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Trend table status

Trend

SP-500

R2000

COMPX

Primary

? 3/31/20

?- 3/31/20

? 3/31/20

Intermediate

Dn 4/3/20

Dn 3/20/20

? 5/8/20

Sub-Intermediate

Up 4/20/20

Up 4/22/20

Up 4/17/20

Short term

Up 5/20/20

Up 5/20/20

Up 5/20/20


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Friday, May 31, 2013

Daily update 5/31

Last night I wrote "SPX managed to hang onto its 18 SMA again today.  However, it is now getting time to launch or break."  I guess I was right.  It broke today.  Here is the daily SPX chart.


SPX closed right dead on its low.  There were over 152 new lows today so this was a second day over 100.  This pullback is different then any other pullback this year.  Do not expect it to end as fast.  The people that have been buying all those gap downs just got bitch slapped up side the head.  They will likely be a bit more cautious now.  Lets zoom in to the 195 minute SSO chart.


We now have the trend bias as down confirmed by the lower close.  The daily chart is still up.  Since we closed right on the lows the selling was probably not exhausted.  A gap up on Monday is likely to be sold into for a retest of today's low.  A gap down is a little hard to say.  The 195 minute chart has a blue bar indicating it closed below its lower Bollinger band and is extended.  We could get some shorts taking profits on a gap down that could cause a bounce.  However, the U.S. and Japan have been holding up equities around the world.  Japan has already broke and now the U.S. is showing cracks.  Today's sell off could echo around the world on Monday and cause a gap down that people sell into anyway.  Whether we bounce on Monday or not, the 50 DMA is still likely to be hit before any significant bounce.

Here is the monthly SPX chart.


SPX closed with a blue bar indicating price was above the upper Bollinger band and is extended.  So we have trend line resistance and the Bollinger band to contend with.

Chart practice has been updated with LMT the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Have a great weekend,
Bob

Construction slow down?

In XHB vs lumber I showed how XHB and lumber tend to trend together.  Recently lumber prices had dropped dramatically, but XHB was still going up.  I wondered whether lumber would turn around or XHB.
Lets revisit the latest chart.


 Lumber prices have continued to decline.  Crashing actually.  XHB has pulled back a little bit.  To add intrigue to the situation check out this chart.

Source

Architectural billings have taken a bit of a tumble along with lumber.  There seems to be a real slow down in the building pipeline.  I think this increases the risk the home builder stocks may see a pullback fairly soon.  I think the pop in lumber that started in Oct. was Sandy related.  The crash probably means the majority of the rebuilding is close to over.  That should mean the positive economic affects from Sandy will be waning.  Whether slowing economic data is good or bad for stocks is an open question.  More QE or less?

Bob


Thursday, May 30, 2013

Daily update 5/30

Hmm.  Another afternoon fade.  Some people are still looking for strength to sell into.  Here is the daily SPX chart.


SPX managed to hang onto its 18 SMA again today.  However, it is now getting time to launch or break.  Even though we ended the day up, internally it was a weaker day then Tuesday.  We had 141 new highs as opposed to 247 the other day.  There are now three obvious upper tails in the candle stick pattern.  There is clearly resistance in this area.  Lets zoom in to the 195 minute SSO chart.


Price appears to be forming a triangle pattern here.  Price was rejected at the upper trend line late this afternoon.  That suggests a trip to the lower trend line is likely.  The trend bias is flipping around on this time frame.  It turned down, but was never confirmed.  It flipped back up today, but needs confirmation.  It also will not take much of a down move from here to turn it back down again. 

This still looks like we are in a corrective phase to me.  I think a trip to the 50 DMA is in the cards.

Bob

Eerily similar to 2010

There are some things that are eerily similar to April 2010.  That was just before the infamous flash crash.  I showed this chart last week.


We had the biggest drop in the number of new highs from one day to the next since 4/27/2010.  That was a considerable change in the character of the market.  Very similar to 2010.

