The Price Action Report – Friday, October 24, 2014 [Premium]

The Price Action Lab Report includes a market recap and premium analysis and it is delivered daily before the market open. The premium analysis focuses on high probability setups in ETFs and S&P 500 stocks. Click here for more details.

Market Recap – October 23, 2014

U.S. stock indexes rose on Thursday after a strong opening. The S&P 500 rose 1.23%, NASDAQ gained 1.60%, the Russell 2000 added 1.79% and the Dow climbed 1.32%.

Bond prices fell with the 10-Year Note yield rising to 2.28%, up 5 basis points. Crude oil prices rebounded with the spot price dropping 1.90%. Precious metals prices were mixed with spot gold falling 0.73% and silver rising 0.15%. The US dollar was steady versus the Euro at $1.2646.

Comment: Shorts will be squeezed to liquidation before the market enters into a serious correction mode, unless there is a black swan that causes bulls to abandon their plans of a quick transfer of wealth from the bears. This is how the market has operated for a long time and anyone who does not understand that the fuel for the rallies comes from people who think logically and expect a decline should stay away from the markets. You can think logically and yet be wrong in the markets. I learned that by missing a strong rally in late 1990s when I was thinking in terms of valuations while watching the market going up while my cash was sitting in a savings account doing nothing. I thought logically then and I was wrong. One must think only in terms of statistics in the market and use some common sense. Strict logic is often useless in this domain.

Short-term Technical and Quantitative Analysis

There are two new open positions, one in a commodity ETF and another in a fixed income ETF. The table below shows three open positions and eight pending setups.

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That Was Not a Correction But a Reversion to the Mean

The recent drop in stock prices was a normal reversion to the mean, as it is evident from statistics. On the other hand, the 2010, 2011 and 2012 drops were something more than a reversion to the mean, possibly due to the fact that there was more uncertainty then about rates. Given the statistics and also the expectations about rates, only a black swan can prevent the market from making new highs at this point.

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The Price Action Lab Report – Thursday, October 23, 2014 [Premium]

The Price Action Lab Report includes a market recap and premium analysis and it is delivered daily before the market open. The premium analysis focuses on high probability setups in ETFs and S&P 500 stocks. Click here for more details.

Market Recap – October 22, 2014

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A Lesson For the Bears From 2007

Bears almost never get a top where they want it. During 2007, the S&P 500 fell below its 200-day moving average and then rose above it three times before forming a top and in the meantime it also made new highs squeezing shorts hard.

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The Price Action Lab Report – Wednesday, October 22, 2014 [Premium]

Daily Market Recap and Premium report delivered before the market open. The premium report includes analysis of ETFs and S&P 500 stocks with focus on short-term high probability setups. Click here for an example of a daily premium report.

Market Recap – October 21, 2014

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S&P 500 Low Volatility ETF New All-Time Closing High

Although some may believe that the market is in correction mode the last three days amount to a short squeeze, SPLV, the SP500 low volatility ETF made an all-time closing high yesterday. The theory of parallel worlds applies to the market too.

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The Price Action Lab Report – Tuesday, October 21, 2014 [Premium]

Daily Market Recap and Premium report delivered before the market open. The premium report includes analysis of ETFs and S&P 500 stocks with focus on short-term high probability setups. Click here for an example of a daily premium report.

Market Recap – October 20, 2014

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