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Trend table status

Trend

SP-500

R2000

COMPX

Primary

?+ 6/30/20

?- 3/31/20

Up 5/29/20

Intermediate

? 6/5/20

? 6/5/20

Up 6/5/20

Sub-Intermediate

?+ 7/6/20

?- 7/7/20

Up 7/2/20

Short term

Up 7/6/20

? 6/11/20

Up 7/2/20


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, December 30, 2016

Daily update 12/30

Some selling to end the year.  The quest for Dow 20000 will continue into next year.


The market started out higher, but the sellers showed up immediately. They kept on going until the last 15 minutes when a notable rally into the close took place.  SPX closed below its 20 SMA.  The breadth ended at -52%.  It was never higher then -58% so the selling was not all that broad.  Some big cap tech stocks were hit as evidenced by QQQ being down 1%.  New highs were 61.  New lows were stable again at 17.  Some profit taking in some of the bigger winners this year.  Probably trying to get a jump on the selling that is supposed to happen next week.


The futures tried to bounce overnight, but could not get back above the 50 SMA.  We now have a confirmed break of that line.  First time that has happened since the election.


The red count shot up some more today.  It is the highest since back in Sept.  It is a bit below the oversold level, but higher then the last two swing lows. 


Despite the straight up nature of the rally the bull pressure chart indicates the move is not particularly strong.  None of the time frames show the green line getting above the red line from the last sell off.  The intermediate green line got right up to it though.  The selling pressure was not all that high into the Nov. low.  That makes the lack of strength on the rally more troublesome.  The bar was not that high for the green lines to get over.  This type of action usually means there is more corrective activity to come.


The break out in the transports may have failed.  Not only is the index back below the break out level it has a confirmed break of the break out day low.  The bulls could still show up and save the day, but at this time it is possible the Dow theory buy signal ends up being negated.  That buy signal was widely publicized of course.  I doubt there will be any word of it failing.  In Daily update 12/7 Dow Theory buy signal I wrote

"Now that we have a Dow theory buy signal what happens now.  The Dow theory sell signal back in Feb. marked the exact closing low for the Dow.  In other words it was a massively failed signal as there was no further downside.  Is this the start of a really big break out?  Could it be we end up with another massively failed signal?  I sure wish I knew. "

At the moment it is not looking like a really big break out.  It remains to be seen if it turns out to be a massively failed signal.  From what I can see at the moment that would not be a surprise.


The NASDAQ 100 index lagged through out the post election rally.  It finally made a new high, but could not progress significantly higher.  That break out failed today as NDX fell back into its fall trading range.  I believe this to be a very important event. 

The pundits on TV assure us that great economic growth is right around the corner.  The market is saying otherwise.  The main growth index is NDX with the transports being a close second.  Both of these indexes lagged behind in getting to new all time highs and both have failed their break outs.  I think the market is speaking loud and clearly it is not expecting strong economic growth.  That happens to match what I see in the economic data to this point.  Everything still looks consistent to this being a final blow off top and a likely end to the bull market.  I saw this today which made me even more sure we have the right sentiment conditions for "the end".  An economist who predicted a 17,000-point stock-market crash just 10 days ago is suddenly bullish

Harry Dent is bullish.

Dent, an economist and one of the biggest doubters of the stock market's rise since the end of the recession, said he no longer believes a crash is imminent for the market after persistently calling for a massive drop over the past seven years.
What changed the mind of the man who said that the market would be "cut in half" in 2011, called for a "year and a half" long crash in 2013, and said the Dow could fall 17,000 points as recently as December 10?

The markets ability to withstand the election of Donald Trump.

"All of my research pointed to signs that the end was near," wrote Dent in a blog post last week. "The Dow was set to shed thousands of points in short order. How much has changed since November 8…"

According to Dent, the market shift to seeing Trump as an economic positive instead of a destabilizing force was stunning.
I agree that the shift in the market after the election was stunning.  I have called it just amazing many times in this blog.  However, I fail to see how that means the future is all bright and rosy.  When SPX was making new lows in March of 2009 was it a sign the economy was crashing?  Not exactly.  Markets overshoot in both directions.  They have been known to discount things that never happen.  Harry Dent makes me look like a perma bull.  Him flipping to bullish may go down as one the best contrarian signs in a long time.

If we end up going into a bear market before 20000 is reached this magazine cover will show up many times in the future as a sign of the end of the bull market. 

