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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 22, 2015

Daily update 12/22 Unusual negative Dec. action

Bulls came out to play.


Another light volume rally day.  Breadth was a very strong +73%.  That is a bit strong for the magnitude of the move.  Likely some money moved into the beat down energy stocks that have lower market caps so they did not move the SPX all that much.  New highs were only 30.  New lows dropped significantly down to 64.  Another indication today's buying was likely a lot of bottom fishing.  Notice SPX is still below the 20 and 50 SMAs and they are now experiencing a negative crossover.  Some people will view that as short term negative. 


You can't see this on this chart because of overnight data, but the futures closed the 12/18 big gap down based on intraday data.  They ended the day above the 20 SMA, but a break above has not been confirmed yet.  The futures stopped right at the 200 EMA.  Whether that is significant resistance or not I don't know.  Just mentioning it.  The 100 SMA is very likely going to be resistance should we get there.


The green count crossed above the red today, but it is still below 50%.  We had a similar cross on 12/4 that did not amount to anything so the bulls need to follow through on the upside here.


The MCO has a positve cross today and the 10 DMA lines are getting close.  They could cross tomorrow if we get another strong day.

The market has worked off the slight short term oversold condition from the post FED selling tantrum.  It has not gotten enough strength to say the bulls are back in control though.  There is still more work to do.  Now that we are back to neutral if they still have more to sell the bears may show up again.  Unfortunately I have no way of knowing whether they are done or not.  I did not see any sign of selling exhaustion that I could recognize.  Going to have to wait and see what tomorrow brings.

Since the beginning of Dec. we have had three -1.5% or worse days and one -1.44%.  Two of those days were back to back.  With that in mind read the following snippet from Setting Us Up for More ‘Fed-Ache’

Jason Goepfert of Sundial Capital reports that the action on Dec. 17 and 18 amounted to the first time since 2007 that the S&P 500 has suffered back-to-back 1% losses in the latter half of December. The time before that was in 2000.

Moreover, he reports the market has not suffered back-to-back 1.5% losses in the last half of December since 1937, or any time in December since 1982. Going back to 1928, he notes, back-to-back 1% losses in the last half of December has only happened during bear markets, which is probably an important message.

I didn't know that piece of trivia when I wrote last night "However, longer term the market continues to weaken.  On Friday night I took a look at the number of SPX stocks down over 20% from their 52 week highs and found the count has now risen to 40%.  That is actually worse then after the Aug. mini crash.  Its getting pretty hard to argue that we are not already in a bear market."

Now we have unusual Dec. activity that only seems to occur in a bear market.  Things are not looking particularly good for next year and they could be quite negative.

This is an interesting article.  Technically Speaking: It’s Now Or Never For Santa  While there are several interesting things to look at I found this chart kind of stunning.


“What is so significant about those extremes in OEX open interest put/call readings? They were almost all accurate in forewarning of struggles in the stock market. In late 1999 and mid-2007, the extreme readings preceded cyclical market tops. In mid-2011, the extreme occurred prior to the sharp summer decline. And while readings in June 2003 and late 2014 did not precede major weakness, the stock market did stagnate for several months following. Perhaps only an occurrence in January 2012 proved to be a complete bust as a warning sign.

Then, there’s 2015. After 15 readings above 2.0 in 15 years, there have been no fewer than 166 readings that high so far in 2015. What gives? Either it truly is “different this time”…or this is an unprecedented red flag waving in front of us.”
Whenever something unprecedented happens there is really no way to know if it is important or not.  There could be some simple logical explanation for all those red lines.  However, with the ultra weak technical condition of the market this could really be the biggest red flag the market has ever waived before a crash.  Unfortunately we are only going to know in hindsight.

Bob

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