Pre-Market Update March 31st, 2011

For those of you who just showed up here, I have a couple posts that you should read in order to understand a lot of what I’m doing.

This first one lists a lot of the breadth indicators that I track.

http://signalgenerator.wordpress.com/2011/03/12/weekend-update-march-12th-2011/

Next a look at the 60min trading strategy in practice. Also, at the top of the page see 60min Trading Strategy.

http://signalgenerator.wordpress.com/2011/03/17/update-march-17th-2011/

This next one outlines a case for a market bottom on March 15th/16th. It also lists some of the parameters used to signal oversold readings that often occur at market bottoms. In this post I also take a look at $RITEC, which I am still concerned with especially in light of what’s been happening to AAPL lately.

http://signalgenerator.wordpress.com/2011/03/20/weekend-update-march-20th-2011/

GL

Quick Update March 30th, 2011

No time for putting up a chart so…

Look at your 60min charts of $SPX and note that the RSI 14 climbed to 74 and then closed at 70. Usually you can expect a consolidation day following a day when this happens.

Zweig Breadth Thrust closed at 60.19, with 60 being the level that marks huge overboughtness.

On 9/3/10 ZBT rose to 61.13. The next session, which was Tuesday September 7th, the day after the Labor Day holiday, the $NYA closed down almost 100pts.

On 9/13/10 ZBT rose to 63.32, after closing the previous Friday at 60.11. This threw the markets into a consolidation period that lasted the rest of that week.

On 9/20/10 ZBT closed at 61.09. Over the next three sessions, the $NYA would lose 120pts on a closing basis.

On 10/13/10 ZBT closed at 60.71. This led to a consolidation which took the $NYA down, on a closing basis, about 160pts.

On 11/4/10 ZBT closed at  62.26. This was the day after the Fed announced QE2 and was also something like a 95% up day. This led to the November pull back.

If you catch my drift. In reality you should be telling me all this because it won’t be long before you are on your own with all this stuff.

However, and then again, blah, blah, blah, as I was saying.

$NAMO is within a hare’s breath of tagging its upper BB and if those BB’s weren’t expanding so fast $NAMO would have pierced its upper BB easily today. But it didn’t and close may not count.

None of the other breadth indicators that I follow are giving extreme overbought readings. $NYADV is close, but…

Tomorrow is the last day of the month and the last day of the quarter. What do you think all the MM’s have in mind for the market? $SPX is now up 1.04pts and 0.08% for the month. Do you think the Big Boys are going to allow the month to end in the negative?

And the Q’s are only down about 40 centavos for the month. But make no mistake, with AAPL getting sold off with every pop higher, it’s not going to be easy to push the Q’s positive for March, but don’t put it past them.

Your homework assignment is to find a monthly chart of the $RUT/IWM and zero in on the RSI 14.

GL

Weekend Update March 27th, 2011

All of the market breadth indicators that I follow are staying in sync with this move. While negative divergences did not work from the time they began to appear in late September of 2010, I do think a negative divergence or divergences at this stage of this nascent rally leg  could prove to be problematic.

$NYSI daily chart showing how the Summation Index has apparently bottomed and is now trying to right itself and move up. It will take most if not all of next week before $NYSI confirms the rally with a fresh buy signal indicated by one or more upward crosses of the MA’s. This is a  direct link to a weekly chart using a 5,3,3 sto, which is showing to be oversold at the moment. That sto should/could/better turn up next week, if you catch my drift.

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”     Donald Rumsfeld

$SPX daily chart that epitomizes the known unknown and the unknown unknowns. The unknown here is why the $SPX stopped at this falling trend line. Was it coincidence or perhaps alien intervention?  I just find it interesting that it stopped where it did but it does bring into question whether the last few days of up moves are anything more than a dead cat bounce. A close above this falling trend line on Monday is going to be important and since that is a falling trend line then $SPX could close flat on the day and still close above it. Then, of course, there’s the potential Bear Flag that would start to lose most of its credibility with a close above 1332. Until then, it will be important for $SPX to stay above the Pyscho/Voodoo level of 1300 because a failure to hold that level would mean that the short term MA’s on the chart would be breached to the down side and would then start to roll back over. IMHO, however, this is a bullish looking chart.

Charts courtesy of StockCharts.com

That potential Bear Flag pattern on the daily chart is the rising trend channel on the 60min chart. Based on what I’m seeing in the market breadth indicators, I have to give the benefit of the doubt to the bullish rising trend channel rather than to the potential Bear Flag, but a paranoid trader has to consider all options and escape routes.

The $INDU, XLB, IWM, $MID, XLI, $TRAN, $CYC, and I’m sure others, have already had bullish DI X’s and with this kind of leadership you have to expect other key sectors will follow, or famous last words.

