{"id":20342,"date":"2022-11-15T07:30:48","date_gmt":"2022-11-15T12:30:48","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20342"},"modified":"2022-11-15T07:30:48","modified_gmt":"2022-11-15T12:30:48","slug":"a-historic-rally-is-quickly-running-out-of-fuel","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/a-historic-rally-is-quickly-running-out-of-fuel\/","title":{"rendered":"A Historic Rally Is Quickly Running Out of Fuel"},"content":{"rendered":"

Jeff’s Note:<\/strong> While chaos hits the stock market, I’ve shown my subscribers how to take back control of their financial future with a little-known class of trades called “Retirement Codes<\/a>.”<\/p>\n

These codes could help you make 79 years of typical market returns in just two<\/em> days – regardless of where the market goes. That’s because they signal big market moves before anyone knows what’s happening.<\/p>\n

All you have to do is type the code into your brokerage account and then close the trade to potentially make quick, low-risk profits.<\/p>\n

For more details on how to leverage the power of these codes yourself, click right here to watch my interview<\/a>. I even reveal my next “Retirement Code” trade for FREE.<\/p>\n

\n

Last week’s stock market rally was historic.<\/p>\n

The S&P 500 gained almost 6%. The Nasdaq Composite Index blasted 8% higher.<\/p>\n

The action was strong enough to cause a lot of financial television talking heads to declare, “The bear market is over. Stocks will go higher from here.”<\/p>\n

Maybe…<\/em><\/p>\n

After all, we are in a seasonally bullish time of the year. The stock market tends to perform well in November and December.<\/p>\n

But the problem is last week’s rally used up a lot of energy. There’s not much fuel to propel the market higher from here…<\/p>\n

Today, we have a reason to be concerned about the short term.<\/p>\n

Just look at this chart of the S&P 500 bullish percent index (BPSPX)…<\/p>\n

\"Chart\"<\/div>\n

A bullish percent index measures the percentage of stocks in a sector or an index trading with positive technical patterns.<\/p>\n

It’s a percentage. So, it can only drop as low as zero or rally as high as 100.<\/p>\n

Most sectors are overbought when the bullish percent index rallies above 80. Most sectors are oversold when the index dips below 20.<\/p>\n

But when it comes to broad-based indexes – like the S&P 500 – which hold stocks in multiple sectors, the parameters are a little tighter.<\/p>\n

For example, the S&P 500 is overbought when the bullish percent index climbs above 70. It’s oversold when the BPSPX dips below 30.<\/p>\n

Trading signals occur when the BPSPX reaches overbought or oversold levels and then reverses.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

On the chart below, the red arrows mark the four times over the past year when the BPSPX turned lower from overbought conditions – thereby generating a sell signal. <\/p>\n

Here’s how the S&P 500 performed following the first three of those signals…<\/p>\n

\"Chart\"<\/div>\n

In all four cases, the S&P 500 started to decline within just a few days of the BPSPX sell signal.<\/p>\n

Last November, the index fell 200 points in one week. In January, it lost 450 points in less than one month. In less than three months, the S&P 500 dropped over 900 points following the sell signal in late March.<\/p>\n

And the most recent signal in mid-August – which happened when all sorts of talking heads were declaring the bear market was over – led to a 600-point drop in about six weeks.<\/p>\n

This is important because if you take another look at the BPSPX chart, we’re setting up for another sell signal soon.<\/p>\n

The BPSPX hasn’t turned lower yet. But it’s above 70. So when it does turn lower, we’ll have a new sell signal for the broad stock market. <\/p>\n

That could happen as early as this week.<\/p>\n

Yes, it’s possible the market could press even higher in the days ahead.<\/p>\n

But with the BPSPX already extended above 70, the gains are limited. Any strength early this week will likely be given back in the weeks ahead.<\/p>\n

And if you recall the monthly S&P 500 chart I shared with you on November 4<\/a>, a decline toward the end of this month could set the stage for a waterfall decline in the months ahead.<\/p>\n

Traders should be careful here. <\/p>\n

Until the BPSPX works off its current overbought condition, there’s limited upside to the stock market. And the downside could be substantial.<\/p>\n

Best regards and good trading,<\/p>\n\n\n
\"signature\"<\/td>\n<\/tr>\n<\/table>\n

Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

In today’s mailbag, Rob W. shares his thoughts on Imre Gams’ essay from last Thursday<\/a>…<\/p>\n

\n

I think the Fed will likely pivot in March or April when demand for energy slows and the worries of a cold winter will have abated.<\/p>\n

Whether or not there was a cold winter will not matter by that point and the biggest spikes in natural gas and crude typically occur in late January\/early February.<\/p>\n

If there is a cold winter, then the pivot will most likely happen in April… perhaps even May.<\/p>\n

– Rob W.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. Keep them coming at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s not much fuel to propel the market higher from here\u2026<\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-20342","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20342","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20342"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20342\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20342"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20342"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20342"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20342"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}