Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

The Stock Market Has Gone Nowhere and Volume is Low. What’s Next

Stock-Markets / Stock Markets 2019 Jun 18, 2019 - 05:46 PM GMT

By: Troy_Bombardia


The stock market has been trading within a very small range since last week, and volume has been notably low. Today’s headlines:

  1. Stock market’s small range
  2. Stock market’s low volume
  3. High stock:bond ratio
  4. The S&P’s long term correlations
  5. “A key manufacturing gauge just saw its biggest one month collapse in 18 years”
  6. Banks underperforming

Go here to understand our fundamentals-driven long term outlook. For reference, here’s the random probability of the U.S. stock market going up on any given day.

Small range

The stock market has gone nowhere each day since last Monday, with very small daily changes.

Such small daily movements tend to happen when a market is slowly grinding higher, such as in 2017. It doesn’t often happen when the market is still climbing out of a correction and VIX is elevated.

Here’s what happens next to the S&P when it goes up and down less than 0.5% on each of the past 6 days, while VIX is above 15.

Slightly bullish over the next 1 week and mostly bullish 1 year later. Low intraday volatility is a hallmark of bull markets.

Low volume

Low volume and small daily fluctuations tend to go hand-in-hand. With the stock market going nowhere over the past 6 days, SPY’s volume has been exceptionally low.

SPY’s volume has been more than -30% below its 1 year average for 6 consecutive days. Historically, this was mostly bullish for the S&P 6-12 months later. Low volume is a hallmark of bull markets.

Stock:Bond ratio

Our Stock:Bond ratio is quite high right now. The ratio has been above 2 for 13 consecutive days.

Similar historical streaks were mostly bullish for the S&P on every time frame.


To look at analogues objectively, we must calculate correlations.

Over the weekend we looked at the S&P over the past 200 days vs other 200 day historical periods. But what if we looked at the S&P over the past 400 days vs other 400 day historical periods?

Afterall, a longer term chart “looks like” it could be making a triple top. Here’s the S&P

Here’s the Dow

I looked at the S&P’s price over the past 400 days and compared it to other 400 day historical periods. Only 7 other historical cases had a correlation greater than 0.6

I did the same thing for the Dow, and there was only 1 historical case.

1999 was a late-cycle case, with only 1 year left in the bull market.

A key manufacturing gauge saw its biggest one-month decline in 18 years

From CNBC:

Here’s the chart.

These headlines confirm the “economy is going to hell” narrative that’s so popular in the media and social media.

Here’s what happens next to the S&P when Empire State Manufacturing falls below -8

The stock market tends to bounce 2 months later, even during recessions (2001 and 2008).


While the stock market has made new highs over the past 2 years, banks have not. Here’s the KBW Bank Index vs. the S&P.

This is a very long divergence. Is it a bearish sign for the stock market?

This is rare, but not consistently bullish or bearish. Financial stocks have underperformed throughout much of this 10 year bull market.

We don’t use our discretionary outlook for trading. We use our quantitative trading models because they are end-to-end systems that tell you how to trade ALL THE TIME, even when our discretionary outlook is mixed. Members can see our model’s latest trades here updated in real-time.


Here is our discretionary market outlook:

  1. The U.S. stock market’s long term risk:reward is not bullish. In a most optimistic scenario, the bull market probably has 1 year left.
  2. The medium term market studies (e.g. next 6-9 months) are mostly bullish.
  3. Market studies for the next 2-3 months lean bullish.
  4. Market studies over the next 2-4 weeks are mixed.
  5. We focus on the medium-long term.

Goldman Sachs’ Bull/Bear Indicator demonstrates that risk:reward does favor long term bears.

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 2019 © 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.

© 2005-2019 - 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