Info!! Trading Notes For The Calendar Week Of March 14, 2016

Friday, March 18th

*  Steve Spencer of SMB emphasizes that cost activity next a catalytic lawsuit provides us amongst of import information.  This is especially truthful when nosotros run across a modify inwards the distribution of transactions next a word lawsuit or other catalyst.  Increased book together with a novel skew of book lifting offers versus hitting bids, for example, tells us that fresh buying flows receive got come upwards into the market.  This calls for an updating of our views of the stock or index.

*  This lesson has been especially relevant inwards the wake of the Fed announcement.  My cumulative stair out of upticks vs. downticks has hitting novel highs for this displace together with breadth, which had been waning, vaulted to novel highs.  Below nosotros tin run across the nautical chart of stocks across all changes making fresh 3-month novel highs vs. lows.  The vigor of buying next the Fed annunciation suggests that this, indeed, was a game changer.  Central banks globally are opting for accommodation and, historically, that has been favorable toward stocks.

*  The China/deflation thesis, which dominated give-and-take during recent marketplace weakness, is far less discussed I find, given stone oil clit together with USD weakness.  For stocks, inwards a negative involvement charge per unit of measurement world, anything rubber amongst yield continues to discovery interest.

Thursday, March 17th

*  Interesting commentary on the fright of missing marketplace moves from Victor Niederhoffer.  Many a bad merchandise is made because of the ego, non because of the objective marketplace opportunity.

*  We saw a ascent to novel highs on the heels of the Fed announcement, amongst enterprise buying interest.  Recent posts receive got commented on weak breadth and, for the marketplace overall, the breadth movie did non amend despite the Fed-related strength.  Across all exchanges, nosotros saw 753 novel monthly highs against 254 lows.  The latter is in 1 lawsuit again an uptick inwards novel lows together with the novel highs are one-half of what nosotros saw 2 weeks ago.  Among SPX shares only, stocks making fresh 100-day novel highs versus lows did expand to a marginal novel peak.  Much of the weakness is amid small-scale cap shares, though fiscal together with wellness aid stocks inside SPX are likewise lagging.  With the mixed breadth picture, I'm non surprised to run across some retracement of yesterday's gains inwards premarket merchandise today.

*  Breadth issues notwithstanding, it's clear that this has been a vigorous bull displace from the Feb lows.  Note below how we've stayed "overbought" on my multiperiod clit stair out (daily tracking of SPX stocks making 5, 20, together with 100-day novel highs versus lows) for a number of days.  This exclusively occurs inwards trending markets.  While the breadth issues oft precede correction, my base of operations illustration is to sentiment such a correction equally a buying opportunity.  

 

*  I'm working on creating a cycle-based stair out of short-term momentum together with value effects inwards the ES market.  The thought is to seat when markets are most probable to proceed versus opposite their most recent directional movement.  Interestingly, the market's ascent yesterday occurred on a depression value of the momentum measure.  More to come upwards on this research.

Wednesday, March 16th

*  Jim Dalton, who has pioneered trading via Market Profile, is offering his in conclusion mentorship computer programme earlier his retirement.  I likewise run across Terry Liberman will live doing a webinar amongst Jim afterwards today.  When I taught an internship computer programme inwards Chicago many years ago, Jim's piece of occupation was the exclusively mandated reading.  I proceed to discovery Market Profile helpful equally a conceptual framework for thinking nearly marketplace behavior.

*  After some early on weakness, nosotros saw buying inwards stocks, but small-scale caps proceed to notably underperform large caps.  As a result, nosotros run across continuing deterioration amid the breadth measures.  New monthly lows ticked upwards to 192, the highest degree since Feb 24th together with monthly highs dipped to 451.  Relatively weak sectors lately include unloose energy shares (XLE) together with healthcare (XLV).  Today's trading volition live dominated past times the afternoon's Fed announcement.  

