Late Night Update, April 12th, 2011

As I mentioned on Sunday, $TRAN, $CYC, and IYR were oversold and could bounce based on the RSI 14 in the 60min time frame. Only $TRAN has bounced, up 16pts today and 11pts for the week. If you look at the 60min chart, you will notice that $TRAN closed slightly above the 20MA which, according to the 60 minute trading strategy, would be a ‘buy’ signal. However, that 20MA is still pointing down so this could easily turn into a false signal.

Chart of $BPSPX showing that the 14,3,3 stochastic started dropping today. This set up has worked well in the past as a warning to would-be dip buyers to hold off adding to existing long positions or entering new long positions. The red line in February shows the kind of misery you would have been spared had you just sat tight until the dust settled.

Chart courtesy of StockCharts.com

Zweig Breadth Thrust dropped to 43 today when <40 is the better oversold signal. ZBT could continue to drop despite a bounce tomorrow. I’d feel better waiting for ZBT to drop below 40 before adding to any existing longs.

4wk New High/Low Ratio dropped to 32.51 today when 20 or less is starting to show extreme oversold so there is still quite a bit of room to go on this.

Something I forgot to mention over the weekend is the absence of a 90% up day to mark the bottom of this most recent rally leg. This rally leg did not start with a climax signal from either $NYUPV  or $NYUD:$NYUPV and it climbed higher on light volume without a 90% up day. All the work I’ve done studying the market since the 09′ lows tells me that this is not right and that this little rally leg lacks credibility and could be little more than a big fat distribution pump. This rally leg almost makes you believe that the market is ignoring high oil prices. Wrong!! It is not. It seems to me that the climax sell signal that is missing from this particular rally leg may come in the days ahead at some time and price point yet to be determined.

GL

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’.

Quick Update April 1st, 2011

If the $SOX, $RITEC, and AAPL don’t get in the game soon, then the weight they are already creating will bring this market down. For the moment nothing is stopping the $TRAN, $RUT, $MID and fertilizers.

Chart of $NYA with Zweig Breadth Thrust readings above 60 noted with blue arrow. Since I am long the market via a couple of ETF’s and stocks, I don’t care whether or not the market consolidates a little in the week ahead, but the reading today of 61.76 for ZBT indicates that we should get some kind of consolidation or pull back. Time, of course, will tell.

If you look closely at the chart below, you’ll notice that the blue arrows coincide with large hollow candles. We had a lot of 90% up days in the run off the September lows and those candles probably represent many of those 90% days. Since the March 09’s lows, every bottom that this market has put in has been characterized by a 90% up day, every bottom but the most recent one.  This, along with no extreme oversold readings from $NYUPV and $NYUD:$NYUPV, matters to me but it doesn’t appear to matter to the market.

Also notice on the chart how extended the $NYA is above the 20MA.

(Adding the following on Saturday, April 2nd:

The 4wk New High/Low Ratio went to 91.07 on 2/18/11 while ZBT only rose to 59.14, a slight drop from the previous day’s reading of 59.40.

On 11/4/10 the 4wk New High/Low Ratio went to 92.45 when ZBT went to 62.26.

On 10/13/10 the 4wk New High/Low Ratio went to 94.69 when ZBTt went to 60.71.

If you catch my drift. Basically we’re not as overbought as we could be but we may be overbought enough.)

Chart courtesy of StockCharts.com

I will try to put up a post over the weekend, but may not have time for it. Ski season is wrapping up here and we just got a few fresh inches in the mountains over the past couple of days.

Be sure to check out ETF Investment Outlook.

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.

Update March 1st, 2011

I sold UWM, USD, & UYM today but still hold a few shares of DDM, SSO, POT, & REMX. I very seriously considered going long SRS today as the chart of IYR looks very toppy. I’m up on POT and REMX, but down on SSO and DDM.  My gut tells me that holding longs here is not wise but the market has fooled me so many times since September that I decided not to unload everything today. But there’s always tomorrow.

My biggest concern is with the transports as this important sector is too influential to be ignored. While the market may bounce out of today’s low, nothing substantial is going to happen until $TRAN gets back in the game, IMHO, of course.

Chart courtesy of StockCharts.com

What is going on in Wisconsin is nothing less than an assault on the middle class. Republicans want a country where there are only two classes: the very rich & the very poor. In such a feudal system, employers set wages as low as possible and workers have no choice but to accept those wages.  While Republicans complain about the debt-ridden future that awaits your children and grandchildren, the future the Republicans have in mind for your offspring is slavery.

GL

Weekend Update February 26th, 2011

The pull back that happened last week is not the pull back I’ve been waiting for for several weeks and the way I see it the pull back that should come from way too much euphoria has now been postponed. The market is quickly repairing the damage that was done this past Tuesday and Wednesday with $SPXA50R back to 70.40% after having dropped to 63% mid week. Thanks to our buds in Libya we may never know if the $SPX would have reversed off the fib confluence area of around 1350. Of course, it may yet.