SPX is still in position to bounce.  If we get confirmation of a break of the 20 DMA next week then a trip to the 50 DMA may be in the cards.  A bounce to a lower high would also be problematical.  Will the sellers that held off for tax purposes show up as many people expect?  I don't know, so many times the market does the opposite of what most expect it to do.  I guess we will see.

I don't like to make predictions about the market.  Unless you make a lot of them it is a futile effort.  If the U.S. goes into a recession then it will be a bad year for stocks.  If not, then maybe it is a great year.  At the moment the economic data suggests to me that recession odds are high.  Technically and sentiment wise we have what looks like a textbook bull market top.  Complete with retail investors piling in, bear capitulation, and a magazine cover.  The long awaited rise in volatility could happen next year.

All three indexes entered short term downtrends today.  Time to bounce of the selling could pick up a bit.

In order to start the weekend off on a light note I introduce a new tradition.  Joke Friday.  Here is the first installment.


Have a great weekend.  I wish all a very happy, healthy, and prosperous new year.

Bob

Thursday, December 29, 2016

Daily update 12/29

A few dip buyers showed up early, but it did not take long for the sellers to get to work.


The market rallied a bit right after the open.  At the high the breadth was +71%.  At the end of the day it was +57%.  New highs slipped again to 49.  New lows came in at 18 near where they have been.  SPX dipped slightly below the 20 SMA, but found a few buyers there.  This is the first touch of the 20 SMA since early Nov.  Usually that is good for a bounce.  Of course that would depend on whether the pension funds still have more stock to sell or not.


The futures closed below the 50 SMA yesterday.  Every bar since has closed within 2 points of that close.  There is no confirmation of a break of the 50 yet.  Most of the time we get a bounce when confirmation does not happen right away. 


The red count crossed 50 today.  The bulls are losing their grip.

The market is in position to bounce, but will it.  The "why buy know" theory is still in play along with unknown pension fund selling.  There was a little dip buying today, but would there be enough tomorrow to really push prices much higher.  Whether there is still pension fund selling to be done or not I cannot say.  The idea that a lot of investors are waiting until next year to sell seems valid to me.  It seems like this pullback might have further to run.

Bob

Wednesday, December 28, 2016

Daily update 12/28

I guess the pension funds decided to start unloading their excess stocks today. 


Bob Pisani was running around today saying there were no bids.  The "why buy now" theory was in full force today.  It is likely to stay in force the next two days so the question is how much more do they have to sell.  The breadth was -74%.  New highs dropped way down to 77.  New lows picked up just a bit to 29.  Volume picked up a bit, but was still very light.


The futures closed below the 50 SMA, but have not confirmed a break yet.  They found support there back in early Dec., but this time that seems less likely.


The red count shot up today, but is still a bit below 50.  While the red count is about where it was at the early Dec. low the green count is much lower.  The market appears to be a bit weaker this time.

TLT had a strong day as the pension funds rotated into bonds.  I have no way of knowing how much stock selling they got done today.  Is it finished or is there more to go?  Since I don't have a crystal ball and I did not see Art Cashin saying it was over we will have to wait and see what happens.  The volume was so light it is easy to imagine there will be  more selling.

SPX and COMPX turned their short term trends sideways today.

Bob

Tuesday, December 27, 2016

Daily update 12/27 Red Flag on Recession Crops up in NY Fed’s Coincident Economic Index

Dow 20000 denied again.  It got within 20 points and stopped. 


The volume suggests many investors were still out of the office.  The market shot up a few points from the open in the first 20 minutes and stopped.  The breadth peaked at 10:10 at +70%, but ended at +59%.  New highs increased a bit to 138.  New lows were stable once again at 20.  The bulls showed up for the famed Santa rally.  Will they show up again tomorrow and get Dow 20000?


The futures hit the upper channel line this morning and stopped.  Still in consolidation mode.


The green count remains below 50. 

The consolidation continues.  While many view this as a positive that is not always the case.  This bull market has seen a number of sideways patterns like this end up breaking down instead of up.  Just look at last Aug. for an example.  Art Cashin was talking about some pension funds needing to re-balance their equity/bond ratio because of the sell off in bonds and rally in stocks.  He mentioned there could be $35 billion of stocks to sell before the end of the year.  I am surprised they would wait that long.  Who do they think they are going to sell the stock to at the end of this year?  Remember the "why buy now theory".  The sideways price pattern suggests people are waiting until Jan. to harvest gains from this rally.  Who is going to buy all that stock this week if there will be more selling next week that could easily produce a better entry point?  Art looked a bit concerned when he talked about it.  I can see why if there really is that much stock to sell.  It could make for some volatility I guess.

