Stock Market Indicators – December 19th, 2015

Here are the latest readings from my stock market indicators.  They have some conflicting messages.


In the shortest term I measure, stocks are neutral at 44% long.  This is shocking considering the sell off in the averages Thursday and Friday this week.


In the medium term, they are oversold.  Not extremely oversold, but oversold.  They had a small bounce in the first part of this week that has not yet been retraced.


The long term is slightly oversold.  I don’t have data for this indicator going back to 2007/2008 so I cannot tell you what it would look like in a true bear market.  I would guess an extended depressed period similar to the extended overbought period the past few years.  It would likely have a shorter duration as declines typically occur faster than rises.


My composite indicator has bounced from its low reached two weeks ago.  It is slightly oversold at 37% long.

Due to the conflicting messages, it is best to remain on the sidelines until there is a clear direction.  The last half of December is historically a good time for equities.  This year could be no exception.



As a bonus, I’ve been watching the tightening in mining stocks (as characterized by the ETF GDX) for the past few years.  There are a few long term trendlines finally converging.


Here is a close-up view.  Oddly enough, gold stocks have stayed above their bottom in August and September whereas gold itself has not.  Typically, gold stocks will start showing strength before the medal itself.  This could be it.  It’s too early to call it because we need some real price action going up.  There has been “blood in the streets” for a while in the mining space.  Slowly, stronger companies will start scooping up assets on the cheap from those with debt problems.