Stock Market Opportunity Come with Volatility

Stock Market Opportunity Come with Volatility


FLASH: The ‘easy money’ is coming off of Q-4 Sell-off

January produced returns worthy of an entire year.

  • Russell 2000 +11.7% YTD
  • NAS Comp +10.0% YTD
  • S&P 500 +8.0% YTD
  • DJIA +7.6% YTD

So, if you were in cash at year end, got the buy signal on 26 December then invested then you are making big money now.

Often, the best returns come after major corrections.

The Big Q: Is there more upside ahead?

The Big A: Probably, but looking for a test lower before moving beyond 2700 on the S&P 500 for good.

Since Q-4 of Y 2012, we have tracked all up and down moves on the S&P 500.

If last Tuesday’s close was a near-term peak, then the move was 16.44% or 353 S&P 500 pts. The average move from Q-4 of Y 2012 is 7.42%. This move was the 2nd best performer if the move is complete. Overall in the frame there have been 36 such up moves.

The best gainer was from 18 August 2017 through 26 January 2018 when the S&P 500 moved up by 18.44% or 447.32 S&P 500 pts. That move was followed by a drop of -10.16% over 13 days. Volatility may seem to have disappeared again but if we went back a year we could have said the same thing on 26 January

On 5 February 2018 the VIX rose by 20 pts in a single session.

The Big Q2: Could the fear be looking at us again?

The Big A2: Not yet, but it is obvious the easy money is on this move again.

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Neutral to Bullish in here.

Have a terrific week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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