I’m not sure to whom the following should be attributed, but there’s an old Wall Street saw that goes like this:

“The market is all about taking the most amount of money from the most amount of people in the least amount of time.”

GL in the week ahead.

Quick Update March 24th, 2011

WTF (win the future)

Why, I have no idea. Something about earnings, blah, blah, blah, but those earnings were for the quarter ending Dec 30th, before the spike in oil prices. It’s going to take some heavy duty pixie dust to make earnings look good next month. But maybe THEY can pull it off.

Well, well. 60min strategy hinted at a ‘buy’ signal one week ago. That signal appeared to be in jeopardy last Friday, but then THEY spiked the $SPX nicely on Monday morning and all’s good that closes good.

60min chart with potential up trending channel in place.

$SPX, and several others, have been above their respective 20MA’s on the 60min charts for long enough now to give a fresh ‘buy’ signal using the 5/10 method, which occurs when the 5EMA crosses up through the 10EMA.  Unless the markets fall off a cliff between now and the close on Monday, the 9/20 method would get a confirming ‘buy’ signal between now and then.

Chart courtesy of StockCharts.com

While I would expect a pause day for Friday after such a big move today, most of the breadth indicators that I follow are giving neutral readings instead of the overbought readings I expected to find. Hmm.

Monday 3/21/11 $SPX 60min Chart

Weekend Update March 20th, 2011

I hope you took some time to bookmark all those direct links I put up last weekend and to look over those various charts. Ultimately you should own those indicators as they will help you better understand the market and make better and more timely decisions. By owning them, you should also be able to overcome your personal bias, what ever that may be, and identify potential turning points in the market.  Your mileage will most certainly vary as nothing works every time but by becoming familiar with overbought/oversold readings from indicators like $NYADV, etc, you’ll have an edge over the vast majority of traders out there, most of whom trade by the seat of their pants.

*   *   *

I am still waiting for a climax selling event as indicated by $NYUPV and $NYUD:$NYUPV. Since the March 09′ lows, these two have been on the money in spotting bottoms and I have come to rely heavily on them.  But…..there is a lot of other evidence that says we’ve had a climax selling event.

$NYHILO has dropped into the low 60′s and since the August/Sept lows this has been low enough.  I expect this to drop a little more in the week ahead. If it should drop into the low 50′s, then it could run into the 30′s. I’ll be watching for $NYHILO to turn up sometime next week.

Zweig Breadth Thrust: ZBT went to 37.06 on 3/16. 40 marks the oversold level for ZBT and this has worked very well at this level in the past.

4wk New High/New Low Index: This went to 8.56 on 3/15 when below 20 starts to mark oversold levels so this has gone to an extreme oversold reading.

$NYSI: The Summation Index dropped by 88 ticks on 3/16. During the April/July decline of 2010, $NYSI dropped by more than 100 ticks on several different occasions but aside from that period and since the March 09′ lows, when $NYSI drops by 80-90 ticks this has indicated a climax event.

$NYMO:  The McClellan Oscillator pushed through its lower BB on 3/15 and 3/16,  dropping into oversold territory. This should have signaled a pause or bounce for Wednesday, but obviously that didn’t work.

$TRIN: $TRIN closed at 3.06 on 3/16, its highest close since August 30th, 2010.  This shows that sellers were scrambling to get out at any price.

$SPXA50R:  $SPXA50R dropped to 27% on 3/16 when generally 25% or lower indicates the market is extremely oversold. 27% may be close enough, or not.

P/C Ratio: P/C Ratio closed at 1.18 on 3/16 so obviously just about everyone was convinced that the market was headed lower. 1.18 is high, but 1.2x is more convincing.

$VIX: In the way olden days before the 2008 meltdown, when the $VIX got into the 20′s, it usually meant that the market was about to reverse. We all know the $VIX can push into the 40′s and keep going, but it need not. Well, we’ll just have to see if new highs are in the works for the $VIX.

There appears to be enough evidence to support the idea that the market is in the bottoming process, if it hasn’t already bottomed. Since we have closed below $SPX 1276, I say the $SPX is now in a down trend until proven otherwise. Before I get all giddy, I need to see the $SPX get back above the 20MA and then have the 9EMA cross up through the 20MA because I think that waiting for that mini bullish X is prudent, especially given all the noise out there now.

My biggest concern at the moment is Big Tech, AAPL, HPQ, CSCO, FFIV, CRM, AKAM and all the other big tech stocks that are part of the 135 stocks in $RITEC.

Since peaking on February 17th, $RITEC  dropped 9.6%, on a closing basis, and has since rebounded somewhat. Big Tech is always important and $RITEC says there’s big trouble in tech land. The market might bounce without tech, but if the big tech players, like AAPL, don’t get back in the game, no bounce is sustainable.