Check out this chart from Shaeffer's investment research.

Source

Here is a snippet from the article that explains what a buying climax is if you are not familiar.

Last week saw 673 buying climaxes, the most since 4/30/10 and a subsequent 17% drop in the SPX.  A buying climax occurs when a stock makes a new 52-week high, then closes lower on the week.  Large clusters of them can show deterioration under the surface.  To see such a large amount last week is definitely a concern to be following.

We had very few buying climaxes last year.  The numbers have picked up this year with two previous spikes before the big spike last week. This is only the second time in this bull market climaxes crossed 600.  The market took quite a tumble last time.  Will it be different this time?

But wait there is more.  Here is the weekly TLT chart from back in 2010.


In early April of 2010 TLT made a new 52 week low as shown on the chart.  The prior low was from June 2009.  Here is the current chart of TLT.


This week TLT made a new 52 week low.

We won't know for some time if any of these similarities mean a big move down is coming.  However, it really is kind of strange how similar the market is acting.  It seems to me there is a very common feeling among market participants that any pullback will be short and shallow.  I am sure that comes from the action over the last few months.  Every little pullback has been bought.  However, there is a reason why we always see the disclosure about how past performance is not necessarily indicative of future results.  There is volatility in both Japanese bonds and equities.  I don't know if that will leak into the rest of the world's markets, but I think it could.  It is hard to say what would be the cause of a big move down.  It always seems to be something few if any expect.  I see a very complacent market with some possible warning signs that things might not be as calm as they seem.  I think this is a good time to be a little cautious.

Bob

Wednesday, May 29, 2013

Daily update 5/29

Gap downs are coming a lot these days.  However, dip buyers keep showing up just as often.  Here is the daily SPX chart.


SPX is still above its 18 SMA.  Will it bounce or break?  Lets zoom in to the SSO 195 minute chart.


The trend bias on this time frame flipped to down today.  However, it needs a lower close for some confirmation.  Lets take a look at the current breadth chart.


Both the 10 DMA breadth chart and the McClellan oscillator have the most negative readings they have had since last Nov.  Breadth was 78% negative, but oddly the trin was an extremely low .48.  On 5/22 the breadth was 76% negative and the trin was .93.  Readings under 1 like that show there was no panic selling.
Therein lies the problem.  Every other day this year that breadth was 70% negative or worse the trin was 1.5 or above.  This is a bit of a change in character in the market.  Up until now there was some panic selling when the market pulled back.  So far that is absent at this time.  Obviously panic will happen if we keep going down.  One more chart is the new highs/lows.


We had 124 new lows today.  I marked the two times last year that new lows shot above 100.  As you can see SPX was well off the highs before it happened.  This is only one day off a new bull market closing high in the Dow.  That is the first time that has happened this entire bull market.  Another sign of internal weakness?
Despite dip buyers showing up on the gap downs, the market appears to be continually getting weaker. 

I had to laugh when I saw today's USA Today paper.  I have commented on some articles in the paper that were in the money section.  However, today the front page says "Bull run gets solid footing".  Well, internally the bull run has the weakest footing it has had all year.  I guess we will see what happens.

Chart practice has been updated with AAPL the stock tonight.  I am sure followers of the stock have noticed the possible inverted head and shoulders bottom pattern.  Just in case you haven't check it out.
http://traderbob58-chart-practice.blogspot.com/

Bob

Margin debt

The margin debt figures for April are out and they show another increase in debt.  Here is an interesting currency adjusted look at the debt vs SPX

Source

The same surge in debt that happened at the last two major tops is happening again.  We are in an area that has been hard for SPX to continue to rise.  Will it be different this time?  Peaks in the margin debt at these levels have coincided with tops in SPX.  It looks like May is going to be another up month so it is possible the debt number will climb some more. 

Here is a look at the credit balance data.

