Post by ukarlewitz on Jul 25, 2010 9:52:03 GMT -5
Spy weely - looks very similar to July 2006. Notice how during the bull market, the 13/34 weekly MAs periodically touched as the macd kissed the zero line. 2006 was an especially long correction with prices below the 34wema. We are in a similar spot now, unless prices close below these averages again too soon.
Every sector I track is above its 50dma now, except regional banks, home builders, retail and healthcare. More than half are above their 200dma. Qs look very strong with semis leading. CAT is nearly above its 52 week high. Sentiment is strongly in the bulls favor (i.e., bearish). It all looks pretty good, except Nymo is overbought (closed at 80 where >70 is overbought) so near term weakness is certainly possible. I like Drogen's comments below on what you want to see next.
Drogen - The naz is now back above its 20, 50, and 200 day moving averages. That 50 day moving average is flat and the 20 is rising. The only thing left to confirm that we are back in an intermediate term uptrend is some consolidation without bids evaporating. In a perfect world, bulls would love to see Monday and Tuesday be extremely quiet, giving back maybe 20 basis points each day. Three days of a slight drift to the downside would be even better. If that happens, I will be loading up to make some real money. What do we not want to see? A huge gap up on Monday morning or a big distribution day. Here’s the play book. If we gap up big I will be a seller, not a short seller, just a seller. Short term we would be very overbought and I am not going to risk giving back great gains over the past 3 days. I won’t be a seller on the downside until we see a distribution day now. leighdrogen.com/momentum-book-update-29/
Sentiment - With regards to investor sentiment, the "dumb money" remains bearish (i.e., bull signal) and the "smart money" and company insiders never really got super bullish with the current down draft and they continue their indifference to the market. I would interpret this set of circumstances as the following: 1) prices are above key pivot points and this is bullish; 2) investors remain bearish on the market and this should provide buying support if prices drop below current levels; 3) the market should continue to grind higher as the "smart money" continues its indifference. The ratio of assets in bullish:bearish funds is 43.36%. Values less than 50% are associated with market bottoms. This is the lowest value since July, 2009. thetechnicaltakedotcom.blogspot.com/2010/07/investor-sentiment-i-am-squirrel.html
Caldaro -
- The rally off the June low started a bit choppy but then started impulsing and generated a WROC buy signal. These buy signals have a better than 80% success rate at signalling new uptrends. With an oversold weekly MACD and a positive weekly RSI divergence, plus many other positive technicals, we suggested that the SPX 1011 low may have ended Primary wave II. We then posted a green, tentative, label on the charts. In the meantime we received our first confirmed uptrend in the SPX sectors and two foreign indices were already in uptrends. While all this was transpiring the market generated another WROC buy signal. Double signals in one month are quite rare. Several more SPX sectors confirmed uptrends pushing the number to five of nine. The NYAD confirmed an uptrend, and now five of the thirteen foreign markets we track are in confirmed uptrends. The technicals are looking quite positive for a potential OEW SPX/DOW uptrend confirmation soon. Economically, however, we have some concerns.
- In addition to tracking the technicals of the markets we also track a few quantifiable economic indicators. The one that is giving us the greatest concern is what we call the WLEI, weekly leading economic indicator. Generally, when this indicator is above 50% the economy is expanding, and below 50% contracting. Historically, whenever the WLEI drops to a contracting 47% or below it has been trouble for the stock market. Over the past fifty years, whenever the WLEI has dropped to 47% or lower the market has corrected about 20% or more and often entered a bear market. This week the WLEI dropped to an alarming 39.5%. Since the market has already corrected about 17% during the past three months and has started to advance again. We reviewed the historical data to find two other similar events. In 1990 and 1998 the WLEI dropped below 47% and the market corrected about 20%. If the market has indeed ended this correction at SPX 1011 we will need to see some improvement in the WLEI in August to continue this stock market advance into September. If not, the recent low may only be Major wave A of Primary wave II, and this potential uptrend Major wave B. This count would suggest a 4 year cycle low bottom in October with a retest of the OEW 1107 pivot or lower.
