slight bullish lean 3 months later.

Click here to see yesterday’s market study


Our discretionary technical outlook has changed a little

  1. The current bull market will peak sometime in Q2 2019.
  2. The medium term remains bullish (i.e. approximately next half year).
  3. The short-medium term is mostly a 50-50 bet. With that being said, it leans bullish.

We focus on the medium term and long term. We mostly ignore the short term, which is usually just noise.

Our market outlook is not always a reflection of how we’re trading the markets right now. We trade based on our clear, quantitative trading models, such as the Medium-Long Term Model.

Members can see exactly how we’re trading the U.S. stock market right now based on our trading models.

Click here for more market studies

By Troy Bombardia

I’m Troy Bombardia, the author behind I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules