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QQQ Seasonality

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QQQ Seasonality

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Citigroup Panic Euphoria

The below chart represents Cumulative ETF money flow.

We’ve been monitoring money flow into this group, causing a narrowing or market breadth, leaving the stock market vulnerable.  Visit our site www.stockbarometer.com to learn how to profit from the coming market move.

This is significantly strong, but on a contrarian basis, it can be bearish. Visit our Facebook page below to see our Roc view. Access all this data on our website below.

ETF Money Flow

This is one of our 300 market timing indicators to help traders and investors identify potential buy and sell points.

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The below chart represents ETF money flow. A significant change that is taking place in the financial markets is the shift of money into ETFs and the money leaving equity funds. This is significantly strong, but on a contrarian basis, it can be bearish. Visit our Facebook page below to see our Roc view. Access all this data on our website below.

etf money flow

This is one of our 300 market timing indicators to help traders and investors identify potential buy and sell points.

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The stock market is all about hope and fear.  Buying and Selling.  Certainty and uncertainty.

As an election approaches, you always have the potential that an administration can change.  This creates uncertainty.  Uncertainty creates pause.

In the case of the Trump election, there was certainty that he wasn’t going to win.  There was certainty that the party would remain in office and the only change would be new representation from that party.

Then along comes a Black Swan.

A Black Swan is when something happens that no one sees coming that has a great impact on our lives and that in hindsight, people tend to say they say it coming.  A Black Swan can be good or bad.  It can be as big as the Internet, or as dark as the housing collapse.  Point is, Donald Trump, the dictator of the Celebrity Apprentice, winning the presidency, is a Black Swan.  And we’re yet to see the full impact of his bring president, but it’s beginning to unfold in front of us.  So stay tuned.  This market will never be the same.

Where are we now?

Sentiment is about as bullish as we at www.stockbarometer.com have seen in some time.  If you watch financial news, the interpretation of his presidency is SO bullish, that it’s hard to find a negative news story.  That’s concerning.

The best way to show this is through a sentiment indicator.

Citigroup Panic Euphoria Model

As the market corrected going into the election, especially as Trump gained in the polls, you saw a traditional shift of certainty to uncertainty.  Then when the election results were in, and the world was shocked, the investors took over.  The net impact to the stock market was bullish because of the sectors that had been beat down over the past 8 years were now going to improve.  And the net impact of them improving will be good for the whole economy.

The next two weeks will be critical.  We have an options expiration, which tends to align with reversals and we also have an inauguration.  There is a ‘sell the inauguration’ trade theme developing.  And it may stick, given the level of hope and complacency we’re seeing.   Remember the Investor Psychology Cycle, and let me ask you – where do you think we are…

Investor Psychology Cycle

I’d say we’re somewhere between excitement and greed/euphoria.  Extrapolate this indicator over the Citibank indicator, and you get a pretty good idea why.

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The signal from the Citigroup Panic Euphoria Model – is potentially showing bearish activity for 2017. Subscribe to the Daily Stock Barometer (links below) to find out when to sell the stock market – AND access this data!

citigroup panic euphoria model

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This is one of our 300 market timing indicators to help traders and investors identify potential buy and sell points.

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The comment of Chinese Financial market

China has two major stock indices: Shanghai Composite Index and Shenzhen Composite Index. They are like the S&P 500 and Dow Jones Industrial Average which can show the performance of Chinese stock market.

First of all, let’s understand several features about Chinese stock market. In my opinion, this market is more irrational than American stock markets. The reason is that this is a young market which lasts for less than 40 years. We can imagine that there are many pitfalls for this developing market. Secondly, Chinese market doesn’t have enough derivatives to trade. For example, there is no option market in China and you cannot find any other derivatives in China except futures. And the second feature can be a big problem for investors because when stock market starts to become unstable, there is no derivatives to hedge your position. The best way is selling all the stocks. Thirdly, the Chinese government has restrictions on foreigners to invest in Chinese financial markets. You may find some problems when you want to open a stock account in Chinese local broker companies. But foreigners still can find a way to invest in Chinese market directly. Fourthly, there are several kinds of participants in Chinese stock market, such as government, stated-own business, common people, financial organizations and companies and foreign investors. Among them, government owns stated-own corporations and influences market greatly. Stated-owned corporations count in stock market because all stated-owned corporations are giants and significant to their industries in China. Foreign investors and common individual investors only occupy a small part of the market.