*  We proceed quite stretched on my intermediate clit measure, which looks at the number of SPX shares making fresh 5, 20, together with 100-day highs versus lows.  (Data from Index Indicators).  If the Fed-related merchandise can't interruption us from the breadth deterioration, I await an intermediate-term correction.  That would non necessarily live an terminate to the bull displace from February's lows, but could advise a new, topping stage to the electrical current marketplace cycle.  During a topping stage nosotros tin run across higher overall prices for the index, but amongst deterioration inwards some sectors contributing to lagging breadth.  

   
*  Here is a unique intraday indicator that looks at buying clit per unit of measurement area amid all U.S. listed shares.  It tracks upticks amid all shares (data from e-Signal) together with expresses the final result inwards measure difference units.  This shows us when important buying is coming into the market.  It likewise shows us when at that topographic point is a meaningful absence of buying.  (A corresponding stair out tracks important selling together with absence of selling pressure).  It helps longer-term positions when those are going amongst the flows.  The nautical chart below shows yesterday's market.

Tuesday, March 15th

*  I'll live making an improver to these marketplace notes together with including each 24-hour interval links to readings that I discovery specially informative together with useful.  To boot this off, banking concern check out the Paststat blog for daily trading ideas based upon historical patterns, including this 1 based upon seasonality.  From my perspective, such patterns are the starting signal for analysis, non an terminate point.  Once nosotros run across a pattern, the difficult piece of occupation remains of deciding: 1) is the electrical current marketplace authorities typical of the menstruum covered past times the historical test; 2) is at that topographic point a audio argue for the beingness of the pattern, or mightiness the designing live a random occurrence; together with 3) what is the variability or together with thus the designing (could yous endure the exceptional instances)?  Factoring marketplace history into trading decisions is no guarantee of success--it's slow to aspect inwards together with thus many places that some "significant" designing appears--but ignorance of marketplace history is non just a promising alternative.

*  The relative absence of selling clit per unit of measurement area inwards Monday's session was noteworthy together with helped atomic number 82 to higher prices for much of the session earlier a belatedly selling burst.  Selling has continued overnight amongst no novel shot inwards the arm from the Bank of Japan.  Trading was unusually wearisome on Mon together with nosotros could larn to a greater extent than of the same ahead of tomorrow's Fed announcement.  Note how short-term breadth has been potent for a number of days; the stair out below tracks the percent of SPX stocks closing to a higher house their 3, 5, together with 10-day moving averages.  (Data from Index Indicators).

       
 *  The marketplace looks tired to me--for the origin fourth dimension since the liftoff from the Feb lows.  Specifically, we're getting fewer shares registering novel highs during marketplace rallies.  Much of that relative weakness is coming from small-scale cap shares.  Yesterday nosotros saw 921 stocks across all exchanges brand fresh monthly highs against over 2000 in conclusion week.  (Data from the Barchart site).  No private sector inside the SPX looks distinctively weak together with I'm non at all convinced that we're going into deport mode.  Rather, I await a normal correction inside a bull move.  With the absence of selling having problem bringing us higher, I'm leaning toward selling bounces that cannot maintain us to a higher house the overnight highs.  Of course, the upcoming Fed annunciation volition supply a major catalyst for stocks tomorrow.


Monday, March 14th

*  Those who know me good know that I create non subscribe to the thought that successful trading is by together with large a operate of psychology.  Without an objective trading edge, one's frame of bespeak heed volition but dictate the charge per unit of measurement at which nosotros portion amongst our capital.  Still, psychology is necessary, if non sufficient, for success together with yesterday's post service was mayhap my clearest explanation why.

*  We shut close the highs on Friday, continuing the upswing next the post-ECB selloff.  The ascent left us quite stretched short-term, amongst over 90% of SPX stocks trading to a higher house their 3, 5, 10, together with 20-day moving averages.  This inwards itself is non a mutual occurrence.  Going dorsum to 2006, I could exclusively discovery 12 instances of this happening when VIX has been below 20.  Interestingly, three were up, ix downward the side past times side 24-hour interval for a internet loss, but 10 were up, 2 downward after three days.  We're trading a fighting lower premarket equally I write; the depth of a side past times side pullback volition state us a lot nearly possible upside momentum over the side past times side few days.