Source

There was another sizable drop in the credit balance in April.  We are well below the level at the 2007 top  and rapidly closing in on the 2000 top. 

The use of margin is probably one of the best sentiment indicators available.  When people are sure of the up trend they load up.  Maybe it does not feel like the optimistic sentiment at the 2000 and 2007 tops, but it looks like it from the margin data.  Both of those tops saw retests of the highs with lower margin debt levels.  Will that happen again and give us a better clue we are at the final high?  The global economy was humming along at the other tops.  That is not the case this time.  We are in or close to being in a global recession at the moment.  If the market has a significant sell off I am not sure we can count on a similar retest. 

Bob

Tuesday, May 28, 2013

Daily update 5/28

In Daily update 5/24  I wrote

"I think the drop in new highs is a sign we have entered a correction.  However, I want to see some actual selling before I can say that is the case.  Other then the key reversal day all the intraday action has been to the upside.  This does not mean there won't be sellers if they get strength to sell into, but until it happens we won't know."

Today we got selling into strength.  Here is the daily SPX chart.


SPX tested the area of the recent highs this morning.  It found its high early in the day and worked lower throughout the afternoon.  Tuesday was up for the 20th time in a row.  I have seen this all over the place now.  You have to wonder how many more times that can happen.  This looks like a possible failed retest of the high.  If the market rolls over from here there should be considerably more selling this time.  It looks like we have clear resistance in the 1674 area as price has been unable to stay up there.  The daily chart looked like it was forming a top to me before the key reversal day.  I don't see anything that has happened since to change my view.  It looks even more like a top now.  I guess we will see what happens next.

Bob

A few tidbits to start the week

This first chart is interesting, but I am not sure if it is meaningful or not.

Source

From the start of the secular bear market in 2000 until 2011 the gold/silver ratio moved inversely to SPX nearly all the time.  The bottoms in SPX and tops of gold/silver were fairly close in proximity.  However, bottoms in gold/silver seem to precede tops in SPX.  The article points out the prior two red arrows where they traveled up together and ended with SPX falling.  With the last bottom in gold/silver back in 2011 this is the longest time they have moved up together in over a dozen years.  The trouble for me is that correlation and causation are two different things.  If this limited history is valid this chart would imply SPX should head south some day in a meaningful way.  In the few minutes I have pondered this chart I have not come up with any real reason why it looks like it does.  I know that the global growth rate peaked in 2011 and that EEM (emerging market ETF) and EEB (BRIC ETF) topped in 2011.  Is there some connection?  Beats me.  I just thought I would show the chart and let everybody decide for themselves if there could be some meaning behind it.

This next chart is an attempt to show how stock buybacks have affected index prices.

Source

Stock buybacks may be a good way to boost a stock's price, but it seems like a stupid way to use money.  It provides zero future benefit in any way.  This is an interesting quote from the article.

The S&P 500 now has 2.3% fewer shares than it did in July 2011, when share total reached its high for the bull market. The drop in total stock outstanding accounted for 25% of the past year’s earnings-per-share growth for companies in the index.

I am sure the increase in share buybacks since July of 2011 is tied to the global growth rate topping out that spring.  This is really nothing more then earnings manipulation.  Incidentally buybacks in 2007 were extremely high as the market topped out.  That was a big waste of money now wasn't it, LOL.  Are they wasting it again?   I guess time will tell.

This next chart I find very disturbing.  Tthat could be because I have a firm belief that no entity can spend its way to prosperity.

Source

On an inflation adjusted basis tax receipts have flattened out since 2000.  You don't suppose that is because of all the tax cuts we have had do you.  Clearly spending was not throttled back in any way.  Obviously this situation is not sustainable.  Either spending comes down or we will all be paying more taxes.  Just for the record I complained bitterly to my wife all the time when Bush cut taxes and increased spending.  She got tired of hearing it.  Since then we have had more of the same, only a bigger dose of it.  Stupidity plain and simple.  I should point out that the stupidity goes back to the late 20s.  The majority of the time since then we have been over spending.  It just cracks me up when the pundits say you can't cut spending now, it will hurt the economy.  Well when exactly are we supposed to do it.  When will it not hurt the economy?  It will seriously hurt the economy to have the bond market balk at the over spending.  That is nicknamed the bang moment.  By then it is too late to do anything about it.  Just ask Greece.