Last week I posted some charts wondering if there was some kind of inflection point last July.  Here is further evidence the U.S. economy is slowing.  Red Flag on Recession Crops up in NY Fed’s Coincident Economic Index

I don't see any false indications of recession in the last 25 years.  This is clearly the first time this index has gone down since turning up in late 2009.  Here is a closer look at the last few months.

The index peaked in Aug. and has now fallen for three months.  The long term chart shows this index pretty close to being coincident with U.S. recessions.

It is always difficult to detect the start of a recession.  That is why the NBER often waits until a year later to say a recession started.  Last spring I issued a recession warning, but I did not think we were in recession yet.  A few months ago I stated I could not say whether we were in recession or not.  The current data does not look like we are in recession, but is so weak downward revisions could change that.  There is a very big and growing divergence between leading economic indicators and actual economic performance.  The leading indicators have stock and commodity market prices in them.  Real economic data obviously does not.  I can't say for sure, but I think it is possible the market component is at least partially responsible for the divergence.  What I can see in the data is that the U.S. economy started slowing in early 2015.  It picked up a bit in the spring, but since July may have started slowing again.  What is more concerning is that the pick up in rates since July (in percentage terms a historical move up) has not had time to work all the way through the economy yet.  We are seeing a slow down in auto sales, and some signs of a potential slow down in the housing market.  That could end up being enough to put us into recession.  We also can't be sure rates have stopped going up yet.  There is a pause going on, but no sign of a turn down in rates yet.  While survey data is all positive the more reliable real time economic data says otherwise.  High stock valuations and recessions do not get along very well.  The average SPX draw down in a recession is 38%.  With the super high valuations we have today a much larger draw down is possible. 

I feel very strongly we need to be very vigilant about a U.S. recession in 2017.   The market is discounting a future that might not happen.  I will keep watching for signs we are getting stronger or falling off a cliff.  One of those scenarios seems likely to happen.

Bob

Friday, December 23, 2016

Daily update 12/23

Another snooze fest.


The buyers showed up enough to get a positive day, but just barely.  My "why buy now" theory worked for one day anyway.  Breadth was +55%.  New highs slipped to 74.  New lows were stable at 16.  Not much to say.  Nothing new in the futures either.


The green count slipped back down today as I suspected it might.  This is just noise from the very narrow multi day range.

They talk to a trader named Peter Costas sometimes on CNBC.  Last year near the top in SPX he said he got out of stocks.  I think I commented on the blog about that because nobody gets on TV and says they are out of stocks.  After the mini crash in Aug. they asked him if he had gotten back in.  He said no.  Then comes Feb.  They asked him what he was doing and he was back into stocks.  Pretty good timing I would say.  In the middle of Dec. they asked him what he was doing and he said he was out of stocks again.  His point was that he did not care about missing 3% on the upside.  He thinks there will be an opportunity next year to get back in.  I saw him again today and he reiterated his stance.  He elaborated a little more though.  His perspective is that while earnings may be slightly positive this quarter they won't live up to the expectations people are setting with the run up in prices.  In the last two years this guy has been right on.  I tried to google to find out more about him and the only thing I came up with was this quote from stocktwits:

"Peter Costas is the only one cnbc thats been correct from start to finish.:  from  theBack9 Hedge Analyst

I don't really know who this guy is.  Unlike many on Wall Street he must like to keep a low profile.  He has demonstrated impeccable timing before.  I think he is one worth listening to.  Time will tell if he is right in this instance. 

This is a great read whether one celebrates Christmas or not.  Just A Note Of Thanks & The Joy Of Christmas

Merry Christmas and Happy Holidays to all.

Bob

Thursday, December 22, 2016

Daily update 12/22 2016 Year-End Bull/Bear Debate

Low volatility continues.


SPX touched the upper channel line.  Sometimes that will spark a little buying.  The breadth was -56%.  New highs dropped way down to 83.  New lows were down just a bit to 18.  Buying enthusiasm is waning as people take off for the holidays.  It makes sense.  Why buy now.  Everybody says nobody wants to sell until next year.  Why not wait until everybody takes their profits next month and then buy.  A pullback in early Jan. seems likely to be a self fulfilling prophecy at this point.  Guess we will see.


The futures got a confirmed break of the 20 SMA overnight.  Selling pressure was minimal though today.  We are still above recent lows.  So far the theory that nobody wants to sell now seems to be working out.


