Why No Bottom? June 4th, 2011
We are getting out of sync readings from the gauges and ratios that I use to spot bottoms and or tops. We have had a couple of heavy volume down days over the past two weeks which some would mistakenly think were bottoming signals or capitulation events. But until most or all of the gauges I use give oversold, climax-type readings on the same day, then I have to think that there is more selling ahead, regardless of how convincing any bounce might be.
For instance, $NYUPV hit 75 on May 23rd but $NYUD:$NYUPV only went to -7, when -12 is the key level. Still, the market managed to bounce out of the May 23rd low only to fail a few days later. Then on June 1st these two hit levels not seen since the 2010′ decline, and the market couldn’t have cared less.
We have now had two 90% down days since the May highs, but we have not had a 90% up day reply. Without a 90% up day to indicate that the Bulls are back, then you have to expect the current down trend to remain dominant.
So here’s what I’m looking for and when all of these give extreme readings on the SAME day, then I think it will be a good time to scale in long. This might not happen for several weeks. It could be several months.
Zweig Breadth Thrust must drop to or below 40, like it did on March 16th. Current reading of 47.62 doesn’t cut it.
4wk New High/Low Ratio must drop below 15 and it would be better if it would drop below 10, the way it did on March 16th. The current reading of 14.97 is showing extreme oversold, but one indicator by itself is just not enough.
$NYUPV must close below 80.
$NYUD:$NYUPV must close at -12 or less.
$NYSI must drop by -70 to -90 points. It dropped by -49 on the 23rd of May. Not enough. It dropped by -1.7 points on June 1st. Total BS.
$NYMO and $NAMO must tag their lower BB’s, or be within a hare’s breath.
$VIX must tag or blow through its upper BB.
$CPC must give a reading of 1.15 at minimum. A reading at 1.25 or higher would be better. This past Friday’s reading of 1.24 is definitely bullish for Monday, but that may be it.
$NYAD, the daily, must give a reading of -2000 or lower. This went to -2500 when the market was bottoming in the late June/July period of 2010.
The day must also be a 90% down day, which, if all the above give extreme oversold readings, it would just about have to be.
$USHL5 should be well below 0 on the same day that all of the above give these important readings.
$NYADV should be giving daily readings well below 500 in the days before all of the above give their extreme readings.
$BPSPX will probably be in the 40-50 range on the day we’re looking for.
$SPXA50R will probably be in the teens or maybe in the single digits.
For things to set up the way I think they should could take a long time. And there is the possibility that, with oil just way too high, that we’re headed into a recession and that the market may have put in a major top. We could be staring a 2008 scenario right in the face. But I don’t have a crystal ball so I just don’t know.
I did get suckered into some UPRO at 83.01 on May 16th based on a bullish cross of the 13EMA above the 34EMA on the 60min charts that day. About 5% of available cash. I had a sell order in place while traveling and almost got taken out on May 31st, but not quite. I’m a bag holder. Don’t try this at home.
I’m in Sheridan, Wyoming at the moment and will soon reach my New Mexico home.
http://signalgenerator.wordpress.com/2011/03/12/weekend-update-march-12th-2011/
Be careful.
My paranoia has served me well and kept me mostly in cash since May 2nd. How has your paranoia been treating you?
