If you needed just another reason or two to be cautious after the market’s big rally in April, then pay attention to the McClellan Oscillators for the NASDAQ (NAMO) and New York Stock Exchange (NYMO).

The oscillators are momentum indicators that help to identify overbought and oversold conditions, and warn traders of the potential for a reversal in the markets. The oscillators are considered “extremely oversold” when they drop below -60. They’re “extremely overbought” when they rally above +60.

As you can tell from the following charts, both the NAMO and the NYMO have gone from extremely oversold to extremely overbought in just the past several weeks…

Both oscillators hit their most oversold levels of the year in mid-March. And, they both closed near the most overbought levels of the past year on Wednesday.

Of course, that doesn’t mean the indicators can’t get even more overbought. But, just as selling stocks into oversold conditions in mid-March has proven to be a very bad idea, buying stocks into the current overbought conditions is probably a bad idea as well.

The bullish looking pattern on the 60-minute chart of the S&P 500 that we looked at on Monday reached its target on Wednesday. The oversold bounce we expected to happen in April has played out as well, and the S&P 500 closed yesterday right on its 20-month exponential moving average line (EMA). In the process, the market has created extremely overbought conditions on momentum indicators like the NYMO and NAMO.

This is not the time to be pressing bets on the long side by buying more stocks. In fact, now is probably a good time to trim some positions and take some money off the table.

Stock prices are likely to be lower in the weeks ahead.

Best regards and good trading,

Jeff Clark

P.S. Whichever way the market moves, traders need to be ready. But, we’re in volatile times and these murky waters can be hard to navigate.

Because of this, every Monday before market open, I’ve been recording a live-streamed Crash Course. I give viewers a look at the moves I see coming, and the essential techniques that I’ll be using throughout the week.

And, all of my paid subscribers can access the first three sessions right here.

But, for the remaining live sessions, Crash Course will only be available for members of my Protégé Program, Jeff Clark Alliance. Alliance comes with all of my trading advisories and resources, along with a few extra features – like a quarterly Q&A, the Crash Course, our Alliance Leaderboard, and more – exclusively for Alliance members. Click here to learn more.

Reader Mailbag

In today’s mailbag, subscribers thank Jeff for his guidance and training resources…

Hi Jeff! I just placed my first options trade with the XLK puts. I’ve been watching your videos (Jeff Clark Trader members can view here), and reading your reports over the last few weeks learning about options while quarantined – it gave me something good to do.

Once I figure out what I’m doing, I’ll be subscribing to your Delta Report. Thanks for sharing your knowledge and tips. Take care and stay safe!

– Heidi

Thank you for your recommendations! I tried out the trial of Jeff Clark Trader and made a profit on your recommendations already (I started with a small account) and I just upgraded to a Jeff Clark Trader lifetime membership a few days ago.

Well, I took your recent trade on XLK and guess what? I woke up today to find I have already paid for the lifetime membership upgrade by selling half of my trade on XLK. Thanks, Jeff! I’ve never seen someone with such accuracy in predicting where the market might move.

This service has made the stock market more of an investment opportunity than a gamble (and I’m not one much for risk).

– Frankie

I signed up a couple of weeks ago for your basic program, Jeff Clark Trader, and received one option recommendation about a week ago. It was very good – about a 50% profit in just two days!

– Gordon

Hi Jeff, glad I set the TGT trade. I was watching GBTC and had the sell at price to make a quick
profit. I thought I would mention one I just heard of yesterday. It looked good then and still does now.

– Jon

Crash Course viewers remark on Jeff’s Protégé Program…

Jeff, I’m really valuing your input and insights and don’t want to lose them. I decided to ensure I keep access, and then upgrade to Jeff Clark Alliance when the opportunity emerges, like when you offer a special at the end of a course. In the end, it appears I moved just a day too early (as you often do in your trades too!).

Keep it up! By the way, I am a recently retired Ph.D. economist and an ex-banker, and I believe you’re correct in expecting a bear market. I’m hoping you can help me get the timing right.

– David

Hi Jeff, I’ve really found value in the recent Crash Course video (members can access here) – it’s helped me step back into more active trading. Thank you!

– Vaughn

Hi Jeff and company, I would absolutely love to be part of this opportunity! I have literally been obsessed with learning about options trading since beginning your educational videos (view here if you’re a Jeff Clark Trader member) and watching the first three Crash Course videos (paid subscribers can access those here). I have learned so much and am eager to learn more!

– Chase

And Frank gives us his thoughts from Wednesday’s Market Minute

In one corner, there’s Jeff Clark, the man expecting an imminent next leg down in a bear market. In the other corner, the powerful Fed, busily adding liquidity to the system — a Fed put, if you will.

From my earliest investing days, I am reminded of the constant refrain not to “fight the Fed.” At the same time, Mr. Clark’s prescient market forecasts have been impressive.

So, where have I placed my bets? I’m firmly in Mr. Clark’s corner. My puts are in place, and I’m ready for the next bear paw. At some point soon, the equity markets will reflect what’s happening on Main Street.

– Frank

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at [email protected].

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