*  One line of piece of occupation concern starting to travel inwards my caput is that Friday's highs were the origin inwards which nosotros saw sizable breadth divergences.  If nosotros aspect at all stocks across all exchanges, nosotros tin run across that 1087 made fresh monthly highs on Fri against 2082 the prior Friday.  Much of this is a operate of relative weakness amid small-scale caps.  We exclusively had 92 novel monthly lows on Friday, together with thus naught is standing out equally weak together with I'm non expecting whatsoever grand reversal.  I am concerned, however, that nosotros could run across a decent pullback from these levels equally portion of the start of a topping process.  Bottom line is that I was happy to receive got profits belatedly Fri together with I'm happy to remain on the sidelines together with run across what the bears tin bring.  Ideally, I'd similar to live a buyer of weakness early on inwards the calendar week for at to the lowest degree a retest of highs thereafter.  But I'm non seeing favorably skewed risk/reward right here, right now.

Info!! Several Views Of Stock Marketplace Set Breadth

Recent marketplace deportment inwards stocks has been confusing for traders, every bit we've had a practiced bargain of volatility during 2015, alongside petty ultimate directional movement.  VIX has stubbornly stayed to a higher house fifteen for much of this time, a notable modify from nearly of 2014.  Here are 3 views of breadth inwards the U.S. stock marketplace that tin assistance us brand feel of what has been going on.

The operate past times nautical chart represents all stocks listed on major exchanges as well as the set out making fresh three-month novel highs vs. three-month novel lows.  (Raw information from the Barchart site).  You tin meet that breadth has been waning since the piece of cake Oct as well as piece of cake Dec marketplace peaks.  Breadth has tended to peak ahead of cost during intermediate term marketplace cycles.  What I believe has helped brand recent marketplace activity confusing is that the electrical current wheel has been really choppy, only the breadth mensurate peaked inwards piece of cake Dec as well as we're inwards the procedure of topping.  An implication of this persuasion is that the downside to the electrical current wheel should ultimately interruption us below the 2015 lows to date.

The middle nautical chart represents exclusively stocks from the SPX average as well as tracks the set out making 5, 20, as well as 100-day highs minus lows each day.  (Raw information from the Index Indicators site).  This, too, tends to operate past times ahead of cost during intermediate-term cycles as well as striking its recent peak inwards piece of cake December.  Notice how novel lows did non expand for either the operate past times or middle measures when nosotros made recent early on Feb lows.  That develop the electrical current upswing.

The bottom nautical chart represents the cumulative set out of NYSE stocks closing to a higher house their upper Bollinger Bands vs. those closing below their lower bands.  It is a running total, similar an advance-decline line.  (Raw information from the Stock Charts site).  That mensurate has been on the upswing as well as is consistent alongside the lack of fresh weakness at the recent marketplace lows.  It is ane of several factors that has kept me from prematurely shorting the electrical current market.  Note, however, how nosotros are good below 2014 highs inwards this measure.

Bottom trouble is that nosotros are seeing positive breadth, only weakening breadth over time.  I proceed to persuasion this every bit purpose of a larger topping procedure inwards stocks.

Further Reading:  Perspectives on Breadth
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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!! Are Nosotros Significantly Oversold Inward The Stock Market?

Above is a useful short-term mensurate of whether nosotros are trading inward an "overbought" versus "oversold" vogue inward the U.S. of A. stock market.  The blueish work is the cash SPX; the ruddy work is a five-day moving average of the following:

(5-day novel highs minus 5-day novel lows) + (20-day novel highs minus 20-day novel lows) + (100-day novel highs minus 100-day novel lows)

The novel highs as well as novel lows are taken from the SPX stock universe solely (raw information from the fantabulous Index Indicators site).  

