Info!! Trading Notes: Calendar Week Of December 14Th

Friday, Dec 18th

*  Thursday's activity during New York hours completely reversed recent strength, amongst toll weakness evident essentially from the opening bell.  When nosotros did instruct roughly decent buying flows inward the 2nd one-half hr of trade, those were unable to force the marketplace seat to novel highs.  Meanwhile, nosotros saw a resumption of weakness inward fossil oil in addition to high yield markets in addition to force inward the US dollar.  From that dot forrard nosotros traced out a vogue twenty-four hours to the downside, every bit selling flows took over.  When y'all instruct meaningful buying that cannot force prices to fresh highs (or vice versa), that is ofttimes a groovy nation for intraday trading.  Those buyers are trapped on subsequent weakness in addition to contribute to the continued decline.

*  Per my plan, I bought the early on weakness, went greenish on the merchandise amongst the morning time buying, in addition to and thus proceeded to lose that gain in addition to cash inward one's chips into the red.  "That shouldn't hold upward happening," was my response to the toll activity in addition to I stopped out amongst a pocket-size loss on the position.  When skilful trades (trades based on historical tendencies) cash inward one's chips bad, at that spot is data there.  Quite simply, the idiosyncratic influences of  the fossil oil in addition to credit weakness, dollar strength, in addition to marketplace seat maker selling to hedge set selection losses inward the confront of quadruple witching overwhelmed whatsoever historical vogue for an oversold marketplace seat to proceed higher.  This is why flexibility inward next the record is paramount; getting locked into a marketplace seat persuasion blinds 1 to those unique influences that tin plough markets.

*  That beingness said, I'm non convinced that yesterday's weakness (and roughly weakness thus far inward pre-opening trade) is a one-off that nosotros tin but attribute to options expiry.  The weakness inward emerging marketplace seat stocks is real; the weakness inward commodities is real; the weakness inward high yield bond markets is real; in addition to the number of stocks making annual lows vs. highs has been expanding.  All of this leaves me opened upward to the possibility that nosotros move off the recent oversold status inward a depression Sharpe manner, ultimately making lower highs inward the major indexes, in addition to setting the stage for a meaningful decline.  The weaker in addition to choppier whatsoever bounce from this latest weakness, the to a greater extent than opened upward I cash inward one's chips to that hypothesis.

*  I uncovering the weakness inward AAPL to hold upward noteworthy.  It's 1 of those bellwether issues that bears watching.  Notice also how little in addition to midcap stocks (IWM) are farther from their 2015 price highs than large caps.  Microcaps (IWC) are similarly relatively weak.  On the other hand, the to a greater extent than defensive consumer staples shares (XLP) touched a novel high recently.  Not precisely a designing of relative force that speaks to wide in addition to potent economical increase expectations.

Thursday, Dec 17th

*  Once 1 time to a greater extent than nosotros saw force inward stocks coming out of recent oversold conditions, amongst the strategy of buying weakness that stays to a higher house overnight in addition to prior day's lows working well.  We've continued potent inward overnight trading, which keeps the basic strategy alive.  Early inward an upward stage of a marketplace seat wheel nosotros tend to regard momentum, which way that force builds on recent strength.  That's what we've been seeing recently.

*  Per the nautical chart below, my basic overbought/oversold measures house us nowhere close overbought yet.  We stimulate got over 80% of SPX stocks trading to a higher house their three- in addition to five-day moving averages, but that number tin remain elevated for a piece inward early on phases of marketplace seat rallies.  I'm peculiarly interested to uncovering the correlation betwixt stocks in addition to the fossil oil market, which had been quite high in addition to similar a shot seems to hold upward breaking down.   

Wednesday, Dec 16th

*  Many traders essay to predict what volition move on side past times side when they don't sympathise what is happening now.  Here's an article that addresses that situation.

*  Yesterday's postal service noted the oversold province of affairs inward the marketplace seat in addition to cited bullish expectations.  Those played out good inward yesterday's merchandise in addition to similar a shot inward the overnight session.  Today's trading volition hold upward dominated past times the Fed coming together proclamation inward the afternoon.  With traders focused on recent turmoil inward high yield markets in addition to the drib inward oil, roughly are anticipating dovish messaging from the Fed.  It is non clear to me that this volition hold upward the Fed's primary focus, which could move out room for a "hawkish"/bearish surprise.  That beingness said, given the queries cited yesterday, buying weakness that holds to a higher house overnight in addition to prior day's lows continues to brand sense.

*  Note that we've bounced nicely inward short-term breadth, given yesterday's rally.  If this is the start of a bull motility higher, nosotros should regard the "overbought" status remain overbought for multiple days, every bit the early on stage of an upward wheel typically features momentum.  Where we're at inward cycles helps decide whether nosotros tin aspect short-term momentum versus hateful reversion.

Tuesday, December 15th

*  I flora yesterday afternoon's trading inward ES to hold upward rattling constructive.  We had important bouts of selling pressure level (high negative TICK readings) but toll held to a higher house its morning time lows.  Since that time, we've seen a prissy rally inward stocks inward European hours.  The