I just got a sell signal on my 60-minute chart of the S&P 500. As I mentioned yesterday the stock market volatility is shrinking. We saw the stock market rally momentum exhaust itself last week and are now in a slow drifting top characterized by low volatility, which can continue into next week.
There are trades lining up though.
First here is the 60-minute chart.
The signal I’m talking about is the 60-minute stochastics on the S&P 500.
This is happening with the 20-day Bollinger Bands coming together as I mentioned yesterday.
However, I’m not expecting a big sell-off right this second and we should expect the market to drift into next week’s FOMC meeting.
One thing that would be interesting to see is if BOTH the hourly Bollinger Bands and daily Bollinger Bands come close together. That’s a rare thing that hasn’t happened probably in a but could easily happen next week. The daily has done it, but the hourly will do it if the market just continues to drift into next week as it has been doing.
However, after next week the stock market is going to be experiencing a buying vacuum, because the stock buybacks that have been so important won’t be happening for the four weeks going into the April earnings season.
That’s when companies enter a quiet period in which they can’t do share buybacks.
The big message I’m trying to convey for you is that the past big cap tech fad stocks such as FB and AAPL are still not acting well and the S&P 500 and other indices are now so overbought and the rally is exhausted so there is no point in just throwing your money into them right now. If you are tempted to buy just wait and let things consolidate for as nothing is going to run away from you today.
With the S&P 500 in the 2800-2850 resistance the risks are too the downside.
There are trades working though.
You need to focus on individual stocks and sectors outperforming the market and breaking out on there own.
Use my Two Fold Formula to help identify the best patterns in the best stocks to buy.
Personally, I’m not trying to trade or time the S&P 500, but am shorting weak stocks with a portion of my money and going long in strong sectors. I’m acting more a hedge fund and focusing on this in my private Power Investor Group.
And you can also use other trading strategies to make money in a market like this too.
For example, Jeff Bishop is a super-smart options trader and instead of just playing SPY or AAPL is killing it in options.
Jeff quietly built a valuable reputation among serious traders for his uncanny ability to consistently score double, triple… even 4x digit returns with options!
He’s now sharing his options strategy in a book you can grab here.