By Investor’s Yak

There are many variables occurring in the market this December 2015. FED meeting, Window Dressing, even an End of Year rally sometimes occur. As of Friday the December 11, the market finished the week with a deep pullback on heavy volume. Major indices will probably test their August 24 low price. If markets break below their low price on heavy volume, they will setup another new low price. However, if prices bounce off the August lows, a careful trader might make some short term advances.

It might be prudent to relax this Christmas, take your profits, stay in cash, and take a break until the New Year arrives. Many investors are waiting to hear from the FED during their December 15-16 meeting. It’s been a difficult to judge year. Each FED meeting has resulted in hints of increasing interest rates followed by procrastinating statements back peddling out of their hint. Each time a member of the FED speaks, the market reacts.

Future market direction will be determined by one of the following:

1 Bullish – New price gains above the 200 DMA and breaking out of TRs
2 Neutral – Trading range development between recent highs and prior lows
3 Bearish – A pullback busting below prior August 24, 2015 price lows

Event calendar affecting markets in November
15-16 December – FED meeting.
29-31 December – End of month window dressing; could extend into December.

By Investor’s Yak

Last week’s pullback (PB) ended on Monday with a reversal then finished the week up on Friday. Most of the market indices are still below the 200 day moving average (DMA). Before a new rally is in place, not only will the 200 DMA need to be penetrated, but prices must exceed trading range (TR) tops. Therefore, this weekly watch will continue into the Thanksgiving week. Future market direction will be determined by one of the following:

1 Bullish – New price gains above the 200 DMA and breaking out of TRs
2 Neutral – Trading range development between recent highs and prior lows
3 Bearish – A pullback busting below prior August 24, 2015 price lows

Event calendar affecting markets in November
28 November – Black Friday kicking of the Retail Christmas shopping season.
27-30 November – End of month window dressing; could extend into December.

By Investor’s Yak

This weekly watch has continued for a month and a half now and has finally performed a pullback (PB). To this point, the market rallied to the 200 day moving average (DMA) in just about all sectors but is currently back below it.

Now is the time to watch closely, and of primary interest is the final magnitude of the present PB. To estimate the best future market direction, watch the coming days and weeks to determine which of the following possibilities occur:

1 Bullish – A pullback stalling out at the prior August or September price lows
2 Neutral – A trading range forming between prior lows and the recent highs (around the 200 DMA)
3 Bearish – A pullback busting below prior August 24, 2015 price lows

NOTE:
Daily charts – indicate markets here and now want to pullback
Weekly charts – for the short term reflect a pullback should ensue
Monthly charts – suggest the market is bullishly strong and could finish the year without a bear run

Event calendar affecting markets in November
28 November – Black Friday kicking of the Retail Christmas shopping season.
27-30 November – End of month window dressing; could extend into December.

By Investor’s Yak

Again, little change in the Market last week, so please refer to our prior articles more coverage. Major market indices are hugging their 200 day moving average (DMA) and appear strong there. But since the market is extended, there is a good possibility for a price pullback. More time is needed to confirm whether a bull or bear direction will ensue.

Action Zone (AZ) Assessment:
* Daily AZ’s are still extended
* Weekly Charts show AZ #2 momentums completed triggering and have conviction to continue higher
* Monthly Charts, have completed a nice AZ #1 trigger an are still setting up for AZ #2

Event calendar affecting markets in November
28 November – Black Friday kicking of the Retail Christmas shopping season.
27-30 November – End of month window dressing; could extend into December.

By Investor’s Yak

There was little change in the Market last week, so please refer to our prior article for present status. Even after the October 28 FED meeting and third quarter (QE3) GDP Report, markets shrugged off the results. A rally has been characteristic of the entire month of October and Action Zones (AZ) are now toppy. Be prepared for a price pullback, but more time is needed to confirm whether a bull or bear direction will ensue.

Action Zone (AZ) Assessment:
* Daily AZ’s are still extended
* Weekly Charts show AZ #2 momentums completed triggering and have conviction to continue higher
* Monthly Charts, have completed a nice AZ #1 trigger an are still setting up for AZ #2

Event calendar affecting markets in November
28 November – Black Friday kicking of the Retail Christmas shopping season.
27-30 November – End of month window dressing; could extend into December.

By Investor’s Yak

Present observations for the Market (S&P500, NASDAQ, Russell 2000, and Dow Jones Industrial Average (DJIA)). All are now above their 50 and 200 day moving average (DMA) with the exception of the Russell 2000. The Russell 2000 is still below its 200 DMA.

Price Assessment:

• S&P500 – 3% below new yearly high prices
• NASDAQ – 4% below new yearly high prices
• DJIA – 4% below new yearly high prices

Action Zone (AZ) Assessment:

• Daily AZ’s are very extended but setting up another late stage trigger (i.e. well above 75% on the chart)
• Weekly Charts show AZ #2 momentums are at the trigger; AZ #3 price has high volume buy conviction
• Monthly Charts, still under construction for October, are triggering AZ #1 and setting up for AZ #2.

