Buyers' 1-2 Punch For Stocks


  • Jason Goepfert

    Jason Goepfert

    Published: 2019-06-06 at 10:31:08 CDT

A one-two rally

The S&P 500 fell to a 50-day low on Monday, and the charts didn’t look good, but they hid a lot of underlying potential. Both Monday and Tuesday saw eager buying pressure under the surface, and Tuesday’s one-day jump in the S&P was the largest in nearly six months.

When the index saw such a big jump, and / or buying pressure was widespread, gains had a strong tendency to continue. Returns over the next 2 months were particularly impressive, especially the risk vs reward.

A crude bear

According to media reports, crude oil has dropped into a bear market. Ignoring the semantics, it has dropped 20% from a multi-month high that was less than 50 days ago.

Other times it quickly dropped 20% from a peak, it tended to keep dropping. But it was an inconsistent signal, at best, for stocks, the dollar, and bonds.

Emerging market recovery

The McClellan Oscillator for emerging markets has risen above 30 for the first time in months, after falling to a very low level. This kind of change in momentum in the stocks underlying those markets has led to further upside over the next month 7 out of 8 times.

Speaking of momentum

The 20-day Oscillator for the Nasdaq 100 fell to -60. The Backtest Engine shows only 19 days since 1999 have matched this, leading to a 6-month gain all 19 times.

This post was an abridged version of our previous day's Daily Report. For full access, sign up for a 30-day free trial now.

The post titled Buyers' 1-2 Punch For Stocks was originally published as on SentimenTrader.com on 2019-06-06.

At SentimenTrader.com, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.


Follow us on Twitter for up to the minute analysis of market action.


Not ready to signup up for a free trial yet?

Signup for our Daily Lite email to receive highlights of our daily report, research and studies.



RSS Feed

Subscribe to the Blog RSS feed

Recent Blog Posts


As mentioned in...

Brought to you by:

Sundial Capital Research Logo