Quick Update April 15th, 2011

After two weeks of some pretty heavy hits, the Dow is up 22pts or 0.18%, the $SPX is down 6.15pts or 0.46%, and the $RUT is down 8.57pts or 1.02% on the month to date.

We’ve had three Stealth Distribution days in the last three sessions which are defined by me as days when the $NYA closes up and at the same time the $TRIN closes above 1.xx.

Today, Friday, 4/15, the $NYA closed up 26pts and the $TRIN closed at 1.71.

Thursday, 4/14, the $NYA closed up  6.85pts and the $TRIN closed at 1.24.

Wednesday 4/13, the $NYA closed up 6.85pts and the $TRIN closed at 1.38.

(Up 6.85pts two days in a row? Now that is alien intervention.)

Stealth Distribution is evidence of covert selling and could be indicating that the mad men at the helm are paring back positions before the ‘sell in May’ phenomenum kicks in, if in fact it’s going to at all. But covert selling is no substitute for the real thing so while this is certainly worthy of further scrutiny the proof is in the pudding, if you catch my drift?

I’m sure everyone on the planet is looking at the chart of GOOG from last April and wondering if the same thing that happened last April is going to happen to GOOG and the markets in general.  While history could repeat, it just seems to me that it would be entirely too convenient to do so.

This chart of SSO stolen from Richard Crockett shows that SSO is about to give a ‘buy’ signal per the 13/34 EMA cross method. Per my own 60min trading strategy I have potential ‘buy’ signals on several sectors including $SPX but not quite yet on the $NDX/QQQ’s.  Meanwhile, $VIX is and has been on a ‘sell’ signal since March 23rd.

I am not convinced that the market wants to go higher but I am equally agnostic to the idea that the market is about to roll over and drop as it did about this time last year.  Sometimes I feel like I’ve got a good handle on the market but other times, like these past two weeks, I feel like a blind man trying to identify an elephant, or, a sideways market takes its toll.

Quick Update April 6th, 2011

Even though the $SOX did a back flip based on the deal between TXN and NSM and then the rebalancing in the $NDX, I have not taken a position in either SOXL or USD. I am thinking about it but I do think $SOX needs to pause a little, but, of course, it need not.

So was that it for the ZBT consolidation? Three days of trading and the $INDU, $SPX,  & $COMPQ don’t have much to show for it while $TRAN & $CYC are slightly negative. That’s a consolidation and it could be over tomorrow, for all I know.

Couple of things I’m watching:

(Adding the following 8:45 A.M. April 7th:

I looked at the ISEE All Equities last night and for some reason it didn’t register, but that hit 302 yesterday. This used to give a pretty good signal when it got to the 260 area but it went into the mid-300’s back in December and early January and nothing.  It could mean nothing this time, too.)

P/C Ratio at .71 is lower than where it was on 2/17 when it closed at .72.

Index P/C Ratio at .96 is at its lowest point this year.

$NYHGH in slight negative divergence. Before September 2010, when $NYHGH would go into negative divergence it was a major red flag. But since then not so much. Still bears watching.

$TRAN down .49% for the week and they often start to exhibit weakness before the general markets. Not much to get excited about, but you just never know.

$BPTRAN dropped 5 points today which seems odd since $TRAN is only down 26pts on the week.

Since the September 2010 lows, 50% of the time in the days after Zweig Breadth Thrust has gone above 60 there has been a large one-day drop of around 100 pts in the $INDU. With the major indexes struggling to find buyers at current levels, a price adjustment lower may be just what the doctor ordered.  Just sayin’.

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.

Weekend Update January 23rd, 2011

$CPC/$CPCE: If this signal is going to play out, then it’s going to either play out starting in the week ahead or at least give better hints as to whether it’s going to play out at all. We’ve had a sign of overt distribution and the broader markets could be just going through a dead cat bounce. The key will be last Thursday’s swing low, which was 1271 for $SPX. If we close below 1271 before closing above $SPX 1296, then $SPX could easily drop to the 50MA about 50pts below Friday’s close. That would take $SPX down into the break out area of 1230.

$TRAN, $CYC, $RUT, $XAL, XLB, $DJUSCX, to name a few, are under pressure, but more importantly so is the $NDX.

AAPL/GOOG, or live by the sword, die by the sword: AAPL is now trading in the same range that it has been trading in since it released earnings back in mid-October. The recent news from Steve Jobs is creating uncertainty and for the moment the market is selling this uncertainty. If this is just a knee-jerk reaction, then no problem and AAPL to the moon, but if selling persists then this will bleed over into other stocks and sectors as AAPL is too important and influential. GOOG is now right back where it was on its October earnings release, also as a result of uncertainty about changes within leadership. AAPL/GOOG make up almost 25% of the $NDX and so there is no way that the $NDX can hold up to further selling in these two.