The green count actually turned up a bit today.  It is still below 50 though.  I am not sure if this is meaningful or not.  The narrow range like we have had over the last several days can cause some anomalous readings.  If the market flies up tomorrow we will know it actually meant something.


The 10 DMA lines got a negative cross today.  The MCO is near zero.  If people are sitting around waiting to buy, this condition will sometimes spark another move higher.  I don't know if anybody is sitting around waiting to buy at this time though.


The transports closed back below the break out level again.  This is already the second time that has happened.  The index contacted the 20 SMA today.  Maybe that sparks some stronger buying this time.  Downside follow through and breaking the 20 would  probably not be a good sign.

If there are dip buyers itching to get in then tomorrow could see a round of buying and maybe Dow 20000.  Based on the "why buy now theory"  I don't know if there is many people in that category.

Here is some food for thought for both bulls and bears.  2016 Year-End Bull/Bear Debate

Bob

Wednesday, December 21, 2016

Daily udpate 12/21 China

Dow 20000 watchers disappointed again.


Volume was very light today.  Breadth was -52%.  New highs dropped back to 133.  New lows were stable again at 20.  There was very little intraday movement today.  Volatility is contracting and the VIX even dropped below 11 for a little bit.  That low VIX could be scaring away buyers.  Everybody was waiting for somebody else to push the Dow to 20000.  It may not happen without a pullback.  Hard to say.


The futures closed below the 20 SMA for the first time since early Dec.  They have not confirmed a break yet.  The low volatility is really evident as the futures remain very quiet overnight.


The red count crossed above the green slightly today, but both remain below 50.  The bottom panel is another indicator I created which is also calculated on all the stocks in the index  The green and red counts are very short term.  This is more of an intermediate indication and is the percent of stocks in bullish mode..  The 50 level tends to be pretty important.  The higher it gets the more momentum the bulls have.  At 71 it is not particularly strong.  It reached 85 on the summer break out and 89 on the rally off the Feb. low.  This is yet another indication this latest breakout is not as broad as other up moves. 

I always hate much talked about levels like this 20000.  Sometimes the target is never reached.  Sometimes there is a pullback that scares people out followed by another surge up to the target.  It always seems to be hard to decipher which is happening in real time.  A pullback here could just keep on heading south while people are holding on waiting for 20000.  At this point I don't have a clue how this plays out.  The low volume shows many people seem to be already stepping away from the market.  Hey why not.  Since nobody is interested in selling before year end there is nothing to worry about.  Right.

Lately there has been some problems in the Chinese credit markets.  Anybody remember Aug. 2015 and Jan. 2016.  China credit problems have caused sell offs in global equities before.  Here are a couple of articles on what is happening now. 
China Halts Trading In Bond Futures After Record Bond Market Crash
China Cuts Offering Size Of 3, 7 Year Bonds By 40% Over Concerns Of More Failed Auctions

It seems to me the stress might be a bit more severe this time then past incidents.  Asian markets have taken more notice then western markets which seem to be living in a perfect world these days.  I can't say if the problems in China will eventually affect the U.S. markets or not.  Just be aware you may wake up some day and the market is worrying about China again.

Bob

Tuesday, December 20, 2016

Daily update 12/20 Was there an iflection point in July?

Dow 20000 watch continues.  Jim Cramer stayed on CNBC past his usual time this morning because he wanted to be there when it happened.  Only it didn't.


The bulls showed up overnight pushing the futures higher.  However, 20 minutes after the open (Dow within 13 points of 20000) sellers showed up and capped the gains for the day.  This is a bit of a problematical price pattern developing.  It could be a pause to go higher or a short term top.  There is clearly resistance here so the bulls will need to power through.  It is probably not a given they will be able to do that as overbought as the market is.  Volume has dropped way off this week as many investors have decided to sit tight.  That should only be a problem if a sell catalyst comes along.  Breadth was +61%.  New highs picked up to 188.  New lows were steady at 21.


The futures tried to launch off the 20 SMA again, but failed to make new high ground.  Obvious resistance in this area.  Will they overcome it or not?

While some of the pundits claim Dow 20000 is just a number it may turn out to be very important.  Dow 10000 was first hit in 1999 and the Dow was still toying with it in 2010.  It has had a history of some round numbers (1000 basically held for 16 years) being trouble.  With valuations where they are it seems quite possible we could be talking about 20000 for many years to come.  They were really disappointed at the NYSE we did not get there today.  Maybe tomorrow.  I can't wait to get it over with so I don't have to hear about it anymore.  Just be aware it could be a tough level to stay above for any length of time.