$TRAN and $CYC took the biggest hits on the week with both being down more than 4%. Clearly the rise in oil put a lot of pressure on the transports and this may continue. Big problem is that oil is not likely to drop in price anywhere near as fast as it rose in price so pressure on the transports may linger. An even larger problem is that increased oil prices have been a precipitating element in every recession we’ve had going back to the 70’s. Not saying we’re on the brink of a double dip but the revised GDP # this week suggests that the recovery may be cooling off and higher oil prices are not going to help.

It’s deja vu all over again for the transports. They came under distribution starting around the 19th of January and didn’t put in a new high until the 16th of February. And now you have to wonder if the action this past Thursday and Friday wasn’t just an oversold bounce. If we don’t put in a new high on the $TRAN before we put in a new low, then there’s your answer.

Chart of $SPX showing that the trend remains valid, though under some pressure. The 9EMA is still above the 20MA so that is good. $SPX is about 24pts away from making a new high and in a robust market that should easily be achieved by the end of next week’s trading, or famous last words, which ever comes first.

Chart courtesy of StockCharts.com

$NYADV showing overbought.

$NAAD also showing overbought.

I usually discount readings on Monday’s, but pay more attention to readings that come in on other days of the week.

Quick Update February 24th, 2011

60min trading strategy says buy when the RSI on the 60min chart dips below 30 and when the stock in question then rises back above the 20MA.

$SOX Index could be a buy, based on the above criteria, but because of all the weirdness in the market now it probably won’t hurt to wait for confirmation by at least one other sector. IWM, $COMPQ, Q’s, $TRAN are all close and if the AH action in DECK and CRM holds over until tomorrow, then maybe these will push above the 20MA and off we go.

 

The $VIX is still outside its upper BB  but could drop below those BB’s tomorrow which, along with indexes rising above their respective 20MA’s on the 60min charts, would be a better ‘buy’ signal.  However, nothing works every time and your mileage may vary. Never take investment advice from an anonymous blogger in the internets.

GL

Weekend Update February 13th, 2011

$TRAN +3.56% for the week

XLF +2.85% for the week

XRT +3.26% for the week

XHB +4.13% for the week

IWM +2.75% for the week

Will these key sectors enjoy similar gains in the week ahead, or is that too much to ask? Have they become overbought and in need of a cooling off period? $NYADV hit 2245 on Friday and is near a point that in the past has preceded pause days in the market, but news over the weekend could negate that signal. Big tech issues like AAPL, RVBD, BIDU, NFLX, AMZN,PCLN, and a host of others are driving this market and until buyers become sellers in these darling stocks, then lets party like it’s 1999.

Babak over at Trader’s Narrative has done an excellent job putting together a sentiment overview and is a must read. Based on all of Babak’s data, it’s clear the market is getting frothy again and while this is potentially bearish this frothiness is also a self-fulfilling prophecy and I’d be careful betting against the ability of the bulls drawing in more bulls.

The bottom line is that trend lines are holding and dip buyers are waiting in the wings ready to pounce on any and all weak sectors and buy these sectors right back up, as they did with $TRAN this past week. Until this market M.O. changes, then longs remain in control.

Chart courtesy of StockCharts.com

$BDI: Up every day last week. A follow-through this week could mark a bottom for this important index.

The picture isn’t completely rosy as there are some signs of weakness in $NYHGH, $NAHGH, $NYA50, and a couple of others as these keep putting in lower highs, but so far these weaknesses have been ignored by the markets.

GL in the week ahead.

 

 

 

Quick Update February 10th, 2011

From the way THEY closed the market, especially in light of how AAPL was getting hammered, I just wonder if THEY’RE not going to gap this up tomorrow. Just a guess.

$TRAN came back to life today and that is good for the market. Blew through the Bull Flag pattern and was sitting at the apex of the symmetrical triangle yesterday so it was going to blow out of the pattern today, one way or the other.

Chart courtesy of StockCharts.com

Op/Ex next week which could lead to more upside, or famous last words.

Quick Update February 8th, 2011

Ha. That Lion fantasy portfolio rose today by 0.95% today. WTF (Win The Future)!

Now, anyone who’s been reading this blog for any time knows I have the uncanny ability to pick on a stock or sector that is showing signs of weakness and that as soon as I mention the stock or sector, that particular stock or sector takes off the following day. Case in point $TRAN, which is up 0.58% so far this week. Let’s see if I can get this mojo to work for me instead of making me look like a fool.

Disclosure: I have been long USD for about three weeks so I am definitely talking my book.

The $SOX index has been a very important part of this rally and it is showing signs of stress.  Not that $SOX was down that much today, but it shouldn’t be down at all. The daily chart is several miles away from giving a ‘sell’ signal, but the 60min chart warns that such a signal could be coming if $SOX should break the rising trend line.  The problem with such a break and ‘sell’ signal is that I don’t see how the $COMPQ could ignore weakness in this key sector.

Longs will want to keep a close eye on the semis until they prove that the action over the past couple of days is just a  reaction to the extreme overboughtness evidenced by the RSI on the above 60min chart.

$SPX 1350 now only 26pts away.

‘Round these parts, “Sto got showed” is considered grammatically perfect.