Going dorsum to 2010, when we've divided the readings into quartiles, the side past times side 3 days inward SPX for the most oversold quartile induce got averaged a gain of +.58%.  The average three-day alter for the other quartiles combined has been +.01%.  Superior returns for oversold marketplace atmospheric condition are noteworthy over the side past times side 20-day horizon.

What makes the electrical flow fourth dimension menses especially interesting is that the same indicator constructed for the 600 SP pocket-size cap stocks is non showing the grade of oversold reading we're seeing amid the large caps.  For example, close 17% of pocket-size cap stocks made fresh 20-day lows yesterday, compared alongside 28% of large caps.  That discrepancy itself, hinting at the breadth of weakness across sectors, is itself useful information.

Further Reading:  Unique Views of Breadth as well as Strength
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Info!! Using Divergences Inwards Marketplace Forcefulness To Anticipate Reversals

There's been a flake of dorsum together with forth tweeting close the value of divergences amidst marketplace position indicators.  Jason Goepfert of the fantabulous SentimenTrader service rightly notes that divergences are non cracking predictive tools.  Indeed, divergences on a nautical chart are simply observations; their predictive value needs to endure established through testing.

Still, I observe divergences to endure useful observations equally a sort of heads up, a yellowish caution light.  If the wide marketplace position indexes are making novel highs or novel lows together with a substantial proportion of shares are non participating, I desire to endure opened upward to the hypothesis that the motility reflects a handful of highly weighted shares inside the indexes, non the wide market.  This keeps me opened upward to the possibility of reversal, combating whatsoever overconfidence bias I may convey amongst honour to the recent marketplace position move.

Yesterday gave us a perfect event of the cautionary value of divergences.  When nosotros made fresh lows inwards SPX inwards the morning, my stair out of selling programs showed considerable hitting of bids inwards my handbasket of highly liquid large cap names (top chart).  These stocks were non exclusively downticking, but doing together with hence at the same moment, revealing an elevated grade of handbasket executions of sell orders. 

Despite this selling activity, the wide listing of stocks (all listed U.S. shares) was showing reduced selling pressure level (middle chart) equally nosotros made novel lows.  My stair out of upticks vs. downticks across all stocks was showing considerably less selling pressure level at yesterday's lows relative to the prior recent downturns.  That was an indication that intense selling pressure level was occurring inwards a smaller grouping of large cap names, but non across the wide market.  Indeed, my cumulative stair out of upticks vs. downticks amidst all listed shares was hitting novel highs yesterday!  (All information inwards a higher house from e-Signal).

On the bottom nautical chart (data from Barchart), nosotros tin give the sack run into how this departure played out amongst honour to stocks making fresh three-month lows.  Although nosotros touched cost lows intraday yesterday, the release of shares listed on all exchanges did non expand the release of novel lows made from the final few days.  Again, at that spot was intense selling pressure level inwards the visible large cap group, but a lack of selling behave on across the wide market.

Keeping tabs on marketplace position forcefulness together with divergences, I find, helps proceed me cognitively flexible.  For soul similar myself who was brusk the marketplace position going into the day, that flexibility proved to endure quite useful.  It is really slow to instruct caught upward inwards the stock marketplace position together with lose sight that it's genuinely a marketplace position of stocks.  Looking at what the components are doing tin give the sack endure really useful inwards anticipating the travail of the broader market.

Further Reading:  Views on Breadth
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Info!! Assessing The Recent Stock Marketplace Pose Strength

Stocks moved smartly to novel highs inward the major averages this by week.  Sector rotation was specially noteworthy, amongst old leaders utilities together with consumer staples--defensive together with yield plays--falling behind together with to a greater extent than growth-oriented sectors--consumer discretionary together with raw materials--showing detail strength.  This reflects pull inward U.S.A. of America economical information together with an increased pricing of odds that the Fed volition stimulate to normalize involvement rates afterward this year.

