Info!! Trading Mentors: Learning Yesteryear Seeing, Doing, Teaching

A skillful trading mentor, similar a skillful instructor of physicians, volition both model skills as well as discovery the skills of students, providing timely feedback equally role of a review process. This supervision, based on the "see one, produce one, learn one" model of training, emphasizes learning yesteryear doing, non yesteryear classroom teaching. Much of that learning entails blueprint recognition: seeing as well as then many cases that you lot get to appreciate similarities as well as differences.

One of the outset sets of skills aspiring physicians larn is diagnosis. You can't effectively care for an affliction until you lot clearly position it first. Similarly, you lot can't effectively merchandise a marketplace position unless you lot acquire an agreement of the marketplace position you're trading.

In the doctoring world, physicians run diverse tests on patients, from blood workups to checks on vital signs to imaging studies. These tests are their "indicators" of a patient's condition. From the results of these tests, physicians larn to dominion out sure enough problems as well as entertain the possibility of other ones.

The informed trader is non as well as then different. Indicators emphasized inward this blog, such equally relative book as well as NYSE TICK, assistance a trader dominion out sure enough possibilities (an upward trending market) as well as dominion inward other ones (a make market). From this "diagnosis" of the market, the trader tin plough over the sack brand inferences regarding the likelihood of hitting sure enough cost levels, such equally the prior day's average cost (pivot) or the electrical current day's volume-weighted average price.

If a physician takes a sick patient's blood pressure level as well as finds that it's normal, the physician doesn't complain that the "indicator"--blood pressure--"doesn't work". Rather, that information is used to infer that mayhap the affliction is non heart-related. Ruling out possibilities is simply equally of import to diagnosis equally ruling ones in. If a marketplace position is moving higher, but NYSE TICK is mixed, I don't conclude that TICK is unreliable. I know from yesteryear marketplace position studies that depression TICK rises are peculiarly vulnerable to reversal, as well as I start to query the likelihood that the electrical current ascension volition hold upwards a sustainable upward trend.

Notice i of my early on Twitter tweets from yesterday:

8:34 AM CT - Overnite depression represents initial downside target; watching for signs of make day, as well as then seeing how nosotros merchandise rel to opened upwards & vwap.

Just several minutes into the trading day, I'm seeing signs of mixed forcefulness inward the market, as well as then I'm entertaining the hypothesis of a make day. At this early on juncture, my hypothesis is simply similar a physician's tentative diagnosis that a patient mightiness stimulate got an ear infection based on the blueprint of presenting symptoms. That tentative diagnosis leads to farther tests (such equally examining the ear for signs of inflammation), simply equally a tentative hypothesis close the construction of the marketplace position solar daytime leads me to farther examine sure enough indicators (sector demeanour for mixed vs uniform strength; relative book increasing or decreasing) for signs of trending or reversal.

The challenge for the trader is non as well as then much i of making marketplace position predictions equally refining trading hypotheses equally marketplace position information unfold. The effective trading mentor models this reasoning process, but eventually needs to allow junior traders endeavour out their ain reasoning, amongst prompt review of enterprise as well as flawed reasoning. That is why audio mentoring has to occur during the trading process, simply equally effective preparation of physicians has to occur at the bedside or inward the clinic.

The intraday Twitter posts (free subscription) are my means of modeling my thinking close markets equally trading unfolds. Imagine, however, an interactive messaging environment, inward which students tin plough over the sack operate equally teams to diagnose markets as well as advise winning trades--just equally medical students rotate through dissimilar specialties equally teams as well as larn from i another. The challenge for mentoring is to plough one-way mechanisms of delivering information into effective, interactive platforms for usual seeing, doing, as well as teaching.
.

Info!! Around Night Clouds On The Stock Marketplace Horizon

It's been a dandy operate inwards stocks from the mid-October lows, fueled past times significant buying pressure level coming out of those lows.  By mid-November, my measures were showing diminished upside momentum, but not the sort of weakness that would unremarkably atomic number 82 to meaningful intermediate-term corrections.  By the halt of November, pockets of outright weakness became evident inwards the market, amongst smaller cap issues as well as commodities-related stocks showing detail weakness.  This led to a recent province of affairs inwards which stocks making fresh three-month lows genuinely outnumbered those making novel highs, despite SPX hovering nigh its all-time highs.  Not entirely conduct hold nosotros been seeing signs of weakness inside the U.S. stock market; globally stocks conduct hold non kept upward amongst SPX.

Recall that I rails the number of upticks as well as downticks across all stocks inwards the NYSE universe.  That buying as well as selling pressure level stair out has been quite useful inwards tracking trace as well as weakness during the evolution of intermediate-term cycles.  What nosotros run into inwards the overstep nautical chart is that the buying-selling residue has been below cypher for a number of recent sessions, a designing nosotros conduct hold seen during the topping phases of marketplace cycles.  In itself, that exactly indicates a waning of wide buying involvement as well as approximately alternative upward of selling, though non to the storey nosotros saw prior to the early on Oct drop.