- We also noted earlier that the double WROC buy signal is a rare event. This suggests an uptrend is unfolding and the likely price target is between the OEW 1187 pivot and the OEW 1291 pivot. If this potential uptrend remains impulsive the upper pivot should be reached around October. If not, the lower pivot comes into play.
- India's BSE and Hong Kong's HSI are in confirmed uptrends. England's FTSE and Spain's IBEX are in confirmed uptrends. Brazil's BVSP is in a confirmed uptrend. Bonds lost 0.4% on the week during its uptrend. Bond prices are displaying a negative divergence at the recent highs, but not yields. Gold lost 0.3% on the week while its downtrend continues. Expecting a low in August. The EUR (-0.2%) and JPY (-1.1%) remain in uptrends.
Bulkowski - On 7/23, I raised the target to 1050 by mid August because the index appears to be reaching overhead resistance and I expect a drop back to my target soon.
Cobra - For short-term, I expect to see a pullback very soon, probably not small pullback. NYMO is way too high now, see chart below, whenever the NYMO was this high, a little bit bigger pullback was on the way. The last 2 trading days of each month since Sep 2009 were mostly bearish. Also according to Stock Trader’s Almanac, the first nine trading days of August are historically weak. The rebound could end between 1111 to 1121.
Murphy -
- Emerging markets are now leading us higher. Chart 1 shows Emerging Market iShares having already exceeded its June high. The EEM:SPX relative strength ratio (below chart) shows global leadership coming from emerging markets. Another positive sign for global stocks is new strength in China. Chart 2 show China iShares (FXI) climbing over their 200-day line and nearing a test of the June high. The RS line below the chart shows that China is now doing better than the U.S. That's also good for ommodities (like copper and oil) that are closely tied to China. Chart 3 shows copper trading at a three-month high and challenging its 200-day line.
- Another sign of short-term market improvement can be seen in the percent of NYSE stocks that are trading above their 200-day averages (NYA200R). What happens to that line often tells us more about the broader market than the major stock indexes (which are dominated by large cap stocks). The good news is that the line has just turned up from oversold territory near 30. Normally, the line has to climb back above 60 to give a more bullish reading. That would only happen when the major of NYSE stocks are back above their 200-day averages and out of immediate danger.
- The Dow and the Nasdaq closed above their 200-day moving averages on Friday which is a definite turn for the better. I'm focusing on the Nasdaq today because it usually acts as a leading indicator for the rest of the market. The daily bars in Chart 4 show the short-term improvement in the Nasdaq trend. Friday's gain pushed the Nasdaq Composite above its July high, its 200-day average, and its April/June down trendline (not shown). And it did so on rising volume (although the rest of volume rose on lighter volume). The Nasdaq/S&P 500 ratio has also turned up. Nasdaq leadership is usually a good sign for the rest of the market. Daily RSI and MACD lines are also positive. Friday's upturn paves the way for a further rally to its mid-June peak. What happens from there will help determine if this is just summer bounce or something more lasting. There are some factors which should temper bullish enthusiasm. First of all, 50-day averages remain below 200-day averages in all major market indexes. That needs to be corrected. Second, the weekly bars in Chart 5 show weekly MACD lines still in negative alignment. That needs to be corrected as well. Lastly, other major stock indexes (like the S&P 500 and the NYSE Composite Index) still need to clear their 200-day lines. Keep in mind as well that summer bounces are usually concentrated in the month of July. Seasonal trends then turn more negative into the autumn.
Rosenberg - The big bear gives reasons to be s-t bullish: ftalphaville.ft.com/blog/2010/07/23/296721/rosenbergs-17-reasons-to-be-bullish-seriously/
Alphatrends - A lot of good signs in the market. Buyers came in on top this week. Higher Hs and Ls on the daily. Looks like Spy will head to 200dma (111.6) and then 113. 105 is the key S. Weekly is still showing lower Hs, so be cautious until 113 is broken to upside. Smh - 29 is key R. Xlf - over 15, momo will come in. Looks like an i/h/s. 14.25 is key S. GLD looks weak and is likely to test its 200dma (112). He thinks Vix is a waste of time.
