Blair Jensen | TalkMarkets | Page 6
President of Downside Hedge
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Blair Jensen is President of Downside Hedge which provides market commentary and hedging strategies for individual investors. His development of a stock market sentiment indicator based on the Twitter stream is changing the way investors and traders view ...more

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Raising Cash
Over the past week my core market health indicators continued to fall. Most notably was the measures of market quality, which fell below zero.
2300, But No More
Traders are still only looking up to about 2300 on the S&P 500 Index. There is little fear for prices below the market.
Market Quality Indicators Drifting Lower
Market quality often leads the other indicators by several weeks so, at the moment, we don’t know if it is signaling a intermediate term trend change or noise that won’t be reinforced by other indicators for several weeks.
Support And Resistance - Dec. 18
For the S&P 500 Index, right now there is strong resistance at 2300. A cluster of support lies between 2240 and 2250. Below that is 2200.
Core Indicators Fall
Measures of market quality continue to inch toward the zero line and will likely need a rally next week tor remain positive.
Time For A Rest
As the market pushes higher, sentiment is starting to wane. Daily sentiment is falling with each move higher as more traders are either calling for a top or the need to consolidate recent gains.
Breadth Improves
Breadth measures are confirming the move higher in the market, but measures of market quality are still lagging.
Rotation Amid Overbought Conditions
The market is rotating into leading sectors and out of defensive sectors with extreme optimism. The extreme readings in daily and 7 day momentum suggest that we may need more of a pull back to relive some pressure.
Adding Exposure Amid Weak Breadth
My core measures of risk have gone positive, but measures of breath and market quality are deteriorating. Add to that, measures of trend are overbought.
Bouncing Around - Friday, Nov. 18
Market internals are repairing themselves in anticipation of a rally to new highs, however, we may need a bit of backing a filling before moving higher.
Bulls Get Vocal
The rally in SPX blew right through every resistance level tweeted by traders until it hit recent highs at 2080. The next resistance level is 2200, but there is a dearth of tweets calling for any higher levels.
Off To The Races
The panic didn’t materialize and now the market is trying to normalize itself. As a result, we go back to normal portfolio allocations based on core indicators.
Bears Get Vocal
The bears are getting vocal on the general market, but the bulls haven’t given up yet. Individual stock sentiment as measured by the number of bullish stocks is still holding above bear market levels.
Market Risk Warning In Place
We have a market risk warning in place. It’s time to aggressively hedge until the current storm passes.
SPX Range Is 2120 To 2160
Just a quick note this week. The current range of support and resistance for the S&P 500 Index is between 2120 and 2160. A break below 2120 (on a closing basis) will carry quickly to 2100, while a break above 2160 should carry back to 2180.
Danger Signs
The risk of a 10% decline from current levels is rising. Breadth is showing weakness and investors are moving to safety. We don’t have a market risk warning yet, but with risk rising it’s time to start watching the market closely.
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