Weekend Update April 10th, 2011

$NDX/$RITEC:

With AAPL being reduced to 12% of the $NDX, it won’t be as easy as it used to be to manipulate the price of the Q’s. $NDX may start to move more like $RITEC, which has been underperforming.

Zweig Breadth Thrust signaled a consolidation period ahead and so far that’s all it’s been with most major indexes essentially flat on the week. Exceptions would have to be $CYC, down 1.68%, and $TRAN, down 2.65%. So, is that it? Is the consolidation over? I have absolutely no idea. If oil were to suddenly drop then maybe.

Bulls vs Bears

Bullish:

P/C Ratio at .87 is slightly bullish for Monday.

$NYHGH slight positive divergence last Friday.

$BPSPX +.20 last Friday. At 82.60 this is back in the mid-80 range that, prior to this latest move, has been a cautionary level meaning that one has to be careful adding to longs as this is showing overboughtness.  Back in December, when $BPSPX first entered this mid-80 zone, $SPX was trading at around 1250.

RSI 14 on 60min charts of $TRAN, $CYC, and IYR dipped below 30 in Friday’s session with each rising above the 30 line by late in the session.

Bearish:

Zweig Breadt Thrust  at 51.58 is dropping quickly.

$SPXA50R at 70.20 has lost the important 75 level.

Sell signals in the 60min time frame for $TRAN, $CYC, IWM,  & IYR with judgement call sell signals for $SPX and other key sectors. By that I mean that these have closed below the 20MA in the 60min time frame and are either just above or just below the most recent trend line. They could go either way.

Sell signals using the 3EMA/10MA method for $TRAN, IYR, $CYC and others. Be careful using this set up because it will whip saw you to death.

$NYSI & $NASI had negative ticks last Friday. They started losing momentum early in the week so this was expected. At this time, these are showing indecision so even though I’ve put these in the Bearish section, they aren’t really that bearish, yet.

$VIX with 5EMA is bearish and potentially very bearish. But as you can see from the linked chart, it can also be very early.

Oil.

ECB rate hike this past week which raises the possibility of rate hikes here.

Neutral:

Just about everything else I watch, from the cumulative $NYUD to the cumulative $NYAD, is giving neutral or confirming signals. In other words they are moving in sync with the latest move. Since they are moving down with the markets, then it will be important to watch for a positive divergence in these and others.

*  *  *

The markets can move up without some key sectors, but they’re not going anywhere without $TRAN. Usually about the time one or more key sectors become obviously weak, then The Buyer shows up and we’re off again.

This chart shows that $TRAN has broken its most recent up trend line. From its swing low in mid-March to its most recent swing high, $TRAN moved about 10%. Since its April 2010 high, it has moved about 8% higher so this latest little rally leg was most definitely parabolic. I’m using Fibonacci fan lines on this chart because they seem to fit well and they give some kind of an idea about potential support levels. IMHO, support is pure Voodoo,  akin to ‘targets,’  so you don’t buy some phantom support level. You just sit tight and wait and see what happens when these levels are approached. Meanwhile, $XAL has been on a ‘sell’ signal since December and looks to be headed lower. On Friday, some of the airline stocks in the transportation index were down 6%,  but then The Buyer showed up and defended price and they closed off those lows, though not by that much.

Chart courtesy of StockCharts.com

It’s all about oil now as we remain hostage to this important commodity. Until the price of oil stabilizes and/or begins to drop, then pressure on transport stocks will persist.

AA reports Monday after the close of trading. Apparently there are high expectations for AA and they’re expected to earn .27 cents a share. Last year, on the 13th of April, AA dropped a little after the release of earnings on the 12th. Because AA has been pumped to the moon over the past three weeks, I would expect that, regardless of earnings, AA will get sold off on the 12th and maybe beyond. But I could be wrong.

Paranoia works well at times like these.

GL in the week ahead.

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 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.

 

 

Weekend Update March 12th, 2011

This is not rocket science. By using $NYADV, daily $NYAD, $NYUD:$NYUPV, etc, I was able to predict with some certainty that shorts should take some money off the table on Thursday and that the market would most likely bounce on Friday. You can do the very same thing by getting to know these gauges and ratios.