Last week, 11 of the 12 AZ stocks listed met with success. Obviously the move was further reinforced by the overall major Market indices which were also triggering their AZs. Interestingly, by Wednesday, the move peaked and reversed direction for just about all indices and stocks as well. It appeared to be the weak rally described as “Scenario 3” in our October 11 article.

However, during the very early hours Thursday morning, the European Central Bank (ECB) was hinting at keeping interest rates low. And before the NYSE opened in the United States, S&P500 Futures were already trading at prices higher than Wednesday’s close. Investors subsequently rallied the market and about two hours before the Thursday closing bell, the ECB made another announcement indicating quantitative easing (QE) possibilities by December of this year.

Between both the ECB and FED stimulating markets, there is a strong potential for a “Scenario 1” rally also described in our October 11 article.

Event calendar affecting markets in October
8 October – FEDs September Meeting Minutes
9-11 October –possible IMF announcement of China as a world Reserve Currency
27-28 October – Fed meeting
29 October – Third Quarter GDP Report

By Investor’s Yak

Action Zone (AZ) observations for the Market (S&P500, NASDAQ, Russel l 2000, and Dow Jones Industrial Average):

• Daily AZ’s are extended but setting up a late stage trigger well above 50% on the chart – be careful
• Weekly Charts show AZ #2 momentums are triggering but AZ #3 price conviction is still questionable
• Monthly Charts, still under construction for October, are triggering AZ #1 and setting up for AZ #2.

Major Indices are holding above the 50 DMA and weekly charts show AZ #2 indicates improved momentum to go higher in the longer term. This could turn into a fall rally which may allow the year to end with positive gains. The 5 bull/bear direction scenarios discussed in our October 11 article are playing out with a move toward the 200 DMA. Continue monitoring market progress for signs of stalling near the 200 DMA. Weakness is still sufficient for an early 2016 bear reversal. Only future market conditions will confirm or deny that assessment.

Event calendar affecting markets in October
8 October – FEDs September Meeting Minutes
9-11 October –possible IMF announcement of China as a world Reserve Currency
27-28 October – Fed meeting
29 October – Third Quarter GDP Report

By Investor’s Yak

Action Zone (AZ) observations for the Market (S&P500, NASDAQ, Russell 2000, and Dow Jones Industrial Average):

• Daily AZ’s are extended, and prices could therefore encounter a slight pullback.
• Weekly Charts are setting up AZ #2 momentums, but AZ #3 price conviction is still questionable
• Monthly Charts, which are incomplete for October, are triggering AZ #1 and setting up AZ #2.

Presently it is important to monitor market progress for signs pointing to either a bull or bear trend. But keep in mind, weekly and monthly charts do not support day trading success very well. We will be examining the market in the coming weeks and months to determine which of the following scenarios play out.

1. Bull rally above the 200 DMA which exceeds the 52 week price highs.
2. Stalling rally above the 200 DMA which is arrested at or below the present 52 week price highs.
3. Weak rally blocked at or near the 200 DMA.
4. Pullback consolidation testing prior August or September price lows followed by an end of year rally.
5. Bear pullback busting below prior August 24, 2015 price lows.

Event calendar affecting markets in October
8 October – FEDs September Meeting Minutes
9-11 October –possible IMF announcement of China as a world Reserve Currency
27-28 October – Fed meeting
29 October – Third Quarter GDP Report

By Investor’s Yak

Homebuilders have now declined below both the 50 and 200 day moving average (DMA). Perhaps soon, the bearish “Death Cross”, distinctive of all the other sectors and major indices, will characterize Homebuilders too. The following represents the correction percentage of major market indices from their most recent high prices:

• Down 12.5% (S&P500) – just 2.5% above the October 2013 low price
• Down 16% (Dow Jones Industrial Average) – below the October 2013 low price
• Down 18% (NASDAQ) – 4% above the October 2013 low price

What does this all mean? For the right now here today, it means the market is sick. However, if the market attempts a fall rally later this forth quarter, it may first pull back to the 2013 lows. Watch for market reaction during the October events listed below. These events may offer an opportunity to find strong stocks during pull backs prior to the next rally.

Event calendar affecting markets in October
8 October – FEDs September Meeting Minutes
9-11 October –possible IMF announcement of China as a world Reserve Currency
27-28 October – Fed meeting
29 October – Third Quarter GDP Report

By Investor’s Yak

Homebuilders now represent the only sector holding above the 50 and 200 day moving average (DMA). Healthcare, Pharmaceuticals, and Biotechnologies have finally joined all other sectors by breaking down below those moving averages. And they have been penalized with the bearish “Death Cross”.

With so much devastation in the market, it’s hard to expect much for an end of month rally. Politics surrounding the retirement of Speaker of the House John Boehner and end of fiscal year budget could influence the market in either direction. If the market does rally this week it will probably be short lived. Use caution going forward and keep stop losses in place. Polish up your stock list by looking for strong stocks during down markets, and consider developing a list of stocks to short.

Event calendar affecting markets in September
7 September – Labor Day
16-17 September – Fed meeting
28-30 September – End of month and quarter window dressing; could extend into October.
30 September – end of Fiscal year 2015 (2016 budget must be passed)