The popular, and often accurate, Stochastic indicator is generating a ‘sell' signal on most of the major indexes. A ‘sell' signal is the typical interpretation when the stochastic indicator reaches overbought levels (>= 80), the faster %D line crosses below the slower %K line, and the %D line crosses back below the overbought level. This is pretty much the case on the Dow Jones Industrial Average, the S&P 500, the S&P 500 Mid-Cap index, the NASDAQ Composite, and the Russell 2000. Those indexes cover most major stocks.
A Stochastics sell signal is not a guarantee of a market pullback. But usually, a noticeable pullback will follow.
The next earnings release season is about to start. FactSet research is predicting the fourth consecutive quarter of declining profitability since the 2008 recession. More estimates are being cut than being raised.
Taking a look at the seasonal track record, the S&P 500 has averaged only a small gain over the next 5 weeks, and years with gains have occurred only slightly better 50% of the time.
There is no strong seasonal pattern in the major indexes over the upcoming earnings season. With declining estimates, declining technicals, and no seasonal pattern to speak of, the potential exists for a significant pullback over the next month.
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, please click on the following link: www.markettamer.com/seasonal
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