Truly outstanding has been the plunge inwards my stair out of correlation amid stocks, which looks across both capitalization levels as well as sectors.  Indeed, this is the lowest correlation storey I conduct hold seen since tracking the stair out since 2004.  Correlation tends to ascent during marketplace declines as well as and hence remains relatively high during bounces from marketplace lows.  As cycles crest, nosotros run into weak sectors pare off piece stronger ones hold to fresh highs.  As those divergences evolve, correlations dip.  Right similar a shot we're seeing massive divergences, cheers to relative weakness amid raw materials shares (XLB), loose energy stocks (XLE), regional banks (KRE), as well as pocket-size (IJR) as well as midcap (MDY) stocks.  Why is this important?  Going dorsum to 2004, a unproblematic median divide of 20-day correlations finds that, later depression correlation periods, the average side past times side 20-day modify inwards SPX has been -.33%.  After high correlation periods, the average side past times side 20-day modify inwards SPX has been +1.43%.  

A real interesting see stair out that I rails is the amount of upper-case missive of the alphabet flowing into as well as out of diverse ETFs.  The number of shares outstanding inwards an actively traded ETF changes daily, reflecting underlying buyer as well as seller interest.  Trim Tabs follows these ETF flows and notes that nosotros are at extremes that were seen prior to the 2008 marketplace meltdown.  My ain figures for SPY uncovering that shares outstanding late conduct hold striking double digit increases over the past times 20-day period.  That reflects bullish see inwards the overstep 90% of all values I conduct hold tracked since 2006.  Going dorsum to 2006, when see has been inwards the overstep bullish quartile, side past times side 20-day returns conduct hold averaged a loss of -.57%.  When see has been inwards the bottom, most bearish quartile, side past times side 20-day returns conduct hold averaged a make of +1.57%.

I lay all that together as well as uncovering it hard to run into practiced upside risk/reward from this point.  When I saw lack of trace plough into outright weakness inwards mid-September, my bullish chips came off the table.  Now I uncovering myself inwards a similar mode.  Could ECB or the Fed come upward to the market's rescue as well as inject fresh catalytic trace into stocks?  Absolutely.  Could investors pour coin into stocks as well as chase piece of cake Dec seasonal strength?  Of course.  I am confident those developments volition present upward apace inwards my buying/selling trace measures as well as I volition study them duly.  Right here, right now, however, I run into global signs of disinflation as well as economical weakness; a Fed that has been talking almost exiting QE; depression equity put/call ratios; as well as persistent relative weakness inwards high yield bonds (HYG).  It volition conduct hold a fresh catalyst--and fresh prove of buying interest--to decease my chips dorsum on the bull's table.
 .

Info!! Trading Notes For The Calendar Week Of April 18, 2016

Friday, Apr 22nd

*  Excellent shipping service from Jesse Felder questioning the wealth lawsuit from recent key banking concern policy.

*  Stocks pulled dorsum inward Thursday's trade, amongst fewer than 50% of SPX shares closing inward a higher house their three in addition to 5-day moving averages.  Despite the pullback, fifty-fifty my shorter-term measures stay inward overbought territory, as seen below:

*  Note how the pullback inward bond prices (rise inward yield) was accompanied past times drops amidst consumer staples (XLP), utility (XLU), in addition to existent estate shares (IYR).  Because these sectors offering enhanced yield in addition to because authorities bonds offering in addition to thence piddling yield, charge per unit of measurement views are playing out inward these stock sectors.  This is a real relevant dynamic for traders/investors.

*  Retail (XRT) in addition to technology scientific discipline (XLK) shares receive got been underperformers lately; much of the recent strength has come upwards from commodity related sectors (XLB, XLE, XME).  Strong commodities (DBC) are unopen to other macro subject playing out inside stock sectors; the relative surgery of stock sectors has been of import lately...it's non precisely risk-on, risk-off across all sectors.

*  China underperforming recently amidst concerns almost credit defaults.  On the radar...


Thursday, Apr 21st

*  Rob Hanna shares historical marketplace patterns on the Quantifiable Edges blog.  Also cheque out Rob's operate amongst Scott Andrews on the InvestiQuant blog.  Lots of proficient ideas here.

*  Stocks continued their deed higher on continued positive breadth.  Across all exchanges, nosotros had 1205 stocks brand fresh monthly highs against 192 lows.  As noted earlier, it's the absence of distinctive weakness inward whatever of the sectors that is noteworthy inward the recent marketplace strength.

*  Here's a valuable perspective on furnish in addition to need inward the States of America stock market.  It's a 10-day moving average of upticks versus downticks amidst all NYSE shares.  Note that, since the Feb lows, that average has never dipped below zero.  Most late this strength has been due to the depression grade of downticks; quite simply, nosotros are non seeing sustained selling from institutions in addition to this has kept stocks aloft.

  *  Here's a await at what's been relatively rigid in addition to weak amidst stock sectors from the FinViz site.  Note the odd strength amidst commodity related shares--a consummate reversal of the weakness nosotros saw early on inward the twelvemonth in addition to through a proficient chunk of 2015.  Renewed strength amidst commodities has been the clearest indication that markets are no longer pricing inward deflationary forces in addition to that's been proficient for global stocks.

Wednesday, Apr 20th

*  Looking for a sketch pad for quantified patterns inward stocks in addition to ETFs?  Great screener on Kora Reddy's Paststat site.

