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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

?- 3/31/20

Up 5/29/20

Intermediate

Up 10/2/20

Up 8/21/20

Up 10/9/20

Sub-Intermediate

Up 10/15/20

? 10/21/20

Up 10/13/20

Short term

? 10/19/20

? 10/19/20

? 10/19/20


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 (-)

Tuesday, December 16, 2014

Daily update 12/16

The dip buyers tried to rally the market today, but were hit over the head in the afternoon yet again.  Here is the daily chart.


SPX closed below the 100 DMA.  That was the signal to buy since May 2013 except for the Oct. sell off.  Breadth was 70% positive at the high today, but ended up 56% negative.  Despite the market being very oversold in the short term people sold that strength without hesitation.  There were 23 new highs and 424 new lows.  Buying enthusiasm continues to wane.  That does not look like a candle that would be part of a low.  Could be more down to come.  Lets look at the futures chart.


The futures tried to rally in the night, but news sent them to new lows.  After the open dip buyers showed up in force though.  They almost touched the 18 SMA before turning back down hard.  I was very surprised how aggressively they sold that rally.  SPX was up 27 points at the high of the day.  It closed down almost 17.  I can't remember the last time I saw a bounce that big end up red the same day.  That is not normal bull market type action.  That is bordering on crash like behavior.  The TRIN closed at .94 so once again it does not look like panic or capitulation. 

When they hammer a market this oversold there is definitely some urgency on the part of the sellers.  Are they about done or just getting started?  With the way the market internals have behaved since July we could easily just be at the beginning.  While it will take a while before we can determine if we are in a bear market or not we definitely have the conditions that have preceded bear markets in the past.  Today had the look of a bear market type day.  If that pattern continues it could be an omen.

Tomorrow is the last FED meeting of the year.  There was a lot of talk about changing the language related to the length of time rates will stay low.  Now with markets going crazy people are wondering if they will back totally off the rate hike idea.  I have absolutely no idea if they will change the language or not or how the market will react if they do or don't.  All I know is that it could be a market moving event one way or the other.

People are out every day telling me of the great value in the energy stocks.  I heard one guy say he had not been investing in energy stocks in years, but he was putting some money into an energy fund.  Everybody is looking for a low in oil soon and a bounce back to the 70s.  It reminds me of the dot com bust.  People that missed the ride up in the late 90s were piling in when the stocks first broke down in 2000.  The internet was changing the world they said and the stocks would come right back.  Many of those stocks no longer exist.  Even the ones that survived went down another 50% or more after the initial crash.  I think there is considerable risk that the oil price goes lower still and stays low for a considerable period.  Everybody involved has budgeted for higher oil prices and cannot afford to cut production.  They are all trying to get as much money as they can.  Every time oil bounces the futures get slammed back down as oil companies come in to hedge their production.  I expect many energy companies will go under.  The leverage is just too high for that not to happen.  Some will be bought by the major players.  While the major companies will certainly survive and probably thrive when they get to buy assets on the cheap it may take some time before their stock prices stabilize.  They can always go lower then one would expect.  Markets often overshoot.  I believe it is way too early to be doing anything other then short term trades in energy stocks.

Bob

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