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Friday, August 31, 2012

Daily routine poll result

Do you have a daily routine of things to look at to help you with your trading?

Yes, the same routine for a long time
  7 (20%)
I have some things I do, but still working on it
  25 (71%)
I have no routine at all
  3 (8%)

Votes so far: 35

I am glad to see most people do have some kind of routine.  I hope those that said they did not have one are happy with the amount of money they are making.  If not, maybe you need to develop one.  Everyone is different and needs to find their own routine.  One guy once told me part of his routine is to read aloud a sign he has on his computer every morning when he sits down.  The sign says "I am a super trader".  Thanks to everybody that participated in the poll. 





Daily update 8/31

I would say the Bernanke speech did just what he wanted from what I heard on TV afterward.  Everybody that thinks there will be QE at the next meeting in Sept. thought the speech verified that.  Everybody that thinks there won't be QE before the election seemed to think the speech verified that too, LOL.  I think that was probably the desired result. 

Lets start with the daily SPX chart as usual.

We bounced, but ended the day below the 18 SMA.  The gap is filled so there is no unfinished business up here.  This was a very odd week though.  Check out the SPY 60 minute chart.

Every day this week except yesterday, SPY traded above its 50 SMA.  However, at the end of the day it closed below it.  SPY also respected my upper trend line today.  I think that validates it as being significant. A break out above it should be bullish in the short term.  With almost every day this week trading above the 50 SMA, the bulls had plenty of chances to take control of the market and they failed to do so.  That would seem to indicate there is more down side to go here. 

Here is a look at the current breadth chart.

I mentioned that we might get a positive cross on the 10 MAs, but that would not necessarily mean the market was going to take off to the upside again.  The positive cross did happen, but the market did not take off.  The negative cross over adds more evidence that there is more downside to come.

Have a great labor day weekend for all those that get the holiday.  For those outside the states have a great regular weekend!


Latest sentiment data

I keep hearing the everybody is bearish so I am bullish mantra over and over again.  Is everybody really bearish?  Lets take a look at the sentiment survey data.

Here is the current NAAIM chart.

At 82.89 this survey has only been above 80 for short periods of time since the 2009 low.   As the chart above shows, the last two times this happened the market did sell off some.  That was not the case in late 2010 and there are also other instances where there was not a significant sell off.  Given the fundamental backdrop it is a bit surprising to me the active money managers are still piling in.  Hopes of more QE?  They are all in now as this survey has only been marginally higher since the 2009 low.  There is more fuel for a down side move then an up side move from here.

Here is the Nova/Ursa ratio.

This survey is clearly not as bullish as it was at the spring high.  Readings above .4 are quite bullish.  It has been seeing unusual swings the last few weeks.  There were some similar swings back in the spring as the market topped, but they were smaller in magnitude.  Even though the survey is bullish, the swings seems to indicate a high level of uncertainty. There is fuel in both directions in this one as it is still well below the peak, but at similar levels to past tops.

Here is the II survey.


This one is not as bullish as it has been at times in the last two years, but it is certainly bullish.  It is also less bullish then back in the spring.  It is at similar levels to those seen right before the melt down last year.

The last survey is the AAII.


This one took a tumble in the last week, but still has a few more bulls then bears.  I discussed this survey a few times over the last few weeks.  This one is the least bullish of these surveys.   Notice they were not all that bullish as the top formed last year.

These surveys really shows that if this market is going to break out and go higher the fuel must come from individual investors.  I still believe it would take some clearly positive news event to make that happen.

The first two surveys are based on actual money, not opinions of what the market is going to do.  Those surveys indicate heavy long positioning.  Both opinion based surveys are on the bullish side, but not as bullish as back in the spring.  There is one thing that is very clear.  Everybody may be bearish on the economy, but they are not bearish on the stock market.



The information in this blog is provided for educational purposes only and is not to be construed as investment advice.