Wall Street is really pounding the table on financial stocks.  They parade people constantly on TV talking about them.  At the lunch time round table about the only thing they could agree on was the financial stocks would continue higher.  I have been trying to recall any sector I have heard this much agreement on the upside on.  The only thing I could come up with was the dot coms in 2000.  It was a given that the new paradigm would drive those stocks to the moon.  Well we know what happened don't we.  The Wall Street firms were hyping the stocks on TV while their trading desks were busy selling them.  I am starting to wonder if this is what is going with the financials.  They say they have to go up as long as rates are going up.  However, anybody remember 2007.  Rates were rising then, but it was not a particularly good time to buy financial stocks.  Maybe this time is different, but over hyping rarely is a good time to buy. 

I previously mentioned GM announced some layoffs while cutting back on 3rd shifts.  Here is an article about even more layoffs to happen (10000 now).  “Car Recession” Bites GM: Inventory Glut, Layoffs, Plant Shutdowns  What caught my eye was this chart.


Notice how the inventory started spiking up after July.  Remember the industrial chart I showed recently with a peak last July.


That also happens to be the month the U.S. ten year rate bottomed.


Is this just a coincidence?  Rising rates is the number one cause of recessions in the U.S.  While a lot of auto production takes place outside the U.S. the industry still is important to the economy.  Layoffs will not help.  Idling plants will put further downward pressure on industrial production.  Many times layoffs in the auto industry have been the final straw that put the U.S. into a recession.  While the pundits are busy talking about rapid growth next year the reality is we still need to worry about a recession happening instead.  It has puzzled me for many months how the leading economic indicators sky rocketed off their Feb. lows, but the economy has basically trudged along.  For a long time I was expecting to see a real pickup in strength and it just has not happened.  Instead, we are seeing signs that what strength we had in the spring has been fading since July.  What is going on?

Bob

Monday, December 19, 2016

Daily update 12/19 Fed’s Fantasy Vs. Reality 12-16-16

Ho ho ho, hum.


There was a little bit of buying and selling today, but not much movement.  Breadth ended at +59% after being +67% early in the day.  There appears to be some resistance in this area still.  However, volatility is contracting so we are getting to an equilibrium point.  New highs came in at 103 similar to the last few days.  New lows dropped down to 20 as bonds had a positive day. 


As you can see from the futures the volatility including overnight action is really quieting down.  The 20 SMA is holding at support, but has not provided a launch point yet.

The transports managed to close back above their prior high close (re-break out), but are below their prior intraday high.  The jury is still out on whether that break out will succeed or fail.  It seems like the bulls are just waiting to get their chance to run the Dow up to 20000.  Unless some kind of sell catalyst comes along that seems inevitable.  I guess we wait until it happens and see if there is any reaction to it.

There is some pretty interesting charts and data in this one.  Fed’s Fantasy Vs. Reality 12-16-16

Bob

Friday, December 16, 2016

Daily update 12/16 Foreigners are Dumping US Treasurys as Never Before

Odd day.


Despite nearly all indexes being negative the breadth was +54%.    They were buying utilities, oil and gold stocks.  Can you say safety.  That could have been because of the report of China taking  a U.S. unmanned sub.  New highs were close to yesterday's total at 114.  New lows were 33.  Today was quarterly option expiration which can have lots of cross currents.  Once upon a time that used to make for a volatile day.  In recent years though it seems to me the volatility is actually pretty low on those days.  SPX did not tell us much.


The futures tried to launch off the 20 SMA this morning with a gap up.  However, the market never got going and ended up lower.  At the end of the day the futures held the 20 so they might try for a bounce again next week.


There was a negative cross in the red/green count chart.  The last one was a bounce cross leading to higher prices.  I don't know if we have had enough of a pullback to entice buyers yet or not.


Like the red green chart the short term bull pressure lines also got a  negative cross. 