As far as I know, TYH and TYP are the only two ways to play $RITEC. If there is or are other ETF’s that track $RITEC, please let me know. Anyway, the 60min chart below shows part of the problem. TYH just can’t seem to capitalize on an RSI 14 that dips below 30 by rising back above the 20MA.  The 20MA is flattening out now, but it flattened out earlier in the month and even so TYH was unable to stay above the 20MA for any length of time.

Chart courtesy of FreeStockCharts.com

Daily chart showing how oversold TYH is at the moment. The problem is that it got equally oversold back in early May and if you had bought that dip you would have been knocked out of the trade just a few days later. Best to wait for a 9/20 bullish X. By waiting until then, other indicators would be confirming the long side.

Weekly chart showing that $RITEC is hovering just above an important trend line. If this trend line should fail to hold, then it’s really anybody’s guess as to where $RITEC may go.

Charts courtesy of StockCharts.com

The bottom line is that the markets in general need big tech to participate in, if not lead, any move to the upside. Until key stocks like AAPL end their declines then the markets will struggle and no one likes to buy a struggling market.

At 7:21 P.M. this evening, Spring begins.

Gl in the week ahead.

 

 

Saturday, March 19th, 2011

This guy does a tremendous amount of analysis and is well worth reading.

Markets Path Nightly Report

I’m working on some charts of $RITEC and its 3x play, TYH and hope to get them up sometime on Sunday.

Quick Update March 18th, 2011

Judgement call.

$SPX failed to hold the trend line from Thursday but did manage to close above the 20MA so for the moment the bias remains to the upside, though tentatively.

$NDX: Per the 60min trading strategy, $NDX, which did not close above its 20MA Thursday, remains a ‘sell’ due to continued weakness in AAPL. AAPL will need to be defended next week or the weight of this key sector may drag the rest of the market down.

My condo is now on the market so it’s doubtful I’ll have any time this weekend to post. Just watch the 60min charts Monday as the dailies look like crap.

GL in the week ahead.

 

 

Update March 17th, 2011

Dead Cat Bounce?

Short Squeeze?

Op/Ex Fun and Games?

Relief Rally?

Bottom?

I have absolutely no friggin’ idea.

Sixty minute trading strategy triggers a ‘buy’ signal when:

RSI 14 dips below 30 and,

The stock in question then rises above the 20MA, and

Stays above the newly established trend line.

This 60min chart of SPY shows how the RSI 14 has dipped below 30 numerous times in the past 10 sessions but only triggered three ‘buy’ signals per the criteria above, and two of those failed immediately. I think there’s a good chance the current set up will fail, too, but if SPY can stay above the 20MA and this very new and very vulnerable trend line through the close of trading on Monday, then that would be that.  And even though I am more than 100% certain that the market can’t bottom without a true climax selling event based on $NYUPV, etc, I am also 100% certain that the market is always right and if the market has decided that the pull back has ended then on with the show.

 

Ty, I will try and find the time to put up some charts and parameters for breadth indicators that I think are the most important.

Quick Update March 16th, 2011

Weekly charts starting to look more like April 2010 every day.

Zweig Breadth Thrust at 37.05 today.  Went lower than that in early May of 2010 and then went even lower on May 20, 2010.

4wk New High/Low Ratio rose to 16.47 today from yesterday’s 8.56 reading.

$NYUPV at 129.95 is not low enough.

$NYUD:$NYUPV at -9.19 still not low enough.

$NYSI dropped by 88 ticks today. Normally that would be enough to indicate a climax selling event. Normally.

$SPXA50R at 27% with 25% usually considered to be in the ‘oversold’ zone. But in the May/June period of 2010 this spent a lot of time in the low teens and even in the single digits.

89% of volume went into declining issues on the $NYSE. Normally this would indicate some selling exhaustion.

P/C Ratio 1.18 and that could mean a short squeeze soon.

AAPL: The downgrade today is based on a slow down in manufacturing activity at a plant in Japan that does a lot of work for AAPL. The reasoning is that if activity at that plant is slowing then orders from AAPL must be slowing, too.

$OEX smart money crowd has been adding puts in a big way.

$VIX Weekly Chart: The Aroon on the $VIX weekly chart has had a bullish Aroon X. The last time this happened was in May of 2010. Three weeks later, the $VIX finally peaked and rolled over. Just sayin’.

I’m looking at a chart right now of the $INDU with 50, 85, and 100MA’s, and the Dow closed under all three of those today. Same for $SPX, $NYA, and $COMPQ. That hasn’t happened since early May of 2010, if you catch my drift.

Be careful.