When I first became aware of the power of $NYUPV back in August of 2009, I sat down and back tested it. I then logged the extreme readings and noted how the market reacted to these extreme readings in the following sessions. I then began to add more and more of these gauges, their extreme readings, and how the market reacted. This process took several hours of back testing but it was time well spent.

There are only a handful of you who read this blog with any kind of regularity and some of you probably thought that Thursday’s DOOM would lead to more DOOM on Friday, especially given Japan’s tsunami and the war in Libya, etc. But it doesn’t work that way. The market became extremely oversold on Thursday meaning that 90% (It was an 89% down day, BTW) of those who wanted to sell had done so. You had some residual selling on Friday morning but the $TRIN at .6x and .5x for almost the entire session indicated that buyers were stepping in and taking all the shares they could get their hands on and eventually all that buying turned the indexes positive. The Big Boyz, who were probably out on the back nine  at about 3:00p.m., called their respective trading desks with a one word message: “Sell!” That selling brings into question any more up days early next week. Just have to wait and see how that develops.

The point of all of this is that the market is all about probabilities and when you use things like $NYUPV, etc, it allows you establish a probability as to how the market might react. My call Thursday for a bounce on Friday was based simply on the fact that in the past when the market has gotten extremely oversold you have to expect a bounce is in the works. Forget the news, mute CNBC, and stop reading those mind altering message boards and forums. In this age of social networking it’s not easy to break away and trade in isolation, but news, either good or bad,  the opinions of others, especially E Wave perma bearz, will get you in nothing but trouble.

Below I’ve included some of the gauges and ratios that I follow on a daily basis. Some are better than others. Some reveal duplicate information. These are all direct links which you can copy and bookmark and then you can change the settings to travel back in time and back test them. Do it. It will be time well spent and what you learn can be applied time and time again and will be valid until you close up shop.

$NYUPV: This is one of my favorites.

$NYUD:$NYUPV: This one has not missed a bottom since March 09′, but you have to know the correct level at which it marks bottoms.

$NYADV: This lets you know when the market is overbought enough to bring about a pause day and also marks bottoms very well.

$NYDNV: This one goes hand in hand with $NYADV.

$NYAD: This is the daily and lets you know when the market has become way too oversold. It also will help you anticipate pause days.

$NAAD: Same as $NYAD, only different.

$NYMO: Used with BB’s to show when market is either overbought or oversold. Note last Thursday’s tag of the lower BB.

$NAMO: Same as $NYMO, only different.

$NYUD:  This is the daily and is similar to $NYADV.

$NYLOW: Notice that back in November this hit 150 area and marked a good entry area. It did the same in January with similar results. It’s most recent highs are just not high enough.

$NYHGH: Be sure to look at how low this went in the late June/early July period.

$BPSPX with Sto’s: The strategy here is to avoid buying when the  14,3,3 sto breaks 80.  The buy should come when the 14,3,3 sto rises back above 20.

$SPXA50R:  Could be headed back to its Sept. low. Might be headed back to its June/July lows.

$SPX w/ P/C Ratios:  Stolen from Cobra and certainly not as nice as his, but it gets the job done.

Zweig Breadth Thrust & 4wk New High/New Low can be found at Freestockcharts.com. Just type in T2 and you’ll see them in the drop down menu. You can also get Cumulative Volume Index there, which is the same at the cumulative $NYUD.

The reason I’m putting all this stuff up here today is that I am going to be logging off sometime in late April. The blog will stay for as long as WordPress will allow, but I will post no more. The tools above and a simple trend line have served me well and they should do the same for you.

These charts do not look so hot.  The 5/10 method represented in the first $SPX chart has been on a ‘sell’ signal since February 22nd.

On this weekly chart, you can see that the 20/20 Sto has only dropped below 80 two times since the March 09′ lows and if there is any more weakness in the week ahead then it looks likely that the 20/20 will take out 80. If it does drop below 80 it could take several weeks to bottom and recycle up.

Charts courtesy of StockCharts.com

I have no idea what’s going to happen next week, but if the market does bounce I don’t think it will present a buying op. My problem continues to be the absence of a climax sell signal. We need a wash out before the market can move higher as such a wash out will dose the frothed-mouthed bullz with some reality and then we can climb that wall of worry higher.