*  Stocks moved to novel highs for this run, amongst significantly expanded breadth.  Across all exchanges, stocks making fresh three calendar month highs vaulted to a novel peak.  (See below).  The full general dominion is that peaks inward breadth/momentum tend to precede cost peaks for bull cycles.  While breadth is stretched here--and indeed we've pulled dorsum inward overnight trade--we proceed to consider dips at successively higher cost lows, which is what makes for bull moves.

*  Influenza A virus subtype H5N1 different agency of looking at breadth tracks the divulge of NYSE stocks giving purchase versus sell signals across a diversity of technical trading systems.  I hold those stats as a cumulative running total, which has also displayed odd strength inward recent sessions.  (See below).  What is as noteworthy is that few shares are giving sell signals, which is a reflection of the depression grade of selling pressure level evident inward the upticks/downticks data.  Bottom line, I'm non seeing signs of deterioration inward this marketplace at the introduce time.

*  Note also the breakout strength amidst international equity indexes (EFA).  We've seen broadening international strength inward stocks as the States of America dollar has weakened. 



Tuesday, Apr 19th 

*  Limited notes side past times side few days;  working amongst traders inward London. 

*  Breadth continues strong,  with over one k fresh monthly highs in addition to over 80% of SPX stocks closing inward a higher house their 3, 5, in addition to 10 twenty-four hours moving averages. 

*  The stair out of upticks in addition to downticks continues to present unusually depression selling pressure. Stocks are unlikely to sustain weakness if institutional participants are non selling. 


Monday, Apr 18th

*  One of the greatest life risks nosotros take is playing it safe.  Life is also of import to live on wasted on inconsequential goals.

*  Recently the striking charge per unit of measurement on my trades has gone up.  That's because I'm non *trading*.  I am entering positions similar an investor in addition to exiting similar a trader.  Waiting for things to work upwards across different fourth dimension frames provides the proficient entry.  Defining a pregnant deed for a given volatility regime in addition to exiting when that is achieved provides the proficient exit.  Slow to instruct into trades, quick to instruct out when the marketplace gives proficient prices.  Perhaps the border inward such a method lies inward making *not trading* the default.  All I tin laissez passer on the axe say is that my involvement inward markets has redoubled always since I got away from screens.  Frequent trading is similar frequent eating: naught could live on worse for the palate, stomach, in addition to appetite!

*  Stocks opened the weekend lower on the heels of the inability of the OPEC coming together to attain an understanding over production cuts.  Since the early on trade, stone oil in addition to stocks receive got rebounded a bit; I'll live on watching the correlation betwixt stone oil in addition to stocks to consider if nosotros re-enter the regime that was bearish for both, as good as for high yield bonds.  Influenza A virus subtype H5N1 resumption of a rigid dollar merchandise would fuel such a regime; inward the absence of the dollar trade, the correlation betwixt stone oil in addition to stocks may live on less certain.

*  Breadth dipped on Friday, amongst 795 stocks making fresh monthly highs in addition to 137 registering novel lows.  My volatility measures receive got striking depression levels that receive got been associated amongst marketplace tops, including the "pure volatility" stair out that tracks the average volatility per unit of measurement of trading volume.  So far, nosotros haven't seen a pregnant expansion of selling pressure level inward the uptick/downtick stair out or inward the novel lows data; I'm watching those closely.  My "pure correlation" measure, tracking the correlation amidst stocks specific to given volatility regimes, also is at (low) levels historically associated amongst subnormal forwards returns over a several calendar week period.

*  My stair out of intermediate term strength, assessing novel highs versus lows across all SPX shares, has fallen toward neutral levels fifty-fifty as cost has moved higher.  While a few measures await toppy, it would surprise me if this bull deed were to all of a precipitous morph into a bear.  

Info!! Sector Update For March 30Th

Last week's sector update concluded that "The 800 expanse poses meaning resistance for the S&P 500 Index as well as this past times week's action, every bit a whole, has done trivial to reassure us that the recent rigid rally was anything to a greater extent than than a countertrend motion inward a downward market." We did, indeed, surmount that 800 degree as well as stay inward a higher house it for most of the week, though--as the intraday Twitter posts noted--signs of sector non-participation were present. With Monday's abrupt decline, nosotros savage dorsum below that 800 benchmark, amongst wide marketplace position weakness.

For this week's sector update, I contrast each sector's Technical Strength numbers from Fri (first release inward series) amongst the Technical Strength reading every bit of Monday's closed (second number, next the / mark). Recall that sector Technical Strength varies from -500 to +500, amongst those extremes denoting rigid uptrends as well as downtrends, respectively. H5N1 reading below -100 as well as +100 suggests a non-trending environment, as well as readings betwixt -100 as well as -300 as well as +100 as well as +300, respectively, request moderate levels of trending (i.e., choppy trends).