The situation of Chinese stock market

After several crashes from June 2015, Shanghai Composite Index decreased from 5178 to 3096. We can see it from the graph:

Advice on Chinese Stock Market

The volume shrank more than a half compared to that in June 2015. One year ago, people eagerly put their money into market because at that period, everyone could make money no matter what people bought. But right now, that is not the case anymore. The bubble burst and people calmed down. Now they try to find a chance to escape from market. That is attitude from individual investors.

Now, the GDP Annual Growth rate in China decreased to 6.5%. The government wants to spur economy because the data says China cannot develop as fast as it used to be. One method that government is doing is letting more companies issue IPO to gain funds. Now more than 600 companies wait to issue their IPO. At the same time, government encourages companies to collect funds in stock markets and issues many policies to loosen IPO requirements. To put it shortly, government encourages IPO in order to have a higher growth rate in GDP.

Next let’s check the foreign investors’ attitudes. Majority of foreign investors in Chinese stock market are financial corporations, such as UBS AG, JP Morgan and Citi group. They prefer the stated-owned corporations and Chinese Baijiu industries in Chinese market to small caps or high-tech companies. I think that the reason is that those stated owned corporations have a well-paid dividend and are backed by government. Moreover, American has better small caps and high-tech companies.

The last one is financial organizations and companies. Because the majority of Chinese financial corporations are stated-owned, they will follow government’s policies and instructions. If we can understand government’s will, we can easily predict those financial companies’ actions.

The Envision of market

For now the market is steady and it is in Ice age. In the short term, those indices will not go up or go down. The best way to make money is to pick up the potential individual stock. The reason that market is frozen is that common people want to escape from stock markets at a fair price but government wants to finance companies in order to maintain the growth rate of GDP. This dilemma makes stock market frozen. The proof is that although government issues many positive policies to support stock markets, people still have no interest and keep transaction volume low. And as far as I am concerned, this situation will last for a long time.

Trading advice

The most profitable opportunity in Chinese stock market now is IPO. A company’s stock price, on its debut in market, will rise 44% in the first day. Because of daily fluctuation limit, 10% fluctuation at most in the next trading days, in next several days, this company’s stock price will increase 10% per day. I am pretty sure that if you can win a bid for IPO, you will get greater than 100% return rate. The method to decide who win the bid for IPO is like a free lottery. If you win a bid, you definitely make a profit. If you do not win a bid, you will lose nothing. It is like an arbitrage. But it has drawbacks. All the investors in China know this method and all investors want to win a bid for IPO. Thus for every individual investor, the chance to win a bid is tiny.

Another opportunity is special treatment stocks (ST). Special treatment stocks are the companies that lost money for three years. If we grade them, they will have a grade below BB. Now it is the time for companies to prepare to show their balance sheets. Some special treatment stocks may made profits in this year and get rid of the name special treatment or ST. Investors will have a wonderful expectation on those companies and would like to buy their stocks. Those lucky companies’ stock prices will rocket to sky. Now we should do some researches about those potential special treatment companies and buy their shares as soon as possible. When their balance sheets go public, we can know whether those companies make profits and decide whether to keep or dump those stocks.

The third opportunity is the companies that behave well, pay well-dividends and split their shares. Chinese like the companies that split their shares very much. That strange fancy is from a weird idea that splitting shares is a sign of potential. We can pick up some potential companies, buy their stocks and keep them until their balance sheets go public.