Chart of $NDX showing break of trend line, though I don’t consider it a decisive break for now. $NDX formed a nice bull flag back in mid-November and if $NDX doesn’t right itself early next week, then we could see another such pattern develop. There is an important swing low of 2209 from 12/31/10 right where the current 50MA sits so if $NDX flags off then that looks to be a good and important level to watch.

Chart courtesy of StockCharts.com

$TRAN is just a hare’s breath away from tagging or perhaps breaking its 50MA and pressure in this leader will not help the markets. $SPX and $NDX could also be getting ready for a drop to their respective 50’s  and with weakness apparent in $NYSI/$NASI then such a move can’t be ruled out. For the moment things don’t look too bad with  the majors just pausing but if a pull back does get underway then one can never know just how extensive that pull back might be especially since support is not support until after the fact.

Never forget that paranoia is just a higher form of awareness.

GL in the week ahead.

 

Weekend Update January 9th, 2011

Fibonacci mystery solved.  The 1277 Fib target came by calculating the July low, the August high, and the September low. Note that 1350 appears in this projection, as it does in the others. Just scroll down to find my most recent post on Fib targets.

Just a couple of things to keep in mind for the week ahead. If you go back to 2000, you will see that January’s, due to the impact of earnings, I’m sure, are split about 50/50 with regard to how the month turns out. Last year the markets took off like a rocket and didn’t stop until the 11th, burped, ran for a few more days, then rolled over into early February.  With $TRAN up 1.7% , $CYC up 2.57%, $OEX up 1.31%, $COMPQ up 1.9%,  & $SOX up 3.38% so far it could be that the market will just rally on. After all, wouldn’t it be too convenient for the market to follow last year’s pattern? Well, it’s never that easy.

IWM was only up 0.36%, $XTC was only up .21%  while IYR was  down .41%, XLB was down .25%,  RTH was down 1.51%, XRT was down 2.95%, and the $CRB Index was down 2.66%,  due to a 2.59% rise in the value of the $USD. $CRB Index may also be feeling some of the effects of the Chinese rate hike and if so then expect more weakness in this key area.

Is the market starting to split or is this weakness just a one week wonder? I don’t have an answer, but what I do know is that bullishness is reaching mega froth levels not seen in quite some time.

ISEE All Equities Only closed at 283 on Friday and has closed above 300 six times since the first of December with two of those six instances coming last week. Is a reading of 300 the new 200 for this index?

$NYSI & $NASI both produced negative ticks on Friday which pushed their respective McClellan Oscillators below zero, something that is supposed happen only in down trends. This further implies that $COMPQ and $NYA are getting oversold even as they rise and this idea is reinforced  because $NAMO is very close to tagging or pushing through its lower BB. A new paradigm here, as well?

$BPSPX has pushed up to 87, it’s highest point so far in this rally. In the past, which is certainly no indication of future performance, $BPSPX has only been able to stay in the mid-80 area for about three weeks before rolling over. It’s now been four weeks and $BPSPX still rising. $BPSPX has only climbed higher on three previous occasions going back to 1998. It went to 88.8% in January of 04‘, it went to 88.6% in September of 09′, and it went to 87.20% in April of 2010.

When $BPSPX topped out in January 04′, the $SPX rose another 20pts over the next several weeks to the 1160 area. It then rolled over and dropped 100pts,  finally bottoming in August. The September 09’ high in $BPSPX led to an approximately 70pt drop in $SPX over the course of two weeks.  And we all know what happened in April of 2010 after the $BPSPX peaked in the middle of the month.

But $BPSPX isn’t the only Bullish % Index that has climbed into nosebleed territory.

$BPMATE is now at 90% after having reached 96.88% in the second week of December. This 96.88% reading is the highest for this index going back 10 years. It’s previous high over the last ten years came in January of 04′, when it hit 93.79%.  $DJUSBM consists of 66 stocks, two of which, AA & DD, are in the Dow. But what may be more important is that $BPMATE and $BPINDY appear to move in tandem.

$BPINDY is now at 94.8%, its highest reading going back 10 years. It’s previous high reading came in February of 07′ when it hit 92.31%. Prior to that it rose to 89.83% in January of 04‘. $DJUSIN consist of 246 stocks, many of  which are heavy hitters in the Dow, including UTX & GE, to name a few.  I don’t know if $BPINDY is peaking or if it has peaked but there is no way the Dow can stay aloft once $BPINDY stalls or starts to roll.