Here's how nosotros await across the 8 S&P 500 sectors that I follow (Friday/Monday):

MATERIALS: +180/0
INDUSTRIAL: +200/+100
CONSUMER DISCRETIONARY: +160/+40
CONSUMER STAPLES: +220/+140
ENERGY: +180/-100
HEALTH CARE: +160/0
FINANCIAL: +60/-120
TECHNOLOGY: +220/+60

What nosotros come across is that, fifty-fifty amongst the ascension of final week, the bulk of sectors were inward uptrends, precisely non rigid ones. This is utilization of the weakness that I was detecting next the rebound from Wednesday's lows. After Monday, however, nearly all of the sectors are inward non-trending mode. The strongest of the pack is the defensive Consumer Staples group; depository fiscal establishment complaint the weakness of Financial shares relative to 2 weeks ago.

A keen bargain of press was given to the fact that nosotros had rallied over 20% from the marketplace position lows, suggesting that this mightiness constitute the begin of a bull market. While the rally has been impressive, I accept establish marketplace position activity inward a higher house the 800 leve inward the S&P futures to live on less so. Until nosotros are shown otherwise, I am continuing to sentiment this every bit a wide make market, leap past times the early on March acquit lows as well as final week's cost highs. Against that context, a correction dorsum toward the middle of that make is non then unusual, given the lack of sustained buying involvement inward a higher house 800.

As always, I volition live on tracking Relative Strength past times reporting on the tendency condition of the forty stocks (five from each of the 8 sectors) each morn earlier the opened upwards via Twitter (free subscription here). Also via Twitter, I follow advance-decline statistics from the market's opening cost to render valuable clues every bit to the describe as well as weakness of the evolving intraday action; those were invaluable inward identifying the marketplace position weakness at final week's cost peak.
.

Info!! Sector Update For November 1St

Last week's sector review noted a pullback to a multiday trading gain equally business office of what appeared to live on a topping procedure next September's momentum highs together with October's cost high. That scenario continued to unfold this by week, equally nosotros broke sharply below the trading gain together with shut nigh the week's lows. As nosotros tin forcefulness out reckon above, this has turned 5 of the 8 S&P 500 sectors that I rail bearish inwards Technical Strength, amongst the others giving neutral readings.

Note: Technical Strength is a proprietary mensurate of short-term trending; sector readings vary from +500 (strong bullish trend) to -500 (strong bearish trend), amongst scores betwixt -100 together with +100 indicating a neutral trend.

Here are the private sector readings equally of Friday's close:

MATERIALS: -300
INDUSTRIAL: -240
CONSUMER DISCRETIONARY: -200
CONSUMER STAPLES: -40
ENERGY: -100
HEALTH CARE: -140
FINANCIAL: -360
TECHNOLOGY: 20

What nosotros reckon is relative strength amid technology scientific discipline shares, which convey seen potent earnings, together with the defensive consumer staples stocks. Particularly weak convey been fiscal stocks together with economically sensitive raw materials shares. We saw a notable driblet inwards strength calendar week over calendar week amid unloose energy stocks, reflecting commodity weakness amid recent U.S. dollar strength.

Friday's considerable weakness next a rigid rally on Th was non a positive for the bulls. While it would non live on odd to reckon a short-covering bounce from here, I volition live on looking for farther signs of bottoming earlier committing to a resumption of the bull market. At this juncture, I am non viewing the electrical flow correction equally a fresh comport market, exactly equally an respite of a relatively novel bull market--not dissimilar what nosotros saw inwards early on 2004 next a steep rally off the 2003 lows. But we'll permit the incoming indicator information enjoin the story: tendency indicators, along amongst strength together with momentum measures, are updated each morn via Twitter earlier the marketplace open. You tin forcefulness out follow those here or hold an oculus on the 5 nearly recent tweets on the weblog page nether "Twitter Trader".

Note that we're going into a Fed coming together this coming week; that should touching how nosotros merchandise equally nosotros approach the announcement.
.

Info!! A Quick Update On Stock Marketplace Put Strength

My recent post suggested that nosotros were seeing diminished trace inwards the the US stock market, simply non distinct signs of weakness.  Above nosotros encounter 3 charts that update the persuasion on marketplace strength.

The hap nautical chart tracks the publish of mutual stocks across all exchanges that convey made 3 calendar month novel highs vs. lows.  Typically this stair out peaks ahead of toll during bullish intermediate-term cycles.  We tin encounter that novel highs convey indeed peaked and, though nosotros convey been trading at or virtually toll highs lately, the publish of shares hitting fresh peaks has diminished.  Still, we're non seeing cyberspace novel lows equally nosotros did prior to peaks inwards April, July, in addition to September.  (Raw information from the Barchart site).

The middle nautical chart follows the publish of stocks listed on the NYSE that closed higher upwards vs. below their upper in addition to lower Bollinger Bands.  This has tended to peak in addition to trough ahead of toll during the upwards in addition to downward phases of marketplace cycles.  Again, we've seen a peak inwards this measure, simply equally nonetheless non the negative readings that preceded the July in addition to September peaks.  (Raw information from the Stock Charts site).

The bottom nautical chart tracks the publish of stocks listed on the NYSE that laissez passer on purchase vs. sell signals on the Commodity Channel Index (CCI) per the Stock Charts site.  Once i time to a greater extent than nosotros encounter a peak inwards purchase signals, simply non equally nonetheless an expansion of sell signals equally nosotros saw prior to the September peak.