Bob

Friday, May 24, 2013

Daily update 5/24

The song remains the same.  Gap down and rally back to fill the gap.  The last 19 Tuesdays have all been up.  Will the streak continue or will it stop?  Here is the daily SPX chart.


SPX is holding above the 18 SMA.  Volume dropped way off today as a lot of people probably took off to make it a 4 day weekend.  The last two days have started with big gaps down with very little follow through selling.  That could be because longs did not want to liquidate into the down opening.  We have not gone down far enough to create any panic type selling.  Bulls of course are claiming victory and this is a sign of the market's strength.  Both days we closed the gap and stopped.  People were not able to push price into positive territory.  The Dow eked out a slight gain today, but other indexes did not fare so well.  There were only 59 new highs today.  A few more then yesterday, but no sign of real strength.  A lack of panic selling isn't always good.  If price keeps falling panic will happen at some point.  If it starts at a lower level it makes for a bigger pullback. 

Here is the weekly chart.


The trend line connecting the last two highs held as resistance this week.  This really is a good place to start a correction from.  Time will tell.

Today was an inside day.  The low was pretty close to yesterday's though.  I think yesterday's high and low are the key price levels in the short term.  A break of that high could bring in buyers and retest the recent high.  A break of that low should usher in some real selling.  I think the drop in new highs is a sign we have entered a correction.  However, I want to see some actual selling before I can say that is the case.  Other then the key reversal day all the intraday action has been to the upside.  This does not mean there won't be sellers if they get strength to sell into, but until it happens we won't know.

Chart practice has been updated with DIS the stock today.
http://traderbob58-chart-practice.blogspot.com/

Have a great long weekend all,
Bob

Current sentiment picture

Optimism picked up a bit this week.  Here is the AAII survey to start with.

Source

I guess individual investors woke up and realized the market was going up.  There was a big surge of 10 percentage points in the number of bulls.  This isn't the most optimistic they have been in the last year, but it is pretty close.  Was that just in time for the top?

Next up is the NAAIM survey.

Source

The money managers took a little off the table this week.  However, this survey is still in the upper end of its range.  There is plenty of downside fuel should they be moved to sell more. 

Here is the II survey.

Source

The number of bulls has reached the highest level in the last two years.  The number of bears continues to be extremely low.  It was just above the 2 year low set a couple of months ago.  This is pretty frothy and consistent with the onset of a correction.

You cannot make an argument that everybody is bearish.  All the sentiment survey's presented here are consistent with short term tops in the market.  After the key reversal day we had this week a correction seems pretty likely.

Bob

Thursday, May 23, 2013

Daily update 5/23

The dip buyers showed up, but not with enough force to get the market positive.  Here is the daily SPX chart.


SPX tested the 18 SMA early this morning and bounced.  Volume was heavy again today.  It looks like another distribution day.  The bulls really put up a poor performance.  Check out this new high chart.

 
The change in new highs from yesterday was -434 (yellow line in bottom pane).  That is the biggest one day drop since the -474 on 4/27/10 (marked by red arrow).  That was right before the flash crash.  Not only did new highs drop under 200 they dropped under 50 at 45.  I think yesterday was definitely important and we are entering a correction at a minimum. 

The traders on TV today all seemed rather unconcerned about the price action.  That is what the market does to people.  It keeps coming back and coming back until one day it doesn't.  The trouble of that of course is that you can't know if any particular move down is that one time it is not going to come back right away.  We have a lot more margin debt then we had in 2010 or 2011.  A serious pullback could easily turn into a crash like we had in those years. 