Add RTH to this mix and you get two more Dow stocks, HD and WMT.

Over the past month or so, Bullish Sentiment has gone to multi-year highs and this is evidenced by multi-year highs in these Bullish % Indexes. Why, I don’t know. Is it all the Fed and the Fed’s POMO $$? Has the Fed created a bubble? Given that GDP is not expected to rebound in 2011 and may not rebound until 2012 or later, it certainly does appear that equities markets have gotten way ahead of themselves.  But bubbles can go on and on, especially with Bernanke suggesting there will be QE3, QE4, etc.

Even with POMO free money injections we now have four key Dow stocks in indexes that are currently under pressure and we have several  Bullish % indexes at or near all-time highs, with one of those indexes already rolling over. If $BPINDY moves in tandem with $BPMATE, like it has in the past, then this simply means that fewer and fewer of these important stocks will be rated ‘buy’s’ per P&F charting.  Well, if they’re not ‘buy’s’ then what are they? The answer to that question will depend on who holds those stocks and their particular goals or objectives. The bottom line here is that $BPINDY needs to be watched like a hawk in the days and/or weeks ahead and you can get a hint as to changes in $BPINDY by following XLI. If/when XLI starts to show any signs of weakness then this weakness will become immediately apparent in the Dow, and if the Dow starts to falter then, of course, the other major indexes will  follow.

This is a chart of $CPC I’ve been watching, along with another one that I posted here a week or so ago. Hard to know if these MA’s have bottomed  because they can go much lower. Also, Cobra has a great chart of $CPC, CPCI, & $CPCE in his public charts section over at Stock Charts that is worth checking on a daily basis.

Chart of $SPX  showing it more or less struggling at the current level which happens to be the Fib target level. Back in November, when $SPX approached the previous Fib target, it rolled over, which is what is supposed to happen when these targets get hit. After a consolidation period, which allowed $SPX to build strength, it pushed on up and through the Fib level. I don’t know if the same thing will happen this time.

Charts courtesy of StockCharts.com

Good luck in the week ahead.

Weekend Update November 27th, 2010

The big wild cards in the coming week are going to be news driven. From Xmas shopping, to North Korea, to problems in Europe.  The markets are currently held hostage by news events as most earnings reports are out of the way.

Bulls vs Bears

Bullish:

$BPSPX ticked up on Friday even as the market dropped.  It is now within 2.6 percentage points of its November 8th high. The stochastic is now below 20 and may start to move up in the next few sessions. Maybe.  Not adding to long positions or initiating new long positions while the Sto has been dropping continues to be a fairly good strategy.

$NYUPV closed at 78.10 on Friday. I’m not sure how reliable this reading is given the 1/2 day of trading.  $NAUPV, which I really don’t follow as closley as $NYUPV, closed at 204.78, the same level it hit on November 16th, but I’m not reading much into this, either, given the 1/2 session.

$NYUPV:$NYDNV hit .22 on Friday. When this ratio gets into this area, it usually means that the market is very oversold, but, like $NYUPV, this ratio may be skewed due to the 1/2 session.

$VIX nearing upper BB. $VIX may tag its upper BB on Monday. A bounce of some kind may or may not follow.

POMO $$ coming in on Monday, not Tuesday as I posted previously. $33 billion minimum throughout the week. While this hasn’t led to any rallies lately, POMO injections may be what is keeping the market in its current holding pattern.

$TRAN, $CYC, $SOX, $RUT, $NDX, $COMPQ, RTH, XLE, & $XAL remain ‘holds’ per the 9/20 cross method.

P/C Ratio closed at .85 which is only slightly bullish, IMHO.

$TRIN closed at 2.13 on Friday and has pushed the  5-day Arm’s Index to 8.32, which is clearly oversold. This should/could mean that the bulk of selling is over for now but that doesn’t mean a bounce on Monday. Insider selling could be skewing the daily $TRIN readings. See below.

Bearish:

See Chris’ $SPX Signal Watch Table, link to your right.

Insider selling reaches an unheard of 8000:1 ratio in the past few days. Insiders are expected to increase their selling as the new year approaches in order to avoid paying an extra 5% on their capital gains. The new capital gains tax increases from 20% to 25% on January 1st. This selling is increasing the floats in many stocks and will ultimately have a dilutive effect on the value of stocks and earnings per share going forward.

$SPX, $INDU, $NYA are ‘sells’ per the 9/20 method and need to get back above their respective 20MA’s ASAP. I think most of their problems are coming from the financial sector so until XLF, $RIFIN, IYF either bottom or start moving up, then you just have to expect the majors to languish.