Comment of GXC

Here is the graph for GXC from June 2015. We can compare this graph to Shanghai Composite Index above.

advice on chinese stock market

chinese stock market advice

Generally, GXC follows the similar pattern to Shanghai Composite Index, which means that GXC reflects the performance of Chinese stocks market. But this also reflects that GXC only invests the large companies in China. From the website, we can find that GXC puts money in Tecent, Alibaba, China Construction Bank Corp, Bank of China Ltd and so on. They are large corporations in China.

But here I want to point out that the combination of EXC is from several different stock markets. For example, Bank of China Ltd H is from Hong Kong market and Alibaba Group is in US market. And here is the problem. Bank of China Ltd is listed both in Hong Kong and China main land. The stock prices in those two markets do not behave in the same way. For example, they have different prices and pay the different dividends.

What I want to comment is that GXC reflects the behaviors of Chinese large corporations. But GXC’s choices of stocks don’t represent the performance of Chinese stock markets because the majority of those stocks are not listed in Chinese mainland stock markets.

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In 2017, as Investment Research Group, Inc. d/b/a www.stockbarometer.com expands its borders, we will be launching a new service called Stock Barometer Australia. Visit our site to start up.  Below is their weekly commentary:

Stock Barometer Australia Commentary week ending 12/23/16

ASX 200
We are seeing signs which warn of a potential down move. We are still in BUY mode, but if we close below 5510 then go to cash.

ASX

 

EWA
We are in cash here. This one is a little tricky as we had the dividend this week, but we exited immediately after this and remain in cash. With the dividend this trade was either a very small loss or gain depending on when one entered.

EWA

IWM
We remain on a SELL signal, and this past week saw the predicted retest of highs – and this appears to be setting up bearishly. We need a break below the 12/14 lows to confirm this.

IWM

DBA
This past week we had a buy signal then due to a lack of follow through we immediately sold (to cash in our case).
In this case it always seems hard to exit, after all, why not hold on and see what happens – bad idea. The close below the Monday lows on Friday is showing we did the right thing here.

dba

NCM
We are now on a BUY signal on the daily system having reached this on Thursday. The weekly system is a way off triggering, but we would advise taking profits on a short position if you are still in one. This represents a 13% gain.

NCM

SGG
We are still on a SELL signal here.

sgg

JJC
Further downside this past week as we are still not yet at a buy point. As we see in the chart below however we are sitting at the 38.2% Fibonacci retracement. It is no surprise to see a halt to the slide here. We could yet make a higher low and move higher, so stay tuned…

jcc

CBA
CBA has moved up this past week, and our stop has followed. We are still on a BUY here but will move to a sell with a close below 82 (marked in purple). This one has been frustrating but this trade will almost certainly result in a gain (barring a black swan event…)

cba

BHP
We are still on a SELL signal and are now at potential support, see white line after more falls this week. However, we could still see a move further to the yellow support line.

bhp

AUDNZD
We did not see the breakout this week and went to a SELL position during the week, for minimal loss or gain. On Friday we saw further downside.

audnzd

USO (or OIL)
We are still on a SELL signal and ended the week as we started pretty much.

uso oil

TLS
We went to cash this week for a small loss. Stay that way as we see which way this one will move. We believe there is a downside bias but lets wait for the stock to indicate the direction.

tls

GLD
We remain on a SELL with gold. The same arguments as last week prevail.

gld gold

Thank you for viewing our article.  Again, visit our website to sign up as we expect to launch this service in January of 2017.

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The signal from the ECRI – Economic Cycle Research Institute – is potentially showing bearish activity for 2017.  Subscribe to the Daily Stock Barometer (links below) to find out when to sell the stock market!

ECRI

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As the markets set up for a positive looking year end, this weekend’s update on the Citigroup Panic Euphoria Index is raising more caution:

citigroup panic euphoria index

Interpreting the citigroup panic euphoria index requires some subjectivity as the key is when it crosses below its moving average and gives a signal.  Consolidations can occur which delay the signal.  But at the end of the day, the buy signal is getting long in the tooth.  Raise your stops and get ready to position short.

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This is one of our 300 market timing indicators to help traders and investors identify potential buy and sell points.

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