Nick’s Note: When it comes to technical analysis, there are few better than master trader Jeff Clark. He scours the charts to find his readers the most profitable trade setups out there. We follow him closely at the Daily. Below, Jeff says one important chart favors the bulls—at least in the short term…
By Jeff Clark, editor, Delta Report
The stock market blasted higher last week.
The S&P 500 gained 2%—its best performance in quite some time. The index is now in positive territory for the month. And I expect the gains to continue.
For most of the past two weeks, the market action has been constructive for the bulls. The S&P 500 has been making higher lows and higher highs—which indicates bullish momentum. And, so far at least, the technical indicators have avoided reaching into overbought territory. So, there’s still enough fuel to power the market even higher.
But, as a trader, I’m always on the lookout for conditions that might cause a change in the forecast. It’s like a sailor looking for storm clouds on the horizon.
The seas are relatively calm right now. The skies are clear. It should be smooth sailing ahead for the bulls in the short term.
But there is a small patch of turbulent air just a few nautical miles ahead. It’s nothing right now. And it may never amount to anything later on. But traders should keep an eye on it just in case.
The VIX is commonly referred to as Wall Street’s “fear gauge.” It rises as investors grow fearful. It falls when investors are complacent.
Extreme moves in the VIX are excellent contrary indicators. As traders, we look to buy stocks when the VIX makes an extreme move to the upside, and we look to sell stocks when the VIX makes an extreme move lower.
Bollinger Bands measure the most probable trading range for a stock or an index. Whenever a chart moves outside of its Bollinger Bands, it indicates an extreme condition—either extremely overbought or extremely oversold.
Since the VIX is a contrary indicator, it’s best to buy stocks when the VIX is extremely overbought and to sell stocks when the VIX is extremely oversold.
Right now, the VIX is still within its Bollinger Bands. We don’t have any sort of extreme condition of which to take note.
But the VIX is approaching its lower Bollinger Band. If the stock market rallies early this week, then the VIX is likely to decline. And it won’t take much of a decline to push the VIX below its lower Bollinger Band and set up the possibility of a broad stock market sell signal when the VIX comes back within the bands.
For now, the skies are clear and the sea is relatively calm. But keep an eye on this chart of the VIX. It will tell you if a storm is on its way.
Best regards and good trading,
Editor, Delta Report
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More kudos for Palm Beach Confidential editor Teeka Tiwari’s latest cryptocurrency update (PBC subscribers can watch it right here).
From James W.: I swear, Teeka, I feel better after one of your video updates than I do after great sex.
From Marvin W.: Teeka, I just watched the bitcoin volatility update. Well done.
My concern came at the end when you said that there are only 21 million bitcoins that can ever be mined, which is not enough for every millionaire to own one. I own about 1 bitcoin (BTC).
I am just trying to understand why more people are going to want to own BTC. Other than diversification, what’s going to drive demand? BTC doesn’t have the same utility as the other tokens you have recommended. The only real utility I see for BTC is for the purchase of other cryptos.
Nick’s Reply: Thanks for the feedback, Marvin. You must have missed our April 12 issue (“Why It’s Now Riskier to NOT Own Cryptocurrencies”). Institutions are preparing to send trillions of dollars into the cryptocurrency space. Teeka calls this the “Second Boom.” When the floodgates open, the demand for bitcoin will soar. It’s a theme we’ve been following since the beginning of the year.
From John S.: A great big thank you to Teeka. I’ve made money on his advice and I’m now paying taxes… ugh.
When more crypto millionaires are made in the near future because of your advice… you will receive more invites to travel the world on their yachts and never be at a loss for a fancy dinner.
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A course like this would have educated me a lot faster and allowed me to make purchases sooner and with more confidence. Thanks for all you do to keep us educated in the crypto space, Teeka, and thanks to Glenn for partnering on this course.
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