What about the FED Bob.  They won't let the market go down.  Let me ask you this.  Why did multiple FED people including Bernanke even mention tapering the purchases.  I am looking at the incoming data and there is nothing showing any huge strength.  In Jobs and the economy I wrote

"Between Jan. and April in 2011 there were 774,000 jobs created.  In the same period in 2012 there were 899,000 jobs.  So far this year we have 783,000 jobs.  So that means we are only slightly better then 2011 and significantly lower then last year.  Nothing special there to indicate the recovery is gaining strength."

Remember jobs were supposedly the main motivation for QE in the first place.  If the job data is not any better then the last two years up to this point why the tapering talk.  The market reacted negatively to his appearance in front of congress yesterday.  Did he try to clarify anything today to talk the market up?  No he did not.  I have heard him issue clarification comments before when he thought the market got the message wrong.  My guess is the FED is worried about what the markets are doing.  Maybe they would like them to cool off some.  This is speculation on my part, but the economic data is not significantly better.  It really isn't.  Even the latest inflation data is not showing any strength.  If QE is being done for the benefit of the economy there is no reason to talk about cutting back. 

Bob

The gold breakdown

In GLD and GDX 4/15 I wrote "If gold has topped and broken down the most logical reason for that would be a deflation event is coming."  Take a look at this chart.

Source

EM is emerging market inflation and DM is developed market inflation.  That is quite a tumble in the developed world inflation rate.  That looks like the break down in gold could be for real.  Maybe we are headed for another deflation event.  Could that happen while central banks around the world are printing money like mad.  What if it does?  That is a scenario that very few people would consider even possible.  Japan has experienced deflation for close to 20 years now no matter what they do.  Is that coming to developed markets?  This is a key question because the deflation in Japan has not been kind to their stock market.  Gold may give us a clue.  If it breaks down to new lows again it could be trouble.  Stay tuned.

Bob

Wednesday, May 22, 2013

Daily update 5/22

Wow.  What did Ben say that caused that reversal?  Here is the daily SPX chart.


That qualifies as a key reversal day especially with that high volume.  What I find amazing is the breadth reversal that took place.  This morning there were 75% stocks positive on the day.  At the end of the day there were 76% negative.  In all the years I have been doing this I have never seen that big of a downside reversal.  On the key reversal day at the market top in 2007 we went from 69% positive to 62% negative.  That day pales in comparison to today and it was a major market top.  Today the market was talking in a very bearish fashion.  Will it flip back to talking bullish again or not?  The next few days are going to be critical.  Here is a look at the SSO 195 minute chart.


We got the first red price bar we have had all month.  As you can see there are a bunch of potential support lines down below on this chart.  If the market really does pullback this time we will have to see how it reacts to them.  Notice the trend bias filter is still below price so the bias is still up.  It flipped to down on the 60 min. chart on the last bar, but is not confirmed yet.  Here is the current breadth chart.


On the day of a new all time high both the McClellan oscillator and the 10 DMA breadth chart have negative crossovers.  That is extremely odd and is a sign of short term weakness.  That is not the only odd thing though.  Check out the chart of stocks vs their MAs.


This chart has been diverging from price since 5/8.  Since then the advance has been getting narrower and narrower. 

The last two charts are short term in nature, but they do show exhaustion.  With today's reversal a pullback to the 50 SMA seems pretty likely.  A close below today's low could set that in motion.  Dip buyers may show up in the morning.  If they show up I don't know if they will be able to hold the market up all day or not.

A warning sign that we might be starting a correction would be for new highs to drop under 200 in the next four days.  Under 100 would be even more bearish.  Down the road a ways another warning sign would be the 14 SMA of the Nova/Ursa ratio going negative.  It has dropped down around the 0 line twice since the Nov. low, but it has not crossed it.