Wild cards, we’ve got ’em.  War in Libya and earthquakes in Japan, high oil prices that will impact earnings which will start coming in at the middle of April. Ceridian’s last report shows that the economic recovery is slowing, but that was before the latest spike in oil prices.

Basically, uncertainty  is certain.

Cash is a position.

GL in the week ahead.

Quick Update February 23rd, 2011

$NYMO and $NAMO pushed through their lower BB’s today and that probably means that any further selling won’t be as intense as it’s been the past two sessions.

Most of the other breadth indicators that I watch are giving neutral readings today which suggests that we will have some more downside to the point where things like $NYUPV, $NYUD:$NYUPV give better sell exhaustion signals.

I have been long the market more or less since the 1st of year with UWM, UYM, USD, SSO, and DDM. Because I’ve been so paranoid about some kind of pull back in the works, these positions have been kept very small. I added a few shares of SSO and DDM today but these two positions still remain very, very small.

Before I add anymore to my long side exposure, I want to see some kind of climax sell signal like an $NYUPV reading well below 80 or maybe the P/C Ratio at 1.2x or higher.

Cash works best in times of uncertainty.

Weekend Update February 20th, 2011

CAUTION

“Prediction is very difficult, especially about the future.”
Niels Bohr
Charts do not make the market.

The market makes the charts.

This is such a simple but overlooked concept.

There are thousands of TA experts out there drawing Voodoo and Nazca Lines on their charts as if those lines are predictive. They are not.

There are thousands more TA experts out there using long term charts looking for double tops or resistance based on something that happened 3-4 or even 5 years ago. BS. Total BS. You tell me one thing that happened in 2007 or 2009 or even 2010 that will have any bearing on what will happen in the markets in the coming week or weeks. You can’t and yet TA experts look at long term charts and think that what happened years ago will set the stage for what happens in the future. This is a waste of time.

Double tops, long term resistance lines, and etc, are completely irrelevant to what happens in the markets starting next Tuesday. What happened in the past has happened, it’s over and done with and has no bearing whatsoever on future market events. You can not travel back through time and trade the market in March of 09′ just as you can’t travel forward through time and trade the market next year.

There are people out there going short the market based on some mythical long term resistance line in the $SPX chart. Others out there are calling for a double top in the $COMPQ based on something that happened in 2007. These deluded fools, many of whom have bought in to E. Wave chicken scratchings,  suffer from an important component of brain washing known as ‘belief without evidence.’

When the market peaked in April of 2010 there wasn’t a chart out there that gave any hint of the seriousness of the decline into the July 10′ lows. No H&S pattern, triangle pattern, cup & handle, or any other  blah blah blah pattern indicated that  $SPX would drop from 1219 to 1010 over the course  the next two months.  All anyone knew for sure was that the trend line had broken and that the market was flagging off.

Be here now. You can only trade now and the only chart of importance is the one that starts at the September lows. The market adds a candle to this chart every day and the best we can do is watch the current chart for signs of weakness and/or strength and the best tool for doing this is a simple trend line. Until trend lines break in the current charts, then you’ve just got to Zen this thing.

But I digress, or, if you throw enough stuff against the wall eventually something will stick.

$BPSPX: As mentioned Friday, this has climbed to a record high of 89.20%. It could go higher, but why? I started saying back in December that $BPSPX would only get into the mid-80 level for a few weeks before rolling over because that is what has happened, historically. Well, fool me once, shame on you, but fool me ten times and I’m clueless.  This should be like the red flag of frothiness but you wouldn’t know this from the way the market is acting.

Stealth Distribution: Even though the $NYA was up 10pts on Friday, the $TRIN closed at 1.37 indicating quite a large imbalance between the number of shares offered vs those being bought. Advancing volume vs Declining volume was just about even so I’m not really sure where the selling was coming from. One day is no big deal, but stealth distribution has been present before every pull back since the March 09′ lows so I’ll be watching to see if there’s anymore of this next week. The big problem is that there have been signs of stealth distribution at various times since the September lows and this did not impact the markets, naturally.