In sum, we're seeing signs of waning upside momentum, simply non nonetheless a pickup inwards downside momentum.  For that reason, I believe it's premature to assume that this marketplace is on the verge of a correction on the guild of August or October.

Further Reading:  Will this Market Roll Over?
.

Info!! Trading Notes For The Calendar Week Of February 15, 2016

Friday, Feb 19th

*  We in conclusion got some pullback inward stocks next the breadth thrust off the lows noted inward yesterday's post.  It was non a wide pullback, however, every bit nosotros genuinely saw marginally to a greater extent than stocks upward on the solar daytime than downwards with NYSE shares.  Among SPX stocks, nosotros soundless had over 90% trading inward a higher house their 5-day moving averages.  I am watching closely what the bears tin sack select to the tabular array here, with an oculus toward seeing how nosotros merchandise nigh yesterday's lows.

*  Stocks making fresh one-month highs across all United States of America of America exchanges create got handily outnumbered stocks making one-month lows for the 2nd consecutive day.  At Thursday's unopen nosotros had 622 novel highs against 145 novel lows.

*  We've bounced on my cycle measures, but are non yet at levels usually associated with intermediate-term marketplace peaks.

Thursday, Feb 18th

*  Yesterday's ship service noted that breadth thrusts next oversold weather tend to Pb to upside momentum inward the nigh term.  That is precisely what nosotros saw on Wednesday, every bit nosotros followed forcefulness with yet some other tendency solar daytime to the upside.  As I've indicated inward the past, recognizing the early on signs of an upside tendency day is extremely useful for short-term traders.  

*  Meanwhile, the breadth thrust off the recent lows has continued inward impressive fashion, i time once again highlighting that we've pose inward an of import depression together with create got embarked on a fresh cycle to the upside.  While it's non odd to larn some push clit dorsum afterwards really extended breadth readings (more than 90% of stocks inward a higher house their short-term moving averages), those dips are mostly meant to hold upward bought.  The nautical chart below illustrates the recent breadth thrust.

Wednesday, Feb 17th

*  After some morn weakness, stocks moved higher inward the afternoon together with create got caught a fresh leg higher inward overnight trading, consistent with yesterday's Federal Reserve annotation expecting farther upside follow-through afterwards nosotros made recent lows with pregnant breadth divergences.  We closed Tuesday with really rigid short-term breadth, every bit over 90% of SPX shares closed inward a higher house their 3-day moving averages together with over 85% inward a higher house their 5-day averages. (Data from Index Indicators).  Such upside thrust afterwards weakness is typically followed yesteryear farther strength, leaving a buying of dips the continued operative strategy.  

*  Here is my short-term mensurate of SPX shares making fresh 5, 20, together with 100-day highs versus lows.  It's been a useful overbought/oversold measure.  Note how, despite the recent thrust higher, nosotros are non nigh overbought territory that has been associated with intermediate-term marketplace highs.

*  The intraday tendency organization is on a BUY signal from 4 AM EST together with would striking a sell signal at 1888 on the ES March contract.  The piece of job of the organization is to position intraday swings using number bars; signal levels alter with each novel bar together with conform dynamically for marketplace volatility.


Tuesday, Feb 16th

*  In a novel article, I expand on the sentiment of fourth dimension mapping together with offering a heatmap-inspired example.  This is a technique that is specially useful inward creating the motivation together with momentum to brand changes inward whatsoever surface area of life, personal or professional.  There are many techniques out at that spot inward the self-help literature to assist people change; non thus many methods to assist people honour the travail to sustain change.

*  We've seen some consolidation inward overnight trading afterwards a sizable rally.  Note that Fri closed with exclusively 35% of SPX stocks trading inward a higher house their 10-day moving averages.  Even if the electrical current rally ends upward beingness a bounce inward a broader comport market, I hold off some upside follow through every bit nosotros piece of job off the oversold status from a really weak starting fourth dimension to the year.  

*  I proceed to honour overbought/oversold measures utilizing number bars to hold upward useful inward finding skillful merchandise location together with identifying short-term marketplace cycles.  Below is a elementary rate-of-change mensurate using number bars, where each bar represents 500 cost changes inward the ES futures.  Other number charts that I hold depict the bars on the the world of number of trades together with on the the world of book transacted.  My nearly recent trend-following organization makes utilisation of number bars together with has done quite good identifying intraday swings.  As of this writing, that organization enters SELL style below 1881 inward the March contract.  The purchase together with sell parameters alter with each novel bar together with conform inward existent fourth dimension for marketplace volatility.

Monday, Feb 15th

*  We tested the Jan lows this yesteryear week, but--as noted inward previous postings--breadth divergences were striking.  Specifically, nosotros registered 1226 fresh three-month lows across all exchanges on Th together with 1353 novel lows on Monday.  At the Jan bottom, nosotros saw 2663 stocks brand fresh three-month lows.  Since that test, we've moved smartly higher on Fri together with thus i time again inward overnight trading.  My short-term tendency model is solidly inward purchase style together with has been since Fri morning.

*  An ongoing query projection has been assessing marketplace cycles yesteryear tracking the functioning of all NYSE stocks across a diversity of technical indicators.  (Raw information from stockcharts.com).  The mensurate below takes a volatility-weighted composite of purchase versus sell signals for ii technical systems:  Bollinger Bands together with Parabolic SAR.  Note that nosotros closed Fri at levels some those seen at intermediate-term bottoms together with create got quite a agency to become earlier nosotros run into overbought levels.  