Since I have never seen a downside breadth reversal that strong I can't really say with any certainty what it means.  They say one day does not make trend.  However, one day can be a game changer.  That is what happened on 3/10/09.  We did not know at the time how much of a game changer it was.  We won't know for quite some time whether today was a game changer or not.  All I can say is that it could be.  I would not just dismiss it out of hand until we close above today's high on several important indexes.  Obviously we would need to close below today's low to have any meaning at all.

Chart practice has been updated with CAM the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Misc. charts

I ran across a few interesting things lately.  SPX has climbed more then 12% above its 200 SMA.  Here is what happened after the last 9 times we were in this condition.

Source

This is the 7th time since the March 2009 low.  It only happened 3 times in the last bull market and those were all in the first year.  The 2 week return has pretty highs odds of being negative (but not until it stops going up of course).  Last year we dropped 4%.  What happens after that is not so clear.  The last three times the market was lower 2 months later.  Clearly we have a wide range of outcomes over the next three month possible here including a 10% move up or down.  What I find most interesting though is how different this bull market is then the last.  The previous bull market only had 3 occurrences and 12.4% was the highest price ever got above its 200.  This is already the 7th time in this bull market and price was over it by 18% twice.  If this is the most hated bull market why are people bidding up prices excessively over and over again?  It looks more like this is one of the most loved bull markets in history. 

This next chart is about Europe.  I am constantly being told that Europe is fixed.  It seems like the problems have been talked to death, but I don't see that anything has been actually fixed.  Check out this chart.

Source

So non-performing loans have continued to sky rocket in the periphery through out this economic recovery.  Does that look like the banks in Europe are in better shape now then in 2008?  Only Germany is actually better.  Even the rest of the "core" is somewhat worse off.  Is anything really fixed?  I wonder if there is any connection to this next chart.

Source

Yeah, I kind of think there is.  People out of work often have trouble paying their debts.  Europe is still clearly in trouble.  Until they get their economy growing again the risk of banks getting in trouble will still be elevated.  Headline risk is hard to quantify, but in Europe's case it is clearly non-zero like the pundits would have us believe.

Bob

Tuesday, May 21, 2013

Daily update 5/21

The string of up Tuesdays continued today albeit just barely.  SPX set a slight new high today, but was pushed back again.  Here is the daily chart.



There was another upper tail on the candle today showing some resistance in this area.  However, it still closed at a new closing high.  We remain overbought, but resisting a pullback so far.  Lets zoom in to the 30 min. SPY chart.


The 30 min. chart shows the biggest volume bars were red today.  This is the first time that has happened on an up day in I don't know how long.  I looked back a couple of months and did not see that. Is that a bit of distribution creeping into the market?

Check out the TLT chart.


TLT continues to flirt with its 500 SMA.  It tested the lows from 5/14 and 15 this morning and reversed strongly.  This looks like a very good attempt at a bottom here.  If it follows through on the upside tomorrow a short term low should be in place.  This is a potential double bottom at the 500 SMA going back to March.  That could support a significant bounce.  Would a bond rally put downward pressure on stocks?  It has in the past, but who knows now.

Bob

Nominal GDP and recession

The ECRI famously called for the U.S. to enter a recession in Sept. of 2011.  They modified the call in Dec. 2011 to say we would be in recession by mid 2012.  They are still sticking by that call.  Here is a chart they say indicates we could be in a recession now.

Source

They say that the nominal GDP YOY growth has never dropped below 3.7% without the U.S. being in recession.  Here is a longer chart I found that does indeed back up their assertion.

Source

It is safe to say that if we are not in a recession right now it is different this time.  Here is a chart that uses real GDP and is adjusted for population growth.  The author says this chart indicates we are not in a recession.


