Stocks on May 29, 2018: outlook


*These are my discretionary thoughts on the market. My Medium-Long Term model determines my trades. Go to the homepage for my latest market outlook. I update this webpage throughout the day.

Thoughts

  1. Insider Transaction ratio is short term bullish for the stock market.
  2. The stock market is at a decision making point. Will either breakout or decline in the next 1-2 weeks.
  3. Sentiment towards the stock market is neutral. Sentiment doesn’t give traders an edge in the markets right now.

Read Study: what happens next when volatility returns
Read Study: what happens next when the stock market consolidates in a very narrow range
1 am: Insider Transaction ratio is short term bullish for the stock market.
Barrons produces an Insider Transaction Ratio, which is the ratio of insider sales to buys. Readings under 12:1 are short term bullish for the stock market, readings above 20:01 are short term bearish for the stock market. The latest reading is approximately 9:1. This is a short term bullish sign for the stock market right now.

1 am: The stock market is at a decision making point. Will either breakout or decline in the next 1-2 weeks.
We can use daily RSI (a momentum indicator) to gauge the S&P 500’s “market stages” by applying support and resistances to RSI itself. As you can see, the S&P’s RSI is still stuck at levels  at which previous bounces stopped.

The next 2 weeks will be critical for the S&P 500. The S&P’s RSI will either break this resistance and the S&P will rally to new highs, or the S&P’s RSI’s resistance will hold and the S&P will revisit its trendline resistance.
It’s decision making time. An upside breakout is more likely.
1 am: Sentiment towards the stock market is neutral. Sentiment doesn’t give traders an edge in the markets right now.
The AAII Bulls Ratio is a useful contrarian sentiment indicator for the U.S. stock market. It isn’t registering any extremes right now (i.e. it’s slightly bullish right now), which means that this sentiment indicator isn’t sending a SELL signal.

Read Stocks on May 26, 2018: outlook

Outlook

Here’s what I think will happen based on my discretionary outlook.

  1. The S&P has made a 6%+ “small correction”. This will not turn into a “significant correction”.
  2. 2018 will trend higher but will also be a choppy year.
  3. The S&P 500 has approximately 1-2 years left in this bull market.

I do not use my discretionary outlook to place entry/exit trades. I am 100% long SSO (2x S&P 500 ETF) because my Medium-Long Term model does not foresee a significant correction at this point in time. I ignore small corrections. I only sidestep significant corrections and bear markets.
I have been long the S&P 500 since September 7, 2017 when it was at 2465.
*I also have a small Day Trading portfolio. Click here to view my day trades.

4 comments add yours

  1. Hi Troy, have you considered setting up a Patreon? I think a lot people would be happy to send some dollars your way just to keep you doing what you do.

    • I don’t want to start charging people for the daily posts. But thank you for the suggestion:)
      Regards,
      Troy

      • No no, I didn’t mean that, a Patreon is a like donation hub, not a platform to charge for your content. Basically, you could keep running your blog as it is, but say “if you like what I do, here’s a place where you can donate me some money if you’d like”. A lot of YouTubers and internet personalities earn a living this way, while doing their thing open in the world to everyone.

Leave a Reply to Troy Cancel