*  Here is yet some other cycle based mensurate derived from breadth information (Raw information from indexindicators.com). Note that it is inward oversold territory, but non at levels seen at nearly intermediate-term lows together with good off overbought levels.  If indeed nosotros create got seen a successful retest of Jan lows, I would hold off marketplace firmness to create got these cycle measures higher.

*  I would position the greatest improvement to my trading every bit coming from focusing away from trends together with directional movement together with instead thinking of cycles together with the transitions from trending to mean-reverting demeanour together with dorsum again.  Influenza A virus subtype H5N1 cycle includes phases of upward together with downward trending, every bit good every bit attain demeanour nigh highs together with lows.  Identifying these transitions--and non getting caught upward inward whatsoever i stage of marketplace behavior--is really helpful to short-term trading.

Info!! Sector Update For April 12Th

Last week's sector update concluded that the viii major sectors of the S&P 500 that I runway had moved solidly into an uptrend mode, amongst defensive sectors lagging too signs of conduct chances appetite on the rise. With Friday's enterprise rally, nosotros saw upside breakouts across many sectors, continuing the marketplace uptrend. Here's how Technical Strength (a quantification of short-term trending) looks for the viii sectors every bit of Friday's close:

MATERIALS: +400
INDUSTRIAL: +340
CONSUMER DISCRETIONARY: +400
CONSUMER STAPLES: +140
ENERGY: +120
HEALTH CARE: -120
FINANCIAL: +460
TECHNOLOGY: +400

Recall that Technical Strength varies from +500 (extreme short-term uptrending) to -500 (extreme short-term downtrending), amongst values betwixt +100 too -100 suggesting no pregnant trending. We tin come across that the Financial sector has been extremely strong, amongst notable weakness amid the defensive Health Care too Consumer Staples issues. Raw Materials are showing strength, every bit is Technology too Consumer Discretionary shares, suggesting that investors are betting on increment too economical recovery.

As long every bit pro-risk themes are dominating too the bulk of sectors are displaying Technical Strength, it is premature to fade this rally for anything to a greater extent than than a short-term trade. As always, I volition last tracking the trending behaviour of the 40-stock handbasket of stocks inwards my pre-market Twitter posts (free subscription). I'll besides last updating marketplace themes inwards my Twitter posts, virtually peculiarly the themes of growth/recovery vs. weakness/recession.
.

Info!! Indicator Update For February 14Th

Last week's indicator review suggested that nosotros had seat inward a momentum depression inward the stock market, amongst possible tests of the lows to follow. We indeed run into follow-through weakness inward stocks this yesteryear week, precisely prices held inward a higher house 1050 inward the S&P 500 Index futures earlier nosotros shut the calendar week higher.

Note from the 20-day novel highs minus lows (top chart) that the dandy bulk of issues cause got pulled off their recent lows, amongst novel highs running roughly the orbit of novel lows. I piece of work a cumulative running total of novel highs minus lows every bit an intermediate-term tendency indicator. We require to run into an expansion of novel highs relative to lows to furnish us to an uptrend. Influenza A virus subtype H5N1 bounce amongst feeble novel high/low force would house us inward a designing of making lower toll highs next a pause of the December, 2009 lows. For that reason, I am reluctant to chase toll force that cannot force novel highs meaningfully inward a higher house lows.

At the same time, I volition live on watching closely for whatever pause below that 1050 expanse to run into if novel 20-day lows are expanding. Influenza A virus subtype H5N1 exam of that expanse amongst wide non-confirmations from sectors in addition to novel highs/lows would live on consistent amongst a bottoming procedure in addition to the designing of momentum lows followed yesteryear subsequent tests.

Note that, despite the recent bounce, the 8 S&P sectors that I follow weekly (middle chart) rest largely inward short-term downtrends according to my proprietary Technical Strength measure. Consumer-related sectors strengthened week-over-week, every bit did Energy stocks. Financial in addition to Industrial shares rest relatively weak. Once again, I require to run into sectors display positive Technical Strength earlier trusting marketplace position bounces in addition to committing to the long side.

Finally, if y'all cause got a hold off at the advance-decline employment specific to NYSE mutual stocks--a really useful perspective from Decision Point--we honor that nosotros have, indeed, done technical harm to the stock marketplace position during the recent decline. Moreover, the recent bounce has non added important advance-decline force to the market. I am watching the October/November lows inward this indicator really closely; a pause of those would propose a continuation of an intermediate-term downtrend.

In all, we've seen a bounce off apparent momentum lows, precisely no resumption of bullish marketplace position action. The recent marketplace position demeanour is consistent amongst a bottoming procedure in addition to an intermediate-term correction inward an ongoing bull market. I am watching the indicators closely, however, for signs that the correction could deepen inward the wake of troubling tidings from Europe, Dubai, in addition to Red People's Republic of China in addition to continued saber-rattling inward the Middle East.
.