$USD in a strong up trend and like in the past this is putting pressure on most equity classes, but $SOX and $TRAN have so far only been negligibly impacted. If $SOX and $TRAN do start to languish due to $USD strength, then $NDX/$COMPQ & $RUT will follow.

$SPXA50R dropped by 5 percentage points on Friday to 62.20%. Until this starts to rise consistently and gets back above 75%, then longs beware.

Chart of $SPX showing first a bull flag pattern and break out and now what could well be a bear flag pattern. The bear flag would be confirmed, at least initially, with a close below 1180. A close below 1173 could open the door to a serious drop, IMHO, of course.

Click here to open chart in new window.

$NYMO & $NAMO remain below the zero line. It looked like they might get above zero but Friday’s sell off prevented that.

$NASI & $NYSI are locked in a down trend and until these two base and start up, longs are at risk.

Chart of $NYSI showing various stages of current ‘sell’ signal.

Click here to open chart in new window.

Charts courtesy of StockCharts.com

No Lowry’s data this week as Puplava is at the San Francisco hard assets show, but I think it’s safe to say that Lowry’s  current ST sell signal remains in effect.

The $SPX is now up about 6.6%  or 74pts for the year which isn’t really a bad gain but is far from the 25% gain that I predicted on January 1st. And of course it could easily drop 6.6% at any time which is why I say that money in the market is money at risk. I own shares of a Ginnie Mae Fund and those shares will return, on a compounded basis, a little more than 6% this year and will do so with little or no risk. While I spend several hours each day going over stock market data, I only spend a few hours a year managing my Ginnie Mae fund. Since I believe that 2011 is going to be a much tougher year for traders than 2010 and will require countless hours of work in order to stay in front of or with the trend, I am seriously considering following insiders out the door. I can, of course, change my mind at any time, but one thing I’m not going to change my mind about is my last post on this blog, which will be January 1st, 2011.

Only the paranoid survive.

GL in the week ahead.

Weekend Update November 21st, 2010

$SPX 7 vs 3
$COMPQ 6 vs 3

These are the number of days down from recent closing highs and the number of days up from recent closing low. If the market is indeed strong, then taking out the recent highs should be no problem in about the same number of days that the market went down.

Wild Cards in the week ahead include more POMO $$, with 7-9billion on Monday, $USD strength and/or weakness, Chinese interest rate hike, and a potential pre-holiday positive bias. One item that may set the stage for the week may be HPQ’s earnings which, if I have this correct, will be released Monday before the bell. LLTC, which is about 5% of the $SOX, & BRCD also report on Monday.

Bulls vs Bears

Bearish:

Lowry’s still has a ST sell signal in place.

P/C Ratio closed at .66 on Friday.

NDR Crowd Sentiment Poll, see Trader’s Narrative to your right, indicating extreme bullishness. This particular sentiment gauge is new to me.

$INDU, $COMPQ, $NDX, & XLF still below their respective 20MA’s. XLF looks to be the weakest of these.

IYR below its 50MA after a very high volume trashing on Tuesday.

97% up day on 11/4 could potentially be a blow off topping signal.

$NYSI & $NASI still putting in negative ticks so $NYMO and $NAMO remain below their respective zero lines. $NYMO & $NAMO put in lower lows vs the August/September lows and have been putting in lower highs since early September, which was the last time $NAMO came near its upper BB.

$NYHGH went backwards on Friday in a sign of negative divergence, but as we all know these divergences haven’t meant anything lately.

Bullish:

$RUT, $TRAN, $SPX, $CYC, $SOX, $NYA, $XTC, $XAL, and a few key sector ETF’s, like RTH and XLE, closed back above their respective 20MA’s.

All of the A/D lines, including those for the $NDX & $RUT, have been rising in sync with the markets.

Except for $NYHGH, $NYSI, & $NASI, all of the other breadth indicators that I track have been rising in sync with the markets.

$BPSPX has risen for the last three sessions.

$SPXA50R has risen for the last two sessions.

$VIX rallied for a few days over the past couple of weeks but is now back in its longer term down trend. It could make new yearly lows before reversing.

IYR: While IYR is languishing, it’s important to note that 76% of the components within IYR closed in the green on Friday.

*****

 

As usual, we have the Yin and the Yang, the dangerous opportunity. The trend off the September lows is being challenged at the moment and while each small blip in the market since the September lows has resolved in favor of the bulls, there is always the chance that this pull back will go to the bears. IMHO, it is absolutely imperative that the lagging indexes and sectors clear their 20MA’s on Monday and do so with gusto. $SPX 1232 is the next Fib projection target, which $SPX missed by 5pts in the recent run up. If $SPX can first get back above round # support at 1200 and then work its way back to 1227, then there is a chance that it will rise above 1232. A rise and close above 1232 would/might/could set the stage for a run to the next Fib target of 1277.

