What is going on in the market? Anyone not born yesterday knows the markets are not acting normal and are overdue for a moderate pullback. Jason Goepfert at SentimentTrader.com reported recently that the McClellan Oscillator and Summation Indexes are both well into overbought territory.
However, he also reports that the Smart Money/Dumb Money ratio is 67 to 29. This high a separation of the ‘Dumb Money', the individual investors, versus the ‘Smart Money', the institutional investors, suggests the big players have been holding back. If they give up waiting for a pullback, this rally could really take off.
Technology stocks are also stating to perk up. XLK, the Technology ETF, has stepped to highs not seen since 2001. Volume is increasing. The rally will enter a new phase if the individual investors start feeling they may be missing a big rally. They will typically start jumping into tech stocks and other riskier assets, aiming to ‘juice up' their returns.
OIH, the Oil Services ETF, has started another up cycle.
I've been amazed at the number of stocks I can find that, on either the daily or the weekly charts, I can draw a supporting trendline that the stock seems to be following religiously. I then draw a parallel line, move it up so it touches the tops, and find the stock has been perfectly staying within the channel.
I've noticed over the years that there are times we go through ‘rolling corrections'. Individual stocks and whole sectors can correct, while most of the other sectors continue advancing. The large number of ‘breakouts' I'm seeing going through individual stock charts suggests that may start happening if we don't get an overall market pullback.
Good trades right now are where a stock or ETF suddenly quiets down. In this market, they are not staying quiet for lone. In today's Seasonal Forecaster, I have an ETF about to break one way or the other, and a way to trade it for a possible 14% return within a few weeks.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
Also on Market Tamer…
Follow Us on Facebook