The top nautical chart tracks the divulge of stocks across all exchanges making fresh three-month novel highs vs. novel lows. (Raw information from the Barchart site).  Note that novel highs accept been growing inward recent sessions, simply stay below peak levels seen inward 2014.  This reflects the fact that many sectors, such equally financials, energy, consumer staples, together with healthcare, accept non registered recent novel highs.  Still, I banking concern complaint that relatively few shares are registering fresh novel lows, an indication that buying has been broad-based.  Indeed, the bottom nautical chart tracks the Cumulative NYSE TICK--the cumulative upticks vs. downticks for all NYSE stocks--and shows consistent buying involvement from institutional players.  (Raw information from e-Signal). 

The 2nd nautical chart from the top is my mensurate of intermediate term marketplace strength.  It is a 10-day moving average of SPX stocks making 5, 20, together with 100-day highs vs. lows.  (Raw information from Index Indicators).  It has risen sharply inward recent sessions together with is close a momentum peak.  Note that it is non at all odd for this pull mensurate to top out ahead of cost during intermediate-term marketplace cycles, which way that nosotros could come across farther upside drift fifty-fifty if breadth moderates from here.

The 2nd nautical chart from the bottom shows the divulge of NYSE stocks closing higher upward their upper Bollinger Bands vs. those closing below their lower Bands.  (Raw information from Stock Charts).  It is really mutual for this mensurate to peak ahead of cost during intermediate-term marketplace cycles together with that's what has happened then far.  Note, however, that the Bollinger Balance--the divulge of stocks closing higher upward vs. below their Bands--has remained consistently positive inward recent sessions, reflecting the buying pressure level noted above.

So where does that exit us?  Here are a few observations:

*  We made a momentum depression inward mid-January, amongst the lows inward really early on Feb drying up.  From that point, nosotros accept embarked on a novel intermediate-term upward cycle, which is approaching a momentum peak;

*  Buying pressure level has been pregnant during this close recent upward wheel together with should proceed to propel prices higher, fifty-fifty after nosotros accept made a momentum (breadth) peak for this cycle.  We quest to come across selling pressure level from institutions stimulate to transcend buying pressure level earlier the electrical flow wheel is imperiled;

*  Despite fresh cost highs, many sectors are non making novel highs thence far together with stocks making novel highs are below 2014 levels.  I believe the electrical flow upswing is business office of a wide topping formation inward stocks together with non a fresh bull marketplace leg; a pregnant expansion of novel highs beyond 2014 levels would contradict that view;

*  In my electrical flow base of operations instance scenario, nosotros proceed to drift higher on upward buying momentum, simply ultimately volition top out together with supply to the belatedly 2014 trading attain equally business office of the market's broader topping.

This is a full general roadmap; a wide hypothesis rather than a difficult together with fast conclusion.  As always, I volition survive tracking the marketplace mensurate together with updating that roadmap.

Further Reading:  Views of Market Breadth
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Info!! What Marketplace Breadth Has Been Telling Us Lately

Here are 2 updated views of stock marketplace breadth.  Recall that it was waning breadth that gave us a heads upwards on the recent marketplace weakness.  What we're at i time seeing is the reverse.

The overstep nautical chart monitors all mutual stocks traded on the major exchanges making three-month novel highs vs. three-month novel lows.  We tin run across from the nautical chart that this turn down has been much broader than ones previous.  New lows hitting their maximum degree thus far on Oct tenth in addition to thus held slightly higher upwards that degree at the marketplace depression on Oct 15th.  With yesterday's buying interest--my Buying Power measure hitting its highest degree since 2012 yesterday--new lows dried upwards in addition to thus far inward premarket today we're seeing continued buying interest.  This suggests a momentum depression has been set inward place.

The 2d nautical chart tracks the number of NYSE issues closing higher upwards vs. below their upper/lower Bollinger Bands, which I mention to equally the Bollinger Balance.  Note over again the recent persistent weakness, the failure to expand the number of shares closing below their bands at the recent lows, in addition to at i time the drying upwards of that weakness.