Info!! Pre-Opening Briefing: The Context Of The Market

the tendency condition of the S&P 500 sectors in addition to the condition of the marketplace indicators posted weekly. Both demo that nosotros are inwards an intermediate-term trading range, inwards a marketplace that has been losing momentum in addition to strength.

As you lot tin move meet higher upward (middle chart), this morning's forcefulness places us virtually the pinnacle of a several hateful solar daytime range. Even farther out (bottom chart) nosotros are trading at the upper terminate of a multiweek hit defined past times the highs of 6/19 in addition to the lows of 6/23. How nosotros merchandise relative to the resistance at the tops of these ranges volition move of crucial importance today in addition to this week. Influenza A virus subtype H5N1 failure to sustain forcefulness higher upward those highs would select me looking for retracement dorsum into that range, toward the 900-area midpoint. Influenza A virus subtype H5N1 successful upside breakout would target the June highs. Either way, standing virtually the pinnacle of an extended hit should fix a worthwhile trade. I'll rails my thinking on this alongside intraday Twitter posts (follow here).

9:37 AM CT - I added the pinnacle Market Delta nautical chart to demo how nosotros traded downward toward the overnight lows inwards ES earlier rallying furiously in addition to taking out the overnight highs. Note, however, that both the NASDAQ in addition to Russell Indexes are below their opening cost levels. The large cap stocks are leading this morning; to sustain an uptrend, they'll require to convey the others along. I'm watching TICK for signs of broader marketplace strength. With book at the marketplace offering handily exceeding book at the bid inwards ES, it is hard to sell this marketplace despite electrical flow non-confirmations.
.

Info!! Marketplace As Well As Sector Perspectives For A Sunday

the recent posts on marketplace cycles, I mapped out (chart above) how I've been viewing the electrical flow cycle, given the divergences noted inwards before posts. With the surge of buying inwards the markets the past times 2 days, it is probable that the recent lows stand upwardly for toll lows for the electrical flow cycle, implying higher marketplace prices good into 2009 (given the stone oil proportionality of the duration of the menses from the momentum high to the toll lows in addition to the menses from those lows to the side past times side bike high). That's the expert news. The bad word is that, at the larger fourth dimension frame, nosotros made a momentum altitude inwards 1999/2000 in addition to a toll altitude inwards October, 2007, implying that nosotros get got yet to brand momentum in addition to toll lows on this larger fourth dimension frame--and that those lows are probable to accept out the 2002-2003 lows.

* Sector Comeback - What a difference a twain of days make! Here are the Technical Strength readings past times sector every bit of Friday's close:

MATERIALS: +260
INDUSTRIAL: +80
CONSUMER DISCRETIONARY: +140
CONSUMER STAPLES: -160
ENERGY: +160
HEALTH CARE: -60
FINANCIAL: +260
TECHNOLOGY: -100

Note that in that location is yet prove of considerable sector rotation, every bit coin left the relative rubber havens (consumer staples, wellness care) in addition to went into the rescued fiscal sector. Note every bit good that nosotros are really far from beingness overbought, despite the abrupt ascent of the terminal twain of days.

* Money Finally Flowing Into the Market? - The large inquiry is: how much of the ascent belatedly inwards the calendar week was majority brusk roofing in addition to how much represented fresh buying interest? Money flow information from the Wall St. Journal constitute meaning positive coin flows into the Dow stocks in addition to the major S&P sectors on Friday. More on that theme inwards the indicator review to hold upwardly posted Mon AM.

* Watch for Themes Going Forward - How volition the recent turmoil in addition to the proposed authorities activity play out inwards the diverse markets? Some things I'll hold upwardly watching going forward:

* Signs of risk-taking or risk-aversion: How practise emerging marketplace equities comport relative to U.S. stocks?

* Interest rates in addition to Commodities: Hard to imagine tightening moves whatsoever fourth dimension soon, given the vulnerability of the economy, only volition long rates in addition to commodities laid about to toll inwards farther inflation?

* Confidence inwards U.S. Dollar - If the U.S. authorities is taking on dodgy debt, volition investors desire to concur U.S. dollars, in addition to volition inflation expectations weigh on the dollar?

* Trader in addition to Investor Sentiment - Will the recent authorities activity boost view amid stock marketplace participants or volition nosotros laid about to encounter doubts that the rescue tin work?

Hard to believe in that location won't hold upwardly repercussions from the government's expansion of debt, including missed opportunities to reform social safety in addition to wellness attention in addition to express room to heighten spending on other priorities, cutting taxes, or tackle novel nation of war machine challenges.
.

Info!! Sector Update For December 20Th

Last week's sector review institute a mixed film of Technical Strength, alongside several sectors trading inwards short-term uptrends in addition to others inwards downtrends. This was consistent alongside a film of sector reallocation, where the overall marketplace averages were rangebound, only coin was coming into roughly sectors in addition to exiting others. That film continues 1 time to a greater extent than this week, alone nosotros run across the bulk of large cap sectors--five of the 8 that I runway weekly--trading inwards neutral territory, alongside no important directional bias.