The most interesting event of the day was the transports falling back below the break out point.  In Daily update 12/7 Dow Theory buy signal  I wrote

"Now that we have a Dow theory buys signal what happens now.  The Dow theory sell signal back in Feb. marked the exact closing low for the Dow.  In other words it was a massively failed signal as there was no further downside.  Is this the start of a really big break out?  Could it be we end up with another massively failed signal?  I sure wish I knew. "

We still do not know the result here, but today's action opens up the door for another massively failed signal.  This break out lasted a whopping 6 days.  Of course the bulls may show up again and re-break out the index.  On the volume, a friend (tnx sunny) downloaded the volume for all the component stocks.  It turns out those big volume bars are correct.  However, all the proceeding data is wrong.  I guess somebody found the error and corrected it, but not in the history.  At any rate there was no big volume surge like it looks like.  The big volume on today's failed break out is valid, but could have been enhanced by expiration day.  There was a ton of media coverage on the Dow theory buy signal, but I bet there won't be any mention of the failed break out if indeed that is what just happened.


I noted the other day that buying returned to big cap tech, but I did not really give the topic the coverage I should have.  The NDX 100 is a key index and up until 12/13 it had not made a new high post election.  However, it did not follow through on the upside and closed today just a few points above its break out level.  It clearly is in jeopardy of failing.

Market internals are weakening once again.  Will the bulls step in here to buy the dip or wait for lower prices? 

Somebody must have passed a law that the phrase "animal spirits" must be uttered or written everyday.  Over the years I have heard some flimsy excuses for why the market is going to go higher, but this one may win the booby prize.  What does it really mean anyway.  Have a bunch of dead bull's (cows) spirits taken over human bodies and forced them to buy stocks?  If there was ever an anecdotal sign of a bull market top this is it.  I guess we will see what happens.

This is a pretty interesting read.  Foreigners are Dumping US Treasurys as Never Before  Including this chart.

Hmm.

Have a great weekend.

Bob

Thursday, December 15, 2016

Daily update 12/15 Intersting articles on the R2000 and Value line geometic indexes.

As usual the market retraced yesterday's post FED move.


However, once the move was retraced the market ran into sellers.  Today's low came in the afternoon.  Breadth was +54% after peaking at +62% mid day.  New highs came in at 113.  New lows were elevated again at 111.  Bond funds making new lows again.  This was a pretty weak looking bounce.


The 20 SMA has caught up to price.  This is where it usually slaps price higher or the futures break below it and initiate a pullback.


Despite today's bounce the green count slipped some more.


The short term lines continued to get closer together in the bull pressure chart.  It is really the long term lines that should be worrying to bulls.  Both the summer rally and the post election move do not have the buying power seen in the rallies from Oct. 2015 and Feb.  In less days then the current rally both of those moves moved up the long tern green line by 16 percentage points.  The summer rally peaked at 9 and this rally at 8 percentage points.  The breadth has been good on this rally.  The NYSE advance/decline lines (both the common stock only and the regular version) have made new highs confirming the indexes.  All major indexes have broken out.  However, the bull pressure chart is clearly showing a lack of enthusiasm.  The volume is weak.  Lets take a look at the two times in this bull market that are somewhat similar starting with 2015.


The white line in the bottom panel is the current peak.  As you can see the green line barely got over that line starting in the spring of 2015.  Over the summer it got even weaker before the rapid fall in Aug.  The market was running out of stream.   Now for a look at 2011.


In the spring of 2011 the long term line again had trouble getting above the white line.  Over the summer the sellers took hold before the big fall.  Also notice the move up off the Oct. low that year.  In 12 days off that low the green line moved up 14 percentage points.  That was much different then what we are seeing now.  We are already 28 days into this rally and nowhere near that kind of move up.  Whether we are in for a big fall I can't say, but we clearly do not have nearly as much buying pressure as we have seen in prior rallies in this bull market.

We may have a shortage of buying pressure, but we clearly have no shortage of bullish sentiment.  I heard Bob Pisani say the other day that retail brokerage accounts reported big surges (30% or more) in trading activity in Nov.  The retail investor is diving head long into the bull market.  I think this is exactly what my bull pressure indicator is showing.  It is not the big boys piling into this market.  It is individual investors.  Have they come too late to the party?  While on the surface it looks like the clouds have cleared and there is nothing but blue skies and clear sailing on the upside.  I am just not sure that is true.

Interesting look at the Value line geometric index at a key inflection point.  Forget 20K – THIS Is The Stock Market Level To Watch  That article contains this interesting chart.


Jeff Cooper calls a chart like this a rule of four break out.  Essentially this chart is setup for a big move.  Breaking out over a triple top usually leads to big moves to the upside if the break out succeeds.  A big move to the downside usually occurs if such a break out fails.  This looks like a key moment in time.  Will the break out succeed or fail?

Must read article if you are invested in the R2000 index.  Banks in Drag : The Russell 2000 Exposed

Bob

Important

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