Daily Stock Market Update & Forecast – April 24th, 2017

State of the Market Address:

  • The Dow remains below 21,000.
  • Shiller’s Adjusted S&P P/E ratio is now at 29.17 Arguably the second highest level in history (if we adjust for 2000 distortions) and right behind 1929 top at 29.55.
  • Weekly RSI at 67.36 Remains at overbought levels. Daily RSI is at 56.17 – neutral.
  • Prior years corrections terminated at around 200 day moving average. Located at around 17,500 today (on weekly).
  • Weekly stochastics at 60.71 Neutral. Daily at 49.33 – neutral.
  • NYSE McClellan Oscillator is at +7. Neutral.
  • VIX/VXX remain near their historic lows. Commercial VIX long interest was slightly lower this week Now at 79K contracts net long. 
  • Last week’s CTO Reports suggest that commercials (smart money) are shifting their positioning to net short.  In fact, short interest jumped dramatically as compared to last week. For instance, the Dow is 6X, the S&P is at 2.5X, Russell 2000 is at 3X and the Nasdaq is at 5.5X short. That is a significant short position against the market.

In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead.  Plus, the “smart money” is positioning for some sort of a sell-off.

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