Every sector I track is above its 50dma now, except regional banks, home builders, retail and healthcare. More than half are above their 200dma. Qs look very strong with semis leading. CAT is nearly above its 52 week high. Sentiment is strongly in the bulls favor (i.e., bearish). It all looks pretty good, except Nymo is overbought (closed at 80 where >70 is overbought) so near term weakness is certainly possible. I like Drogen's comments below on what you want to see next.
Drogen - The naz is now back above its 20, 50, and 200 day moving averages. That 50 day moving average is flat and the 20 is rising. The only thing left to confirm that we are back in an intermediate term uptrend is some consolidation without bids evaporating. In a perfect world, bulls would love to see Monday and Tuesday be extremely quiet, giving back maybe 20 basis points each day. Three days of a slight drift to the downside would be even better. If that happens, I will be loading up to make some real money. What do we not want to see? A huge gap up on Monday morning or a big distribution day. Here’s the play book. If we gap up big I will be a seller, not a short seller, just a seller. Short term we would be very overbought and I am not going to risk giving back great gains over the past 3 days. I won’t be a seller on the downside until we see a distribution day now. leighdrogen.com/momentum-book-update-29/
Sentiment - With regards to investor sentiment, the "dumb money" remains bearish (i.e., bull signal) and the "smart money" and company insiders never really got super bullish with the current down draft and they continue their indifference to the market. I would interpret this set of circumstances as the following: 1) prices are above key pivot points and this is bullish; 2) investors remain bearish on the market and this should provide buying support if prices drop below current levels; 3) the market should continue to grind higher as the "smart money" continues its indifference. The ratio of assets in bullish:bearish funds is 43.36%. Values less than 50% are associated with market bottoms. This is the lowest value since July, 2009. thetechnicaltakedotcom.blogspot.com/2010/07/investor-sentiment-i-am-squirrel.html
Caldaro -
- The rally off the June low started a bit choppy but then started impulsing and generated a WROC buy signal. These buy signals have a better than 80% success rate at signalling new uptrends. With an oversold weekly MACD and a positive weekly RSI divergence, plus many other positive technicals, we suggested that the SPX 1011 low may have ended Primary wave II. We then posted a green, tentative, label on the charts. In the meantime we received our first confirmed uptrend in the SPX sectors and two foreign indices were already in uptrends. While all this was transpiring the market generated another WROC buy signal. Double signals in one month are quite rare. Several more SPX sectors confirmed uptrends pushing the number to five of nine. The NYAD confirmed an uptrend, and now five of the thirteen foreign markets we track are in confirmed uptrends. The technicals are looking quite positive for a potential OEW SPX/DOW uptrend confirmation soon. Economically, however, we have some concerns.
- In addition to tracking the technicals of the markets we also track a few quantifiable economic indicators. The one that is giving us the greatest concern is what we call the WLEI, weekly leading economic indicator. Generally, when this indicator is above 50% the economy is expanding, and below 50% contracting. Historically, whenever the WLEI drops to a contracting 47% or below it has been trouble for the stock market. Over the past fifty years, whenever the WLEI has dropped to 47% or lower the market has corrected about 20% or more and often entered a bear market. This week the WLEI dropped to an alarming 39.5%. Since the market has already corrected about 17% during the past three months and has started to advance again. We reviewed the historical data to find two other similar events. In 1990 and 1998 the WLEI dropped below 47% and the market corrected about 20%. If the market has indeed ended this correction at SPX 1011 we will need to see some improvement in the WLEI in August to continue this stock market advance into September. If not, the recent low may only be Major wave A of Primary wave II, and this potential uptrend Major wave B. This count would suggest a 4 year cycle low bottom in October with a retest of the OEW 1107 pivot or lower.