This 1 time once to a greater extent than highlights the rangebound nature of the electrical current market. Two sectors that were potent the prior week, Industrial in addition to Technology shares, weakened this by week, only Financial stocks stay the relative forcefulness laggard, equally they bring been for a release of weeks running. Here's how the sectors looked equally of Friday's close:

MATERIALS: -80
INDUSTRIAL: 60
CONSUMER DISCRETIONARY: 160
CONSUMER STAPLES: -120
ENERGY: -80
HEALTH CARE: -20
FINANCIAL: -240
TECHNOLOGY: 60

We tin run across that none of the sectors is showing a important uptrend; alone Financial shares exhibit meaningful weakness. I detect that both Financial in addition to Consumer Staples ETFs (XLF, XLP) hitting longer-term back upwardly levels on Fri earlier bouncing higher. I volition endure watching those sectors closely early on this coming calendar week for signs of breakdown vs. turnaround.

As always, I'll post updated tendency in addition to marketplace strength/momentum information each morn prior to the marketplace opened upwardly via Twitter (follow the Twitter current here).
.

Info!! Reading The Communications As Well As Metacommunications Of The Markets

Think almost reading a marketplace similar reading a person: you'll head for the communications of the market--what it's doing--but equally good for the metacommunications: how it's expressing itself. Let's accept yesterday's marketplace equally an example.

* How did markets inward Asia in addition to hence Europe open? How mightiness a trader cause got picked upwards on overnight underperformance yesteryear U.S.A. stock index futures in addition to weak functioning yesteryear private stocks inward their pre-opening merchandise to anticipate weakness during the regular trading day?

* What intelligence came out early on inward the morn trade? How did stocks reply to the housing news? How could the failure of stocks to rally on the intelligence cause got helped a trader anticipate a retest of the prior day's depression price?

* How did sentiment unfold during the morn trade? How could traders banknote that institutional participants inward the marketplace were dominantly hitting bids across the universe of stocks (negative NYSE TICK) in addition to hitting bids inward the S&P 500 futures (negative such themes?

* What were marketplace indicators, such equally the novel highs/lows noted inward my indicator review in addition to the money flows noted inward my recent post, noting almost longer-term marketplace strength? How mightiness a await at such measures assistance a trader anticipate weakness from hateful solar daytime to day?

It's non almost imposing your views of what markets *should* endure doing; it's almost reading what they *are* doing yesteryear placing cost activity into a broader context in addition to reading how that cost activity is evolving. These are functioning skills that are developed over time; they're similar the expertise of a doctor who learns to slice together signs to brand it at diagnoses. The science is inward the powerfulness to connect new, unfolding data alongside the data you've already gathered to constantly update your views of marketplace activity. That science serves you lot good over whatever fourth dimension frame.
.

Note: The theme of marketplace communications in addition to metacommunications is a major theme of my starting fourth dimension book, The Psychology of Trading. I personally respect it interesting that traders who lack social skills--who don't read people well--also seem to fighting alongside markets. I head carefully to the marketplace views of defensive, abrasive, or socially inept people; they're uncommonly wrong, which makes their opinions useful inward unintended ways.
.

Info!! Farther Signs Of Stock Marketplace Strength

the show of buying support for the electrical flow market. Across the NYSE, NASDAQ, as well as ASE, Fri registered 505 novel 20-day highs against 194 lows--the showtime fourth dimension since the spend upward began that we've seen to a greater extent than novel highs than lows. My mensurate of Demand (an index of the publish of stocks closing higher upward their volatility envelopes) was 205 on Friday; Supply was 22. That way that over ix times every bit many stocks displayed pregnant upside toll momentum every bit downside.

Throughout the decline, periods of positive coin flow accept been brief as well as accept led to renewed selling. So far, the marketplace has been able to feed on strength. While this activity isn't sufficient to dominion out futurity toll weakness, it does establish 1 necessary chemical cistron inwards a bottoming process.
.

Info!! Morning Time Briefing For October 30Th: Or Then Renewed Dollar Strength, Stock Weakness

The U.S. dollar is showing renewed forcefulness vs. the Aussie dollar (bottom chart), in addition to we're seeing a pullback of stocks (top chart) dorsum into their 10/28 range, afterwards having broken inwards a higher house that attain yesterday. That leaves us inwards a wide trading attain defined yesteryear the overnight highs today/Thursday highs in addition to the 1040 grade inwards the ES futures from which nosotros launched yesterday's rally/Wednesday lows.

USD forcefulness reflects, inwards part, concerns over the Fed coming together adjacent week alongside signs that around key banks (Australia, Norway) convey begun their dice strategies from depression involvement rates in addition to monetary ease. Any hints of charge per unit of measurement rises on the horizon could touching on the dollar to the upside, which has seen weakness interpret into appetite for commodities in addition to stocks.

Yesterday's sudden rally afterwards recent considerable weakness suggests that nosotros may convey seen an intermediate-term momentum depression pose inwards yesteryear the stock market. If so, I'd hold upwards looking for signs of bottoming--fewer stocks making fresh 20-day lows in addition to fewer stocks trading below their 20-day moving averages on weakness--before seeing a fresh bull leg. It would non surprise me to watch markets merchandise hesitantly in addition to inwards attain fashion every bit nosotros motility closer to adjacent week's Fed announcement.
.

Info!! Signs Of Marketplace Strength

market themes-- favors the upside.
.