Super Quick Update April 20th, 2011

I have  extreme overbought readings from $NYADV and the daily $NYAD plus the $VIX and all the other volatility indexes blew through their respective lower BB’s today and so you would expect a pause day for tomorrow, under normal conditions.

Obviously AAPL’s earnings, etc., are setting up another rally for tomorrow, or so it seems at 7:20pm ET.

Looks like this rally leg may get some traction. If the $SPX should close above 1339.46 tomorrow, which might be a stretch, then 1344.07 will probably go next week.

Weekend Update March 5th, 2011

Longs are being robbed.

As I mentioned in my March 3rd post, pull backs don’t usually end without a capitulation event. Friday’s action looked good for such an event as many of the gauges and ratios that I track were set to give extreme oversold readings, but then the buy programs kicked in and that was that. IMHO, longs were robbed of a potential capitulation event and now we just have to wait for the next opportunity. The only thing that would change my opinion would be a close above the highs from Friday, February 18th.

On Thursday, I put up a link to a chart of $NYADV that I use and pointed out that, based on the reading above 2400, I expected a pause day for Friday. I guess I was smart by half on that, but that same chart can be used to watch for extreme oversold conditions, as well. A reading for $NYADV at are below 500 has been pretty good at marking when most of the heavy, panic-like selling is over. Friday’s reading of 1029 is just too high.

The chart shows what has happened following extreme overbought/oversold readings on $NYADV since the August/September bottom. The lowest reading we’ve seen since this pullback began was 725. Just as 2400 works on the high side to indicate the market is sufficiently overbought to bring about at minimum a pause day in the next session, a reading at or below 500 is necessary to indicate a selling climax.

Chart courtesy of StockCharts.com

When you use $NYADV along with $NYUPV & $NYUD:$NYUPV, you get a more complete picture. Back in November, when $NYADV dropped to 407, $NYUD:$NYUPV went to -13.25, but $NYUPV only went to 88,  just shy of the important 80 level.  A few days later, on Friday, November 26th, $NYUPV closed at 78.10 indicating a selling climax. Still, if you began to scale in long when $NYADV and $NYUD:$NYUPV gave their respective selling climax signals, you would have been okay as the market only dropped a few more points over the next eight sessions.

So at the moment I’m waiting for some kind of selling climax confirmation. If this pull back continues through the early part of next week or even longer, then we may get  Zweig Breadth Thrust to drop down below 40 and 4wk New High/Low Ratio may drop below 20.  The last time these two gave such readings was on 11/16/10, which was the same day $NYADV and $NYUD:$NYUPV gave their climax readings and just a few days and a few points from the bottom of that particular pull back.

Be careful. No one knows when this pull back will end and it could go on a lot longer than the froth-mouthed bulls expect. I do find it interesting that the smart money $OEX crowd was loading up on Puts on Friday, February 18th just  three days after the 55MA on the $TRIN tagged .96. Just sayin’.

GL in the week ahead.

Very Quick Update March 3rd, 2011

$NYADV showing to be very overbought which, in the past, has meant a pause day for the following session.

My big problem with what happened today is that when the market is in pullback mode you usually end the pullback with some form of capitulation event. Of course, that’s the way it’s always been in the past but this market isn’t like any past market so there’s just no way to know if we need a capitulation event to legitimize what’s going on. Or I’m just being paranoid for no reason.

As spring draws nearer, I’m going to be spending less and less time posting here. Today I only glanced at the market between staining window trim and doing a ton of other things in preparation for painting my house.  Once I start painting, that’s all I will have time for.

GL

Update April 16th, 2010

5:40pm

(Be sure to take a look at the post below this one about high ISEE readings.)

These suggest a fairly substantial bounce on Monday which, if you didn’t already know, is a misspelling of MOOOONDAY. But do your own due diligence. For those of you who are new to this blog, when you back test these, you have to disregard readings you get on MOOOONDAYS. Stock Charts is the best place I’ve found to pull these up.

$NYUPV
$NYDNV
$NYAD, not the cumulative
$NYUD
$NYUD:$NYUPV
$NYUD:$NYDNV
$NYUPV:$RHNYA
$NYDNV:$RHNYA
$NYUPV:$NYDNV
$NYDNV:$NYUPV

Very destructive move today on very heavy volume (see $NYA) which indicates that this wasn’t just Uncle Ted and Aunt Alice who were selling but the mad men at the helm. This being the case, the bounce that the above suggest may occur on Monday has a good chance of failing by the close. THEY will make it look good to try and draw you in but I’d be careful taking the bait.

Really no clue as to why we had the red day today. Could have been GE, GS, GOOG, the super low P/C Ratio, or those high ISEE readings.

The SG for the $SPX took a pretty solid hit today and it appears it dropped by about 10pts or so. The SG for the $COMPQ didn’t fare as badly but still looks to have dropped a couple of points. As far as I’m concerned, and based on extremely overbought markets, today’s numbers pretty much wipe out any bullishness I may have been harboring. However, let’s see how things go on MOOONDAY.

I’ll have the spreadsheet updated later this evening.

Just sayin’.