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Trend table status

Trend

SP-500

R2000

COMPX

Primary

? 3/31/20

?- 3/31/20

Up 5/29/20

Intermediate

?- 5/29/20

?- 5/29/20

?+ 5/29/20

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 (-)

Monday, March 2, 2015

Daily update 3/2 An interesting look at the 36 month MA

COMPX closes above 5000 for the third time in history.  You might recall the other two times were in 2000.  Several other indexes made slight new closing highs.  Lets have a look at the SPX chart.


It was kind of an odd day.  There was a spurt of buying right after the open that sent the indexes straight up.  The ticks were pretty weak during that move indicating it was largely futures driven.  After the first hour the market traded sideways until the last hour which saw another spurt of buying into the close.  Volume increased a bit from Friday.  However, at the end of the day the breadth was only +58%. which is still within the slow creep pattern.  SPX has managed to tack on 7 points since the 2/20 thrust bar in six trading days.  Not a lot of progress there.  Today looked like a bit of manipulation to get the COMPX to 5000.  New highs increased to 189 which is still low for a new high.  The new lows kicked up to 32 which is abnormally high for a new high.  The transports and XLF still remain below their highs.  Lets see what the futures chart holds.


Despite the thrust to a new high close the DI lines do not have a positive crossover yet.  It shouldn't take much to make that happen.  Just be aware that if the market turns back down tomorrow the MACD is already weak and the DI lines already are in a negative cross.  That could allow for more of a pullback this time.  This has the look of a retest of the high with a higher then normal risk of failure.  The bulls need to get SPX through 2020 and keep on going.  A failure here could bring on considerably more selling pressure.

There sure is plenty of talk about the COMPX at 5000.  Lots of talk about why it is different this time.  Most notably the talk was that we are not in a bubble.  The NDX 100 had a PE around 100 in 2000 and we are nowhere near that now.  I did not hear anybody mention that the TTM PE is around 22.  While not the bubble of 2000 that is still historically very high.  I think I will call it bubble junior.  The Russell 2000 has a TTM PE of around 76.  That is where the bubble is this time around.  Whether this trip to 5000 causes rampant selling like last time remains to be seen. 

I thought this chart shows the extended nature of SPX very well.


It is now in the area of the furthest it has been above its 36 month SMA this century.  The smallest pullback from this condition so far has been around 20%.  I am quite certain it will correct that much again at some point.  The real question is whether we are in for another 50% crash or not.  Valuation is much higher now then it was in 2011.  There is certainly the risk of a bigger then 20% sell off. 

I have seen a number of articles wondering about why worker productivity has been dropping for many years.  This kind of makes me chuckle a bit.  I am sure the government will end up spending lots of dollars doing research to find out why.  Might I suggest smart phones and social media as the cause.  It seems rather obvious to me that many people have their phone with them at work and spend plenty of time on it not working.  Sometimes the most obvious thing turns out to be correct.  There you go.  No need to spend all that money on research.

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.