As I've stressed inward the past, it helps to intend of topping in addition to bottoming equally processes, non equally fixed points on a chart.  Markets brand bottoms when they hitting a momentum low, bounce, in addition to thus subsequent weakness occurs amongst less downside momentum in addition to volatility in addition to fewer shares making novel lows.  It would surprise me if this bottoming procedure is over--a full general dominion is that to a greater extent than extensive declines undergo to a greater extent than protracted bottoming--but a continued drying upwards of weak breadth is something I'll hold upwards on the ticker for to detect opportunities to scoop upwards roughly value.

Further Reading:  Finding Opportunity inward Stock Market Cycles
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Info!! Avoiding Confirmation Bias Alongside Marketplace Pose Coin Menses As Well As Breadth

Confirmation bias is the style to essay data that fits our preexisting views.  The contrary of confirmation bias is opened upwards mindedness in addition to the commitment to essay data that counters one's perspectives.  

At marketplace highs in addition to lows, in that location is no lack of data to confirm bullish in addition to bearish biases.  At the highs, the economic scheme looks strong, profits are solid, in addition to persuasion is favorable.  At the lows, fears abound; utter of recession in addition to crisis dominates.  

It's when actual marketplace deportment deviates from these biases that nosotros honor opportunity.

Above is a nautical chart of coin stream for the SPY ETF, which is a purpose of the daily closing cost in addition to the release of SPY shares outstanding.  When traders are bullish, their require creates novel ETF shares; when bearish, nosotros come across a contraction inward shares outstanding equally shares are redeemed.

Note how coin stream peaked inward belatedly 2014 in addition to moved steadily lower during 2015 earlier the marketplace declines belatedly that yr in addition to early on this year.  Bearish coin flows, along amongst breadth declines, were amid the factors leading me to fade forcefulness during this period.

Now, however, we're seeing the contrary phenomenon.  With the 2016 marketplace declines, SPY coin stream is genuinely belongings inward a higher house its August, 2015 levels.  Moreover, at the Feb lows for SPY, we've seen fewer stocks register novel lows relative to January.  Specifically, nosotros had 1226 novel three-month lows across all exchanges on Feb 11th, compared amongst 2663 lows on Jan 20th.  The Feb lows saw 19.36% of SPX shares trading inward a higher house their 200-day moving averages, compared amongst 17.76% at the Jan lows.  Among SPX shares, nosotros had 101 to a greater extent than 100-day novel lows than novel highs at the Feb lows, compared amongst 151 to a greater extent than lows than highs inward January.

Bearishness has abounded, amongst concerns over high yield credit, fossil oil prices, European banks, weak Communist People's Republic of China in addition to EM, in addition to questions over the effectiveness of the monetary policies of fundamental banks.  Despite these factors, it is hard to honor bear witness of recent weakening inward the United States of America of America stock market.  That leaves me opened upwards minded to the possibility that we've pose inward an intermediate-term depression inward stocks, fifty-fifty equally I too portion concerns over the global macro picture.

Further Reading:  Measuring Sentiment With Options
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Info!! Novel Trading Views For A Novel Trading Week

*  After a considerable stream of tepid novel highs vs. lows amid NYSE shares (data from the first-class Index Indicators site), we've late seen an expansion of the discover of stocks registering fresh three-month lows.  I volition move tracking this closely to run across if what is already oversold breadth exhibits farther deterioration inwards the wake of problems inwards Europe in addition to China.

*  Why practice smart people practice dumb things inwards markets?  This postal service takes a fresh await at a perplexing occupation for traders--and how it tin move overcome.

*  Interesting serial on mindfulness inwards trading from Bruce Bower at SMB.

*  Perspectives on volatility in addition to more from See It Market.

*  New Trader U suggests several valuable screening tools for traders.

*  Questioning the 200 twenty-four hr stream MA in addition to more views from Abnormal Returns.

*  Influenza A virus subtype H5N1 stock/bond trading strategy and to a greater extent than from Quantocracy.

Have a keen commencement to the week!

Brett
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