Earnings season starts this week.  If earnings can stay robust, the market is likely to push a lot higher, possibly all the way back to Sep 2018 high.   The question is how much of this robust earnings expectations are already factored into current stock prices. 

According to some analysts, if this high expectation is not met, market may turn into a drama queen.

On the other hand, according to Wall Street Journal this weekend, Fear of Missing Out is likely to push the market a lot higher. 

Actually if you want to get a head start on what stocks may be doing next, pay attention to the bond market.   Bond movements have a way of preceding stock movements.  And according to WSJ, bond investors may be getting a bit suspicious of the Fed. 

On Thursday 3/28 we wrote: “Our trading system is telling us that by end of Friday stocks are likely to end up higher than Thursday’s closing.”
 
And indeed, that is what happened.  All major stock indices $SPX $COMPQ $RUT turned upward at end of day on Friday.  That is always a bullish sign, as traders are unlikely to buy late on Fridays if they are feeling nervous about the market.
 
Furthermore, the late-day buying happened on both Thursday 3/28 and Friday 3/29.  This indicates that the buying may continue tomorrow Mon 4/1. 
 
We alerted you by email on Thursday and Friday about the bullish change of mood.

ANALYSIS
Monitoring the charts today was bit like watching paint dry.  Hard to keep your eyes open for most of the day.
 
However, by 3:30PM EST, we did see that $RUT IWM TNA acting much more bullish than $SPX SPY $COMPQ QQQ TQQQ.
 
So we emailed an alert to our subscribers, and bought some TNA shares ourselves.  You can see our open positions and recent buy/sell here.

SIGNALS
With $RUT IWM TNA suddenly acting much more bullish, the long-term indicators are actually conflicting with each other.  However, we still think that the high of last Friday March 22 is a tough resistance level to surpass for now.
 
So here are the signals that our trading system is telling us.

ANALYSIS
Since last Friday March 22, we have doubled the number of subscribers. 
We want to take this opportunity to send a warm welcome to all our new readers.
 
Today we went back through our previous emails and found this message, which we sent out on February 23.
“And the day of reckoning is unlikely to be Mar 1 which is the deadline of the trade deal.
It will most likely be Mar 20 when the Fed announces results of the next FOMC meeting: hike, cut, stay put?”
 
So that proved to be prescient, didn’t it?    :-)

Right now, our trading system is telling us that change is coming.  However, in the short term, it’s neither what the bulls nor the bears are expecting.
 
For the last 6 months, we have been trading in a strong directional market. 
First stocks went straight down.  Then they went straight up.
 
So we all have been used to catching a ride on the strong directional waves.
We temporarily forget that market can spend a long time in a tight range.
 
And that is what our system seems to be telling us now.
 
SIGNALS
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See our most recent trades here.

ANALYSIS
Today turned out to be neither Turnaround Tuesday nor Terrible Tuesday.
It’s more like Tough Tuesday.  Tough for both the bears and the bulls.
 
This morning, we sent out this alert:
 “$COMPQ, $SPX and $RUT all gapped up this morning, and thing are looking bullish at first glance.  However, not all our indicators have confirmed that this is a true end of the big dip and the start of a new major Up Segment within an Up Trend.

Sometimes this kind of quick turnaround is a setup for a re-test of March 22 high and typically the start of a bigger drop.  We are choosing to wait for further confirmation at this point.”
 
That turned out to be the right move as $SPX, $COMPQ, and $RUT all marched down most of the day, shaking out the weak bulls.  But the bears got a surprise surge in price at day end as well.
 
SIGNALS
We are observing an interesting change in the long-term trend as shown by the weekly indicators.

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See our most recent trades here.

A number of times last week, we wrote in our emails:
“If you are long any of the above indices or ETFs, consider taking partial profit.  Or just fasten your seatbelt for now.  It may be bumpy soon.”
 
We hope you had the opportunity to lock in profit from your long positions in SPY, QQQ, IWM, TQQQ, TNA, SSO etc.

We also hope you took our advice and enjoyed a long weekend, instead of having to struggle with the market on Friday and today.
 
It has not been fun for traders who bought into the exuberance after FOMC announcement on Wednesday.  Thursday March 21 was a major bull trap day, and chances are a number of those bulls got stopped out on Friday.
 
We can’t tell you precisely why the market started selling hard on Friday.  But as you may have noticed, our trading system alerted us to this big dip earlier last week.  
 
So even though it's not 100% perfect, we go by whatever our trading system says.
 
This morning, we sent out this alert:
“There are lots of bull traps and head fakes this morning.
We are not done with this big dip yet for $COMPQ, $SPX and $RUT.”
 
So the question now is will tomorrow be Turnaround Tuesday or Terrible Tuesday? 
Furthermore, is this up trend still intact?

Subscribe to our FREE Buy/Sell Alerts to get the complete list of signals from our trading system, and our trading plan.

See our most recent trades here.