What’s Making Stocks Great Again?

December 12, 2016

Weekly Market Outlook

By Geoff Bysshe


This week’s Market Outlook is late because I needed to figure out the data behind the market secret covered below.

mktoutlook-20161211-600

As traders or investors, we can probably agree on the fact that too much of a good thing usually doesn’t end well.

However, an ‘overbought’, or ‘over exuberant’ market can also be indicative of more good things to come.

So which is it right now?

Has Trump’s mantra of let’s ‘Make America Great Again’ translated into stocks?

Or is the ‘Trump bump’ a short covering, naive bull rally that will go the way of his Atlantic City casinos (bankrupt)?

Fortunately, we don’t need to make such predictions, because the market will tell savvy traders in ways like this…

1. MarketGauge’s automated ETF Sector model showed that the market believed two sectors would rally regardless of the election’s outcome – Financials and Transportation (for more on how and why we knew this, watch this training before it expires on Sunday night)

2. A simple pattern, which could be the single most powerful one-day indication of the future trend in the market that I’ve found in my 26 years of trading, reveals the market’s bias.

The pattern is simply...

Did the market close over the prior day’s high?

In the right context (that’s the real secret), this will tell you what’s going to happen next, but…

Sometimes the market does unusual things, and in the current condition, historically speaking, too much of a good thing MIGHT be problematic.

That’s where this week’s delayed release of Market Outlook comes in.

Specifically, the SPY and the IWM have closed over their prior day’s high for 5 days in a row!

The mainstream media will report the number of up days in a row, but they are not yet aware of this pattern (please don’t tell them).

Five days in a row of a close over the prior day high is highly unusual!

So is it overbought or the perfect breakout?

Well, the last time this happened in the IWM, it occurred 7 times (July 2013), and the market returned to the same prices before exploding higher to the highs we’ve experienced now (but you had to be patient).

Prior to the 2013 retracement, there was a pattern in 2010 which led to a pause in February prior to a massive rally!

In short, the recent rally in IWM is extraordinary, but it’s bullish, not delusionary, and if we see a pullback to levels discussed in this week’s video, it’s time to look long and buy.

To see why, watch this weeks video.

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