P/C Ratio: P/C ratio closed at .72 on Friday, which would be considered slightly bearish for the coming session, but……..

$OEX P/C Ratio: $OEX P/C ratio rose to 2.33 on Friday. On the surface, this appears to be bullish for the following session, but one has to remember that the Big Boys trade the OEX options and if they’re getting concerned, then may you should too. However, they could easily flip bullish on Tuesday so this is just something to watch.

$TRIN w/ 55MA: The 55MA tagged .96 on Tuesday but then rose to .98 on Friday. The 55MA may recycle up, but if the markets should rally on Tuesday and Wednesday then that might be enough to drop this. It’s taken the 55MA almost four years to get to where it is now and it may take several more days or even weeks before the 55 drops below .95 or maybe even below .90, assuming that it’s going to. And this could be ignored like so many other things.

$VIX, $VXO, $VXN, etc: These are all sitting close to their recent closing lows and nothing says they can’t go lower. I’ve been saying for months that $VIX could drop to 10-12 and it just might before there’s any kind of meaningful pull back.

Fibonacci Expansion Targets:

$SPX 1350 is the 261.8% expansion target using the July 10′ low, the August 10′ high, and the August 10′ low.

$SPX 1352 is the 61.8% expansion target using the March 09′ low, the April 10′ high, and the July 10′ low.

This 1350 area of fib confluence is supposed to act as a resistance zone that will cause the $SPX to pullback, build strength, and then push on up and through. But this is theory and we’ll just have to see how it goes now that we’re a hare’s breath away.

AAPL: AAPL remains 20% of the $NDX and is an extremely important and influential stock. I don’t know why it sold off on Thursday and Friday but no long is safe if AAPL continues to get sold. Institutions own huge chunks of AAPL and they’re not likely to sit back while AAPL loses value unless, of course, one of their own has decided to take profit due to the uncertainty of Job’s health. Pull up a chart of AAPL with $NDX, $COMPQ, and $SOX in the background and you’ll see that as goes AAPL so go these important indexes.

$NYHGH/$NAHGH: We’ve had this negative divergence going on in these two and I was starting to think that maybe it’s too much to ask for these to make new highs day after day given the maturity of this rally leg, then I read this article from Carl Swenlin over Decision Point and it got me to thinking.

Zweig Breadth Thrust: This rose to 59.40 on Thursday then dropped slightly to 59.14 on Friday. It is showing overbought but 60 really has been the line in the sand. A nice green day on Tuesday could push this into overbought territory.

4wk New High/Low Ratio: At 91.07 this is close but like ZBT it’s just not the cigar. Again, a nice green day on Tuesday and this could rise to 95 which has worked well as a signal that the market is sufficiently overbought to initiate some kind of pull back or another. But we’re not there and close just doesn’t count, IMHO.

I have no idea how long this particular rally leg will continue as it’s gone on longer than I ever thought possible. It took me a while to recognize that the market was behaving in a way similar to the rally out of the March 09′ lows, but even that rally had a serious pull back in the June/July period and then multiple pull backs on the way to the April 10′ high. So this rally leg is writing its own history day after day and one day it will run out of green ink, I just don’t know when.

Watch AAPL and GL in the week ahead.

Update February 14th, 2011

(Added 9:35 A.M. 2/15/11: Money managers more bullish now than anytime since 2001.)

 

This is a direct link to a $TRIN chart that I follow. Bookmark it and pay close attention to the 55MA over the course of the next several sessions. As of last Friday, the 55MA hit .975 and unless the market falls off a cliff in the next few days, then the 55MA is likely headed lower.

This $TRIN chart is from 2007 and shows the 55MA falling below .95 and then, over the course of the next several weeks, falling to a low of .925.  Dick Arms says that when the 55MA hits .90 then the market is clearly overbought and due for a pull back of one type or another, but all it took to signal a top in 2007 was the 55MA dropping below .95. The 55MA may or may not drop to .90 in 2011 and if it does tag .90 it may or may not mean anything as historical precedent has been of little or no value of late. Regardless, if the 55MA on the $TRIN should tag or drop below .95 any time in the next few days, I’m going to cash, right or wrong.

