Ian Woodward's Investing Blog

Stock Market: Bonuses vs Jobs

With the Constant Yo-Yo we are tolerating of three to four days up and down in the Stock Market these days, the only worthwhile Game Plan is to play it both ways to that tune.  The Large Players don’t want to see this Market fall right now, especially when they can taste their bonuses.  Yet the Global status of the Debt Crisis pokes its head up every few days to trot the market down.

Seasonality suggests we now look forward to the Thanksgiving and Santa Claus Rally, and that is not a bridge too far.  However, the Greek and Super Committee gang of twelve provide the current dark clouds to potentially spoil the fun.

The Bucket Brigade is still flying high to keep you on the right side of the Market since the Rally began.  The twelve Drummers Drumming Scenario is half way with a count of six.  For those who do not recall, the market will break %B 0.5, or the Middle Bollinger Band or the 20-dma line…take your pick, usually within twelve days.  When the internals are this strong, any correction is short lived unless there is a Major Surprise of negative news.  We are back in safe territory sitting with %B of the S&P 1500 at 0.72, so we have a decent cushion.  We want to see the Index trot up higher and beat the recent 0.98 reading on 10/27/2011 for the count to get reset.  I’m sure you know how to read this chart by now…Arms ratios on the Left, Bollinger in the Middle and W&B on the right, but the latest “Good Stuff” is in Red circled in Blue :

So here is the Game Plan for the OPTIMISTIC Scenario that takes us into the New Year.  In a couple of words “Hockey Stick”:

Net-net:  As long as %B for all the Indexes, of which the S&P 1500 is a typical Surrogate, stays above 0.5 and preferably 0.7 the Rally is safe and we head into a Santa Claus Rally.

Best Regards, Ian.




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Disclaimer: Commentaries on this Blog are not to be construed as recommendations to buy or sell the market and/or specific securites. The consumer of the information is responsible for their own investment decisions.