Currently, the short-term trend for the S&P 500 is NEUTRAL. The intermediate- and long-term trends are still very BULLISH. There is No trend in the market at this time. It is neither overbought or oversold.
The SPX is in a ‘non-trending’ market. I expect the next retracement to be completed by the end of April. I plan on taking advantage of this summer’s rally.
I am anxiously watching the 50-day moving average for the next direction as to whether stocks are about to roll over. This moving average is one of the most-watched technical indicators for institutional firms and helps shift market psychology. I am still looking for much higher highs in the stock market throughout 2017.
The PMs
As I have mentioned, I am expecting a pullback/consolidation in the equity markets.
I also expect gold to cross $1300.00/oz. and silver to breach $19.00/oz. by the end of April.
In addition, I am expecting a “buy-in-May” event in 2017. This could begin our rally with the SPX reaching into the 2500 area during the summer.
This market is NOT bearish, so I would suggest that you not trade against this very strong BULLISH UPTREND.
The Importance Of Sentiment
The market's direction is driven by sentiment or social mood. Forget about logic when it comes to this market. That's why so many traders were looking the wrong way when Trump won the election.
Market sentiment in equities clearly suggested that we were heading higher in early November of 2016, regardless of who won the election.
Social experiments conducted over the last 30 years have proven this to be real, despite the public’s belief to the contrary.
Market bottoms and tops typically occur when sentiment reaches an extreme. For instance, when Wall Street is euphoric after a sustained rally, it suggests buying power is exhausted. When there is an exceptionally high number of bears following a sustained downturn, a bottom will be close at hand.
The Consumer Confidence index reached its highest level since December 2000, helped by America’s perception about business conditions and the job market. Small-Business Confidence is also high. The National Federation of Independent Business, which represents small businesses, says optimism is at one of its’ highest levels in more than four decades, based in part on expectations of forthcoming positive developments in Washington. The National Association of Home Builders says that builder sentiment rose in March to its highest level since June 2005.
Bottom Line?
There is fear in the market place.
If you do not have a set of rules for trading, then you should definitely time your trades.
Patience pays off using MRM — the Momentum Reversal Method.
One of the key tenants of MRM trading is to wait for the right trigger/event and then get in early. I find this is one of the most difficult aspects for traders to understand and to master.
Recent Trades:
I currently have four active trades that I think will take off with the market's next swing.