- We also noted earlier that the double WROC buy signal is a rare event. This suggests an uptrend is unfolding and the likely price target is between the OEW 1187 pivot and the OEW 1291 pivot. If this potential uptrend remains impulsive the upper pivot should be reached around October. If not, the lower pivot comes into play.
- India's BSE and Hong Kong's HSI are in confirmed uptrends. England's FTSE and Spain's IBEX are in confirmed uptrends. Brazil's BVSP is in a confirmed uptrend. Bonds lost 0.4% on the week during its uptrend. Bond prices are displaying a negative divergence at the recent highs, but not yields. Gold lost 0.3% on the week while its downtrend continues. Expecting a low in August. The EUR (-0.2%) and JPY (-1.1%) remain in uptrends.
Bulkowski - On 7/23, I raised the target to 1050 by mid August because the index appears to be reaching overhead resistance and I expect a drop back to my target soon.
Cobra - For short-term, I expect to see a pullback very soon, probably not small pullback. NYMO is way too high now, see chart below, whenever the NYMO was this high, a little bit bigger pullback was on the way. The last 2 trading days of each month since Sep 2009 were mostly bearish. Also according to Stock Trader’s Almanac, the first nine trading days of August are historically weak. The rebound could end between 1111 to 1121.
Murphy -
- Emerging markets are now leading us higher. Chart 1 shows Emerging Market iShares having already exceeded its June high. The EEM:SPX relative strength ratio (below chart) shows global leadership coming from emerging markets. Another positive sign for global stocks is new strength in China. Chart 2 show China iShares (FXI) climbing over their 200-day line and nearing a test of the June high. The RS line below the chart shows that China is now doing better than the U.S. That's also good for ommodities (like copper and oil) that are closely tied to China. Chart 3 shows copper trading at a three-month high and challenging its 200-day line.
- Another sign of short-term market improvement can be seen in the percent of NYSE stocks that are trading above their 200-day averages (NYA200R). What happens to that line often tells us more about the broader market than the major stock indexes (which are dominated by large cap stocks). The good news is that the line has just turned up from oversold territory near 30. Normally, the line has to climb back above 60 to give a more bullish reading. That would only happen when the major of NYSE stocks are back above their 200-day averages and out of immediate danger.
- The Dow and the Nasdaq closed above their 200-day moving averages on Friday which is a definite turn for the better. I'm focusing on the Nasdaq today because it usually acts as a leading indicator for the rest of the market. The daily bars in Chart 4 show the short-term improvement in the Nasdaq trend. Friday's gain pushed the Nasdaq Composite above its July high, its 200-day average, and its April/June down trendline (not shown). And it did so on rising volume (although the rest of volume rose on lighter volume). The Nasdaq/S&P 500 ratio has also turned up. Nasdaq leadership is usually a good sign for the rest of the market. Daily RSI and MACD lines are also positive. Friday's upturn paves the way for a further rally to its mid-June peak. What happens from there will help determine if this is just summer bounce or something more lasting. There are some factors which should temper bullish enthusiasm. First of all, 50-day averages remain below 200-day averages in all major market indexes. That needs to be corrected. Second, the weekly bars in Chart 5 show weekly MACD lines still in negative alignment. That needs to be corrected as well. Lastly, other major stock indexes (like the S&P 500 and the NYSE Composite Index) still need to clear their 200-day lines. Keep in mind as well that summer bounces are usually concentrated in the month of July. Seasonal trends then turn more negative into the autumn.
Rosenberg - The big bear gives reasons to be s-t bullish: ftalphaville.ft.com/blog/2010/07/23/296721/rosenbergs-17-reasons-to-be-bullish-seriously/
Alphatrends - A lot of good signs in the market. Buyers came in on top this week. Higher Hs and Ls on the daily. Looks like Spy will head to 200dma (111.6) and then 113. 105 is the key S. Weekly is still showing lower Hs, so be cautious until 113 is broken to upside. Smh - 29 is key R. Xlf - over 15, momo will come in. Looks like an i/h/s. 14.25 is key S. GLD looks weak and is likely to test its 200dma (112). He thinks Vix is a waste of time.