Despite all these positive metrics, the market is still must break its pattern of intermediate term lower lows and lower highs. The metric that gives me confidence is Money Flow (the green splotch below price on the Chaikin Analytics platform screen shot left), which had remained green during the entire pullback and has been increasing in strength during this current up move. We have institutional money buying up equities and therefore the wind at out back as small time traders.
But like institutional traders, we wait for the O/B - O/S oscillator to turn (become oversold)..whether buying the index itself or on individual stocks we're interested in buying from our watchlist. We avoid pulling the trigger when the market is attempting to clear OVERBOUGHT by looking for a pullback below 30 (graph lower left) OR (even more powerful a signal) a reversal in the oscillator to the upside. Green lights on the graph above, including an oversold or rolling up oscillator is the penultimate market condition for buying.
Now, the Fed needs to NOT surprise the market this week with some dumb overly aggressive move, and companies need to demonstrate through earnings that the market is worthy of its recent and continued run.
You can check Market Conditions on the ChaikinPowerUser site every day to get a trend of some of the key Chaikin fundamental and technical factors that drive market activity. Because the Power Gauge is so powerfully predictive of how an individual equity is likely to perform relative to the market (S & P 500) over the balance of the year, over the past 3 years we've been comparing bullish/very bullish to bearish/very bearish stock Power Gauges, then rolling up the ratios and trending the data to form our directional bias, which we now move to cautiously bullish, but not yet oversold.
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