Every bull, every bear, and every computer on the planet is going to be on the alert for either higher lows for the major indexes or for a double top. Regardless of the camp you’re in, I think it’s important to reserve judgment on market direction until we see how the market deals with recent swing high levels.

Chart of $INDU showing how it has broken the minor down trend line along with direction changes in RSI, Histo, and Sto.

Click here to open chart in new window.

Chart courtesy of StockCharts.com

This chart of the SG for the $SPX shows the SG more or less flat lining for the past four days after the big drop on Monday.

Quick Update November 19th, 2010

Using the 5/10 EMA method, RTH, $SOX, and $TRAN got new buy signals today. Using the 9/20 method, none of these actually got a sell signal over the course of this pull back.

There are a lot of sectors out there that are moving up including XLI, XLB, $XTC, $RUT, and $COMPQ/$NDX. But financials and Reit’s are not participating and this is going to have to change if the markets are to move higher, IMHO.

The biggest problem I see for Monday is that the P/C Ratio closed at .66 and that generally means at least a pause day for the following session. However, ISEE All Equities closed at 208 so this low P/C Ratio may have to do with Op/Ex. Click this link for one of Cobra’s charts showing various P/C Ratios.

Pre-holiday trading generally favors the upside but the market might take a dip on Monday based on those low P/C readings. $INDU, $SPX, & $COMPQ, are crawling up along the bottom of their respective 20MA’s, while the $RUT, $NYA, $TRAN, $CYC, & $SOX closed above their respective 20MA’s. If the laggards are able to get above their 20MA’s on Monday or anytime early next week, then the market should be good to go, IMHO.

A paranoid trader knows to never assume anything.

Update November 18th, 2010

Looks like DELL and CRM will have a positive impact on the markets tomorrow, or not. You just never know.

$BPSPX ticked up today, which to me is very important.

$SPXA50R had a major uptick today. Really needs to get back above 75 but 68.40% is getting close.

WSJ showing 88% of volume went into advancing issues.

$NYMO and $NAMO still below zero but moving up. $NYSI down tick was -30 today compared with yesterday’s -67 and Tuesday’s -86, which does appear, at least so far, to have been a climax sell signal.

These two following indicators are showing an extremely overbought market which probably means a consolidation day tomorrow.
$NYDNV at 157
$NYAD, the daily, at 1886

Chart of $INDU showing how it tagged the 50MA and bounced. Would be positive for $INDU to get back above the 20MA, which is only about 30pts higher.

Click here to open chart in new window.

Chart courtesy of StockCharts.com

Markets will need some kind of follow through or maybe a pause day tomorrow, just no red.

Update November 15th, 2010

On the evening news tonight they’ll say that the Dow closed up 9pts and everyone will be happy, but anyone who was watching the market today has to be concerned that the Dow closed almost 80pts off its early morning high.

[Adding this much later that same night: Cumulative $NAAD rose today even as the $COMPQ fell by 4pts in a sign of positive divergence. There was also positive divergence in $NYHGH and $NAHGH.  If you take a look at IYR using a 5,3,3 Sto and BB’s, you’ll notice that IYR is getting very oversold and is about to tag the lower BB. Just sayin’.]

Retail numbers were better than expected and yet RTH got hammered thanks in part to AMZN. Here’s the problem: Ceridian came out with their latest report last week which showed another drop in diesel fuel consumption by over-the-road truckers and this, of course, means that product is not headed for the shelves of a mall near you because retailers are worried about Xmas season sales. Ceridian also indicated that Industrial Production will be down again and this probably means that IP won’t meet the estimate, which is .30%. Last month IP was ignored by the market. Will it be ignored tomorrow if it comes in under estimates? IP will be released at 9:15 AM.

$INDU rose up in the bear flag pattern that I showed on Friday, but then failed. It pulled way back and closed below the 20MA, which in my mind negates the flag pattern completely and sets up the down trending channel that I have drawn on this chart.
Click here to open chart in new window.

I did something almost every day last week to see if I could get one of you, besides Chris,  to take the time to make a comment about it.  Not too late.

I may add some stuff later if I see anything important. Otherwise what I said over the weekend about potentially having two more days of selling remains valid. However, I am concerned about what happened to GOOG today because obviously this rally is going nowhere without big tech.

Click here for updated $SPX daily chart. 1180 is going to be an important support level and the flag pattern is aimed right at it now while the 20MA is rolling over.