His assertion is that the current level of GDP is higher then it has been at the onset of all recessions except 1982.  That does seem to be technically true.  But lets look just a little closer.  Notice the red circle I added.  This was the only time GDP got this low and we did not go into a recession within a few quarters.  We are in a danger zone and we are there for the second time in this recovery.  It could be true that we are not in a recession, but it could also be true that one is imminent.  It would also be easy for a downward GDP revision to indicate we really are already in a recession.  I am pretty sure that if it were not for hurricane Sandy we would be there now.  The positive economic affects from Sandy will greatly diminish over time. 

The pundits keep telling me we are not in a recession and the economy is improving.  When looking at all the data it is really impossible to say with any certainty we are not in a recession.  The most recent data is indicating slowing in a lot of areas.  We are so close to being in a recession the economy cannot stand much more slowing without finishing the job.  That would likely have a negative affect on corporate profits.

Bob

Monday, May 20, 2013

Daily update 5/20

Hmm.  Today looks a lot like a shooting star candle.  Here is the daily SPX chart.



The move off the last low looks quite parabolic in nature. There are four price bars now messing around with the upper channel trend line.  This looks like a short term topping pattern to me.  I was reading today that this is the longest the market has gone without a four day pullback since 1900.  I don't know if it is time yet or not, but I have to think it won't be too far off.  Unless that kind of pullback has been outlawed of course, LOL.  We have had a long string of up Tuesdays.  Will that continue or is it time to break that streak? 

At 1666 SPX is exactly 1000 points above the bear market closing low.  I find it kind of interesting that it closed there two days in a row in a totally random market, LOL.  These kind of round number things can sometimes stop a market.  However, there is another interesting line here.  Check out this weekly chart.


We touched a trend line connecting the two most important tops of this bull market.  Will that be enough to cause some profit taking?  I guess we will see.

Bob

Current sentiment picture

A little more optimism crept into the market last week.  Here is the NAAIM to start with.

Source

Money managers added long exposure again.  This survey continues to be at historically high levels.  The prior week somebody said they were at -125 (leveraged short).  This week the most short response we -2 (effectively neutral).  Every time they short they get screwed for sure.  There is limited fuel on the upside here since this is at bullish extremes.

Next up is the II survey.

Source

The number of bulls is now up near the extremes of the last two years.  The number of bears remains near the lowest levels of the last two years.  The spread between the two at 34.2 is the widest in the last two years.  The rule of thumb on this survey is that a spread of 30 is extreme.  We are more then extreme now.

Here is the latest AAII survey.

Source

The bulls ticked down last week and are just about at the historical average.  Clearly nowhere near extreme readings and clearly less bullish then the other surveys.  There is probably plenty of upside fuel here if they decide it is safe to enter the market.  Just a reminder though that at tops this survey is usually less bullish then the others.

The NAAIM and II surveys are at really bullish extremes consistent with short term tops.  Does that matter in today's market?  Beats me.

Bob

Friday, May 17, 2013

Daily update 5/17

The bulls showed up today in force.  Here is the daily SPX chart.


SPX made it slightly above the upper channel line again.  Something is wrong with the volume in this chart.  Today had bigger volume then yesterday.  According to my stats in Tradestation volume was 25% higher today.  That would be normal for an option expiration.  Today could be a volume climax.  It is always hard to say when it happen on expiration day because the volume is high anyway.  I remember we had a volume climax low on an expiration Friday last year.  I think it is a pretty good possibility because the market is really over bought now.  When I updated the sector status I found 11 of the 16 sectors were above the upper Bollinger band on the weekly charts.  In the time I have been doing this blog there have never been that many at the same time.  SPX is also there.  Here is the weekly chart.


I marked the last two times SPX closed above the upper Bollinger band.  Last Sept. it led to a bit of a correction.  This year it was more of a pause as the market traded sideways the next few weeks. 

Here is the SPY 30 minute chart.


Look at all that volume at the end of the day.  Despite price being extended people really piled in.  I am pretty sure this is going to turn out to be a volume climax short term top.  I will be expecting a pullback early next week.

Have a great weekend all.

Bob

Important

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