Stock Market Analysis from Traderbob58: Update 2/7

Trend table status

Trend	SP-500	R2000	COMPX
Primary	Up 7/31/20	Up 1/29/21	Up 5/29/20
Intermediate	Up 10/2/20	Up 8/21/20	Up 10/9/20
Sub-Intermediate	? 2/22/21	? 2/18/21	? 2/22/21
Short term	Dn 2/22/21	? 2/18/21	Dn 2/22/21

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, February 7, 2020

Update 2/7

I do not like rapid retests of highs or lows. They are prone to failure. This retest of the high is very odd being built totally on overnight gaps which as the information below shows is not normal.

From SentimenTrader:

Buyers keep coming into stocks before regular trading hours. Before each of the past 3 sessions, buyers pushed S&P 500 futures up at least 0.45% before the open.

With a new all-time high by the close, this kind of buying pressure has never been seen before.

Since the inception of the futures in 1982, there have only been a few times when buyers were so eager that they pushed the futures up at least 0.25% before regular trading hours for three sessions in a row. Each of them preceded losses in the futures either 1 or 2 months later, but at this point it seems like any historical precedents are strictly “FWIW.”

This has preceded some trouble in the past. Over the past 15 years, there was a total of 53 dates when the Composite closed at a 52-week high but more than 50% of stocks were in bear markets and more than 65% in corrections. Returns over the next 3 months were well below random for the Nasdaq and (especially) the S&P 500.

There are some reasons to suspect there will be some weakness coming soon. There are lots of divergences here including the advance decline line.

Some people refer to this pattern as a potential tweezer top. It certainly is an odd pattern. I will not be surprised if this retest of the high fails.

The green count barely got over 50 and has already dropped way back. This could cross negative easily in just one down day.

Along with the internal divergences the VIX is staying elevated near 15. It has been rare in recent years to be that high with SPX at new highs. Generally it has been in the 13 area by the time we see a new high. Listening to the people on TV it seems like quite a bit of optimism in the air. No worries over the virus or anything else for that matter. I think sentiment is at least a little frothy if not a lot. When we combine the current sentiment with the poor technical condition we should not be surprised if the market corrects a bit here.