Info!! Indicator Review For July 14Th

Last week's indicator review noted that it was unwise to engage inwards bottom picking, given the expanding weakness across the bulk of indicators. That proved to move a audio policy, every 2d nosotros striking fresh send marketplace position cost lows during the week. Three of the nearly of import themes leading the marketplace position continued to signal to weakness, together with a heads upwardly from the Chair alerted us to regime intervention--first amongst IndyMac, together with then amongst Fannie together with Freddie. The concluding large intervention--with Bear Stearns--stemmed a marketplace position spend upwardly inwards March together with led to a respectable rally. Might that move the illustration this fourth dimension around every 2d well?

Interestingly, every 2d the Fed made its intentions known, the indicators remained weak, simply stopped getting weaker. As nosotros continued to brand cost lows into Fri inwards the S&P 500 large cap stocks ($SPX), the Russell 2000 pocket-sized cap issues held to a higher house their lows from early on inwards the week. This was reflected across a attain of indicators: on Friday, the number of stocks making 65-day highs minus lows held to a higher house the levels from Mon (top chart); the advance-decline trouble specific to NYSE mutual stocks (middle chart; credit to As I noted on Friday, if this departure is meaningful, nosotros should come across practiced buying off the lows early on this week. So far, nosotros are seeing a bounce inwards stock index futures every 2d I write this, inwards reply to the Treasury's back upwardly of the GSEs. I volition sentry the financial/banking together with housing stocks specially closely to come across if the regime actions stalk the selling inwards these nearly vulnerable sectors. Also maintain an oculus on the consumer discretionary sector (XLY), which has borne the brunt of the market's recessionary expectations. Given the resilience of the indicators belatedly inwards the week, it would non surprise me to come across some abrupt short-covering ahead, especially amid these beaten downwardly sectors. If that is going to happen, nosotros should come across some sustained positive activeness inwards the NYSE TICK; I'll move updating that indicator shortly. And, every 2d always, I'll move updating some of my favorite indicators daily via the Twitter app, along amongst links to timely posts on fundamental marketplace position themes.
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Info!! Indicator Update For July 14Th

Last week's indicator review suggested that nosotros were probable to run across farther weakness, given the potent downside momentum going into the week. We did, indeed, larn a follow through to the downside, taking out the of import lows from May in addition to June. This turned the sector trends bearish in addition to expanded the release of stocks registering fresh 20-day lows (middle chart) earlier Monday's solid bounce.

That bounce took us from a moderately oversold degree inward the Cumulative Demand/Supply Index (DSI) to a neutral reading (top chart). Note how downside momentum inward the DSI did non confirm the recent lows, something we also saw inward the Cumulative Adjusted TICK. I volition hold out watching closely to run across if cost weakness going frontwards is increasingly accompanied yesteryear non-confirmations of momentum in addition to strength. That would advise that nosotros rest inward the make defined yesteryear the May/June highs in addition to lows in addition to could motion good into that make from electrical flow levels.

I perish on to persuasion the market's activity every bit to a greater extent than typical of a correction inward a bull marketplace than every bit the offset of a novel comport market. This is supported yesteryear the relatively little correction inward the advance-decline describe of piece of job specific to NYSE mutual stocks (bottom chart; mad props to the splendid in addition to much recommended Decision Point site).

An expansion of novel 20-day lows on subsequent marketplace weakness would violate this scenario in addition to signal to a to a greater extent than pregnant marketplace correction. I volition hold out tracking that in addition to other marketplace indicators inward my intraday Twitter posts (follow here) to justice how nosotros are trading inside the extended marketplace range.
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