'Twas the Week Before Christmas...

Mike Turner |

'Twas the week before Christmas, and the Elves are in high gear. Angst is pegging the needle, as the Elves like to say, with just one week to go before Mr. Big comes swooshing through with his massive Christmas present vacuum, sucking all the presents (and an occasional Elf) into the bottomless sleigh storage compartment. You do not want to be standing in the wrong place when Santa is in Bull-Mode...

Speaking of Bull-Mode, I knew that when all I can see are blurs of hazy blue images (the "high gear" state of the Elves), it is going to be tough to get the Chief Elf to provide me (and you) with his upcoming week's market predictions. Last week, he was dead-on, so I knew he would be willing to rub it in. I guessed at which blue blur I should attempt to throw a net over and, amazingly, I was able to grab the Chief Elf (it only took me 22 attempts). He had that Rudolf-the-red-nosed-reindeer look in his eyes, but did blurt out the Elf forecast for this coming week.

Here it is: "The Bull-to-Bear ratio for this week is 3-to-1 in favor of the Bears. The red line (Short Sell) continues to moderate its downward trend, which is now only mildly trending away from an oversold condition. The black line (Composite of Short Sell and Long Buy indicators) is holding steady with a very slight bottoming formation. The S&P 500 (green shaded area) is trending lower for the month. The previous warning that the market appeared to be teetering on the edge of moving lower was hopefully heeded. Hedging both long and short positions could be prudent as the market appears to be at an indecisive level that could break either way. The odds are higher that the market moves lower, in that regard."


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Investor Sentiment Forecast
For the Upcoming Week
The Turner Investor Sentiment Forecast provides a one-week directional forecast on the market, with [-5] being the most Bearish and a [+5] being the most Bullish. This is predicated on the ratio of number of new Buy Signals to the number of new Short Sell Signals for the previous week. The assumption is investors are becoming more Bullish the more lopsided the ratio becomes in favor of new Buy Signals; and, the converse is true; the more lopsided the ratio becomes in favor of new Short Sell Signals, the more Bearish investor sentiment.


The Turner CrossOver Oscillator provides an indication of the over-bought or over-sold condition of the market. The red line (New Short Sell Index) shows a technical direction and strength (or lack thereof) of investors to push stock prices lower, triggering new Short Sell Signals. The higher the Short Sell Signals line, the more Bearish the market. The black line (Composite Index) is the combined impact of both the new Short Sell Signals and the new Buy Signals and is an indication of the degree of oversold or overbought condition of the market. Buying opportunities exist when the Composite Index is moving higher. The higher this line moves, the more Bullish the market. Market bottoms are represented by a change in direction of the Composite Index from moving lower to moving higher. Market corrections become much more likely the Composite Index crosses the Short Sell Index from above the Short Sell Index to below the Short Sell Index. The market is represented by the green shaded area.

As I turned him lose, he looked back at me and yelled through the din of unbridled toy-making noises, "Let Sosnoff know that I watched tastytrade last week and that's what he gets for not paying attention to the Elves and Mike Turner!" I had no idea what he meant by that, but in a blur he was gone. Knowing that anytime an Elf offers free advice, one should pay close attention... I decided to pass his comments along. Who or what the heck is a "Sosnoff", anyway??

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


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