Jeff Clark’s contrarian indicator … HYG looks bullish … Luke Lango continues to “back up the truck” … the two market levels he’s watching … the dollar is climbing again Is your spouse a contrarian indicator? Veteran trader Jeff Clark believes his is…and she just flashed a bullish signal. In Jeff Clark Trader, Jeff uses a suite of indicators and charting techniques to profitably trade the markets regardless of direction – up, down, or sideways. A few days ago, one of Jeff’s contrarian indicators just triggered: My wife told me she heard the stock market was about to crash… Gabriela entered my office and asked me a question she has NEVER asked in our entire 32 years together… “How does the market look today?” Jeff explains that his wife – though a brilliant woman who runs a wildly successful company – doesn’t follow the stock market. And she hardly ever expresses a market-related opinion. But in recent days, lightninging has struck and she asked Jeff about the market, saying, “she heard the stock market was about to crash.” Back to Jeff: If she’s commenting on the market right now, it’s because whatever is happening is being talked about on one of Gabriela’s guilty pleasures – either mind-numbing television shows, or mind-numbing Instagram postings. And it is a fantastic contrary indicator. But after rallying in the wake of the Federal Reserve’s meeting on Wednesday, stocks sold off yesterday and are sliding as I write Friday morning Do we need to be concerned? Back to Jeff: There’s nothing wrong with being cautious. There’s nothing wrong with trimming some positions and raising some cash as the stock market puts on an oversold bounce. But betting aggressively on the downside right now is probably a mistake. To explain why, Jeff points to the high-yield bond sector – a leading indicator for the stock market. When “junk” bonds are rallying, it usually represents a risk-on environment. That tends to be bullish for stock prices. The opposite is typically true. When high-yield bonds fall, that usually represents bearish, risk-off mode for stock investors. Back to Jeff: It’s useful to note that while the S&P 500 recently traded down 10% from its high – putting it in “correction” mode – the iShares iBoxx High Yield Corporate Bond ETF (HYG) has recovered to within spitting distance of its all-time high. For a visual, below, we look at HYG. To Jeff’s point, it’s less than 1% below its high. 
We’ll keep an eye on this and will report back if we begin to see significant deterioration. Meanwhile, Jeff isn’t our only analyst expecting bullishness It’s time to back up the truck. So says our hypergrowth/technology expert Luke Lango. On Wednesday, Luke continued his recent buying spree, recommending four new stocks in Innovation Investor. This brings the total number of new recommendations in March from Luke’s Innovation Investor and Early Stage Investor services to 25. Back up the truck, indeed! To understand Luke’s bullishness, let’s go to his Innovation Investor Buy Alert on Wednesday: We’ve repeatedly told you that stocks were teetering at make-or-break levels—set to either roar higher or crash into a bear market over the next 12 months. Now, the verdict is in. The latest technical and fundamental data couldn’t be clearer: The market isn’t breaking; It’s making… The Fed just sent a loud, unmistakable signal to investors: They’ve got Wall Street’s back. That’s why we’ve been buying aggressively. And that’s why we’re not stopping now… It’s time to back up the truck. | Recommended Link | | | | And it is time to invest in this next big AI breakthrough – alongside some of the wealthiest people in the world. That's why I'd like to turn your attention to Elon Musk and his AI robot, Optimus. I think it has the potential to profoundly change the world and go down in history as Musk's greatest achievement. And I've found a 'backdoor' way to invest in this new Optimus project. Click here to learn how to invest in this game-changer now. |  | | To make sure we’re all on the same page, there are two “make or break” levels that Luke has been watching They are “19,440” on the Nasdaq-100, and the S&P 500’s 250-day moving average (MA). “19,440” represents about 4% below the Nasdaq-100’s 200-day moving average. As we’ve detailed in recent Digests, Luke’s research identifies this level as a critical “bull/bear” divide, where, historically, a hold/bounce leads to double-digit gains in the ensuing months. Similarly, the S&P’s 250-day MA has been another key make-or-break level for investors where a hold/bounce results in, according to Luke, “massive 12-month rallies.” Below, you can see the Nasdaq-100 trading at 19,527 as I write – on the “bull” side of the divide (though it trades below its 200-day moving average). 
And below, you can see how the S&P 500 briefly lost its 250-day MA, retook it, successfully, retested it as support, bounced, and is now retesting it (which is common as a new rally is beginning). 
To access all Luke’s recent Innovation Investor recommendations as a subscriber, click here to learn more. Now, though Jeff and Luke believe we’re in for bullishness, there is a potential headwind we should watch… Keep your eye on the upward reversal of the U.S. dollar’s recent slide Here in 2025, the U.S. Dollar Index has fallen hard. As you can see below, the greenback has lost more than 4% on the year. 
This is a notable move for a currency. For context, the U.S. Dollar Index typically oscillates in the 5% - 10% range in any given year, so this 4% drop – in less than three full months – catches the eye. Behind the decline has been two primary catalysts: - Traders anticipating Federal Reserve rate cuts this year
- Concerns about U.S. economic prospects due to President Trump's protectionist trade policies
But according to two key technical indicators, a bullish reversal is in the cards as this move has gone a little too far, too fast. And if that happens, it could be a headwind for our budding stock market rally. What we can learn from the Dollar Index’s RSI and MACD indicators To unpack this, let’s look at those indicators: the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicator. For newer Digest readers, the RSI is a momentum indicator that measures the extent to which an asset is overbought or oversold. A reading over 70 suggests an asset is “overbought” (and likely poised to pull back as traders take profits) while a reading below 30 means it’s “oversold” (and poised for gains as bargain-hunters step in and buy). Meanwhile, the MACD indicator reflects changes in a price trend’s strength, direction, momentum and duration. Traders use this tool by analyzing the location of the MACD line relative to its signal line. At its most basic interpretation, if the MACD crosses above the signal line, it’s considered a bullish crossover, and potentially a buy signal. The opposite is true as well. Below, we return to a chart of the U.S. Dollar Index (zoomed in), this time adding its RSI and MACD indicators. You’ll see that the RSI has just climbed out of “oversold” conditions (below) 30 and is headed higher. Also note how the MACD has U-turned from “falling” to “rising” and is about to push north of its signal line – the “bullish crossover” I just referenced. 
If these signals presage upward pressure on the U.S. Dollar Index as history suggests, it could weigh on stocks A stronger dollar typically hurts U.S. stocks, especially large-cap companies with significant international revenues (e.g., Apple, Microsoft, and McDonald's). Companies that generate significant revenues overseas watch those revenues convert into fewer profits at the time of currency conversion due to a stronger dollar. Now, there’s an interesting contradiction playing out… Earlier this week the Fed indicated that it anticipates two rate cuts here in 2025. That would weaken the dollar and be bullish for the currency conversion. So, if the dollar begins rising consistently from here, that could signal that traders don’t believe the Fed and are less confident we’ll get those two rate cuts. It will be an interesting dynamic to watch. In any case, keep the Dollar Index on your radar. It’s another tool for your investment toolkit as we try to navigate today’s complex market. We’ll keep you updated on all these stories here in the Digest. Have a good evening, Jeff Remsburg | 
No comments:
Post a Comment