Jeff Clark's Market Minute

The Air Is Getting Thin

The stock market’s winning streak continues.

We’re eight weeks into 2019, and we’ve seen eight straight weeks of higher stock prices. The S&P 500 is up almost 12% in less than two months. The momentum is strong. The price action is undeniably bullish. And it feels like stock prices will just keep pressing higher, forever.

But, the air is getting really thin up here.

Take a look at this updated chart of the S&P 500…

This has been a stunning rally. And as long as the S&P remains above its 9-day exponential moving average (EMA) – the red line on the chart, which has been support for the past eight weeks – the bulls get the benefit of the doubt. But, the problem with a stock market that moves higher every day is the potential sellers just keep building up. And, when all the sellers finally decide it’s time to leave the party, they rush for the exits all at the same time.

That’s when we get the type of swift decline like we saw last February, which wipes out several weeks worth of gains in only one or two days.

That’s my biggest concern right here.

Recommended Link

The Secret of a Rich, Dyslexic Tree Cutter

If this guy can make a fortune, so can you.

Meet E.B. Tucker, a North Carolina native who used to cut down trees to make a living. Back in 1988, E.B. was diagnosed with a case of “mild developmental dyslexia.” While he was a math whiz and had strong verbal and typing skills, he lagged behind in reading.

But, nonetheless, that didn’t stop him from getting “crazy rich.”

You see, 10 years ago, E.B. stumbled into a little-known secret that’s enabled him to go “from loser to laughing” in investing. It’s actually a rare wealth program (backed by 30 U.S. states) that President Trump once recommended to Americans with little cash to start out with.

In fact, E.B. was able to parlay a $68 investment into a massive windfall!

This stunning video discusses first-hand how he did it.

The last 100 or so points on the S&P 500 have been inspired by the potential for a trade deal with China. Stocks rallied hard on Friday, following another positive headline. So, that bullish news is being milked dry. What happens when a deal is finally done? We’ll need to find some other potential bullish news to milk. Otherwise, we’re likely to get a “sell-on-the-news” event.

That’s why, even though price action is bullish, I want to have a small short position – because, with the current conditions, price momentum can shift quickly.

AGAIN… I repeat… it is still too soon to get aggressive with short trades. Price action needs to reverse, and the S&P 500 needs to close below its 9-day EMA in order to shift the short-term momentum to bearish. But, a small short position – if only to hedge some long trades – is reasonable at this point.

Best regards and good trading,

Jeff Clark

Reader Mailbag

With the current action in the stock market, are you bearish or bullish? And how are you trading with that sentiment?

As always, you can send any other trading questions, suggestions, or stories to [email protected].

Jeff Clark's Market Minute Archives

Jeff’s intuitive feel for short term market swings and his strong protective discipline have allowed me to lock in thousands of dollars in gains where I might otherwise have just ridden the markets up and down .”  -Chris, a reader and “seasoned investment advisor” from Seattle

Jeff -- your picks and analysis have been nothing short of amazing. I have traded the market for many years but I must admit, I have NEVER seen something this good.” - Mike H.

In only 2 weeks of using the service I’ve booked over $10K in profits. Needless to say I’ve paid for my membership.” - Tony J.

I started following Delta Direct about 3 weeks ago… I bought a small investment from one afternoon to the next morning. About 11AM I got out and made 8K in less than 24 hours.” – D. Tilghman