Stock Market Outlook For Trading Week Of March 21 2011

Last Saturday, I stated that bears had a small advantage starting trading the week of March 14 2011. For the next week, my outlook is the same: bears possess a minor advantage going into trading next week.

Do not forget that the advantage bears have over bulls is rather tiny. Consequently you should be in cash right up until a dominant camp, either the bulls or the bears emerges, and then place your bets with that dominant group. A sidelines rating isn't bearish, neither is it bullish. In the small cap universe, the Russell 2000 is in a very weak downtrend which is surprising as small caps are holding up a little better than large caps. The Nasdaq is in a weak downtrend rating..

The trend of all the major indices sustains my thesis that bears have a small advantage starting trading next week.

For the first time in about 7 months, the number of stocks on the NYSE that are trading above their 50 day moving average has dropped below 50% to close the week at roughly 42%. This too props up the thesis that bears possess a minor advantage starting trading next week.

The percentage of stocks trading above the 200 day moving average line on the NYSE is 76% which shows a bullish bias.

The U.S. dollar is in a strong downtrend and is testing the November lows.

Gold has been discouraging for gold bugs up to now with a sidelines rating. With the biggest earthquake ever in Japan, a giant Tsunami wave that wiped out over 9,000 people, a nuclear plant melt down in the world's third largest economy, and war planes bombing Libya, gold ought to be over $2,500. Silver remains in a strong uptrend.

The VIX measures the amount of put buying on the futures market and so it is an essential leading indicator. Three weeks ago, I alerted you to the point that the VIX was in a very weak uptrend. That uptrend rating was downgraded this week by a huge pullback Thursday and Friday of last week. The sidelines rating means that the VIX is no longer providing us a trading signal: either bullish or bearish.
About the fundamental analysis front, two major economic indicators are being released in a few days which have the potential to influence the direction of markets. The Durable Goods Orders will be unveiled on Thursday, March 24, 2011. For more stock market news and investing ideas visit these links:
Stock Trading Outlook For Trading Week Beginning March 21 2011