Chart courtesy of StockCharts.com

It’s 12:30 P.M. ET and the $TRIN is sitting at .76 indicating heavy buy-side action which is further confirmed with the ISEE All Equites just hitting 346 . A few more days of this kind of action might push the $CPC/$CPCE into another ‘sell’ signal while the $VIX, etc, prints a new closing low or lows.

Weekend Update February 6th, 2011

Bulls vs Bears

Bearish:

$NYHGH & $NAHGH: After putting in high readings in early November, these two gauges continue to put in lower highs. While this is potentially Bearish, the market remains unconcerned.

$XAL: Down 2.6% for the week. Was it the winter storm and all those cancelled flights? DAL came out and said they expect a 1% increase in passenger volume for 2011. Charts of DAL, AMR, and LUV are showing lots of stress.

$BDI: I think I mentioned several weeks back that it looked to me that $BDI was trying to bottom, which, of course, never happened. $BDI could be heading back to its late 2008 lows. Taken at face value, this is saying that demand for bulk shipping space is waning and that bulk shippers have no pricing power. This flies in the face of the world wide recovery that everyone is so certain is upon us. Ho hum.

XHB: Home builders have been rolling over for the past couple of weeks and XHB was down a whopping .41% this last week. It’s hard to get too excited about this.

Cumulative $NAAD: Slight bearish divergence on Friday. The last negative divergence, which occurred in late October, was ignored by the $COMPQ.

$NASI: $NASI has been on a ‘sell’ signal since about the 20th of January when it fell below the 5/10/20 MA’s that I use on it’s chart. But you wouldn’t know this based on the performance of the $COMPQ, which closed at a new rally high this past Friday and did so on good volume. This needs to be watched for a possible turn-around next week.

Chinese Interest Rates: China recently announced that they will be initiating another interest rate hate at the end of the month. The previous hike did have an impact on XLB and the like, but this did not last. Still, another rate hike could have a lasting impact.

Bullish:

POMO Free Money VS The Little Shop of Horrors: Like the plant in The little Shop of Horrors, the market keeps screaming “Feed me!” with free money. $14.5 Billion minimum coming into the markets next week.  This week marks the end of the latest free money injections so a new calendar should be forthcoming.

TZA, FAZ, BGZ, and a couple of other inverse 3x ETF’s headed for reverse splits later in the month. This shouldn’t be surprising. The last time I played one of these, I bought TZA at 28.xx and sold it just a few days later at 26.xx. (I was so sure the market had put in a ST top. Geesh!)

P/C Ratio: P/C Ratio closed at .87 this past Friday which indicates the market is climbing a wall of worry.

$VIX: Well, that big candle last week turned out to be another false signal. $VIX has done nothing but drop since then and is now about 1pt above its lower BB. Have to see if anything happens should it get there.

Zweig Breadth Thrust: ZBT rose to 58.53 this past week but dropped to 55.46 on Friday, which is a neutral reading. 60 is the key # for this index and a miss is as good as a mile.

4 Wk New Highs/New Lows, or T2122 at Freestockcharts.com: This rose to 85.56 this past week then fell to 74.54 of Friday. When this hits 95 it signals that the market is overbought, but 85.56 is neutral.

$BPSPX: This hit 87.20 on Friday and has remained in the mid 80’s now for more than two months. While the history of this index says that this shouldn’t be happening, it obviously is.

$SPXA50R: After dropping to 67 a little more than a week ago, this has climbed back above 75% to 77.80%.

$NYSI: The Summation Index rose by 68pts last week and is now on a fresh ‘buy’ signal on the daily chart using the 5/10/20 MA’s. It did show some loss of momentum last Friday compared to digit increases on the 1st, 2nd, and 3rd. $NYSI recently put in a lower low but this would be negated as soon as it rises back above 635.

TLT: TLT was down 3% for the week and the money coming out of bonds is apparently finding its way into equities. With the Fed’s POMO injections, it’s almost as if Bernanke is facilitating the exit of the bond market by big players and it makes you wonder just how fast the bond market might fall if Ben wasn’t there to pick up the slack. (TMV up 9% for the week. Not a recommendation. Just sayin’.)

$USD: The dollar down again, though only .12% for the week and the candle on the weekly chart sure looks like a bottoming candle. The correlation between moves in the dollar and moves in equities doesn’t appear to be a factor anymore.

$TRAN: Transports managed to tack on 1.22% for the week even though it looked like $TRAN was headed off a cliff on Friday. Must have been my cries of ‘wolf’ that saved them. The potential Bull Flag on the daily chart is still in play as well as what might be a symmetrical triangle. As a 4th degree black belt iconoclast, I don’t believe in magic, etc, but I do believe in the power of the mad men at the helm and I just don’t think those bastages are going to abandon this key sector, but I could be wrong. Until one of the following is taken out, then key levels remain 5148 on the topside and 4988 on the downside.

The bottom line is that, in most cases, rising trend lines are holding which indicates Bulls remain in control. Other than POMO injections, I don’t know where the money is coming from but it seems that every day there’s just enough new money finding it’s way into the market to keep the market moving up. I’ve become so comfortably numb to the whole situation that lately I only check the market a couple of times a day. My latest Lion Fantasy Portfolio, which was started at the close of trading this past Wednesday, is already up 1.23% and is living proof that you can buy anything at anytime and still make money in this no risk market.

I currently have long positions in four different ETF’s and if we ever get any kind of pullback I will add a couple of others, like QLD and SSO. I’m done with the 3x’ers for now but would consider these after a pullback.

Weekly chart of $SPX. Really hard to find anything bearish on this chart. The only thing I’m looking at is that $SPX has climbed way above the 13MA indicating that $SPX may have gotten a wee bit ahead of itself. The next Fib expansion target is just 40pts up the road and $SPX gained 34pts last week.

Chart courtesy of StockCharts.com

GL in the week ahead.

Quick Update February 1st, 2011

Seems to me that the action of the past two sessions is a major fail for bears/shorts. $SPX close above 1302 on good volume deserves respect. I consider the $CPC/$CPCE and $TRIN signals null and void. And we move on.

Next important level for $SPX is 1350, which is the confluence of three Fibonacci expansion targets. Will be very interesting to see what happens once we get into that area.

This chart of $TRAN shows a break out from the Bull Flag pattern. It isn’t as decisive as I would like to see, but that should happen tomorrow. Or famous last words. (Or, how ’bout ‘5148’ on the chart? Geeesh!)

Chart courtesy of StockCharts.com

ISEE All Equities closed at 259 today and while that is nowhere near as high as we’ve seen this over the past couple of months, it may be high enough to create a pause in the markets tomorrow. Along this same line, I’m sure when I take the time to look, I’ll see similar, overbought readings in things like the daily $NYAD, etc.

$NYADV: Back test this in smaller time increments looking for instances where $NYADV rises up near or above 2400 and/or drops down near or below 500.

One of the biggest problems I have with E Wave and with others who try to set targets for the markets based on current charts is that these proponents believe that charts make the market. This is totally false. Others will say that price has memory and so they will look at 5-year charts in an attempt to divine support or resistance levels. More BS.

Charts do not make the market and thus their predictive value is extremely limited.

The market makes charts and the best we can know is what has happened and why this has happened.

I will probably not post anymore until the weekend.

GL

Quick Update January 31st, 2011

 

P/C Ratio closed at 1.01 so climbing wall of worry.

BIDU up $9 in the AH, so what else is new?

Outside of the $CPC/$CPCE and $TRIN signals, I have no idea why the market decided to pullback Friday. Egypt? It’s worse there now. MSFT’s bad forecast? Down again today. AMZN’s disappointing results? Down again today but didn’t stop the rally/bounce.

The market bounced today because, IMHO, the market became oversold per the daily readings of the  following measures:

$NAUD
$NYAD
$NAAD
$NYUD:$NYUPV
$NYUD:$NYADV
$NYDNV:$NYUPV

If today’s move marks a continuation of the move off the September lows, then we should know very soon. On the other hand, if today’s move is just a dead cat bounce reaction to oversold extreme levels achieved last Friday, then we should know that very soon, as well.

Chart courtesy of StockCharts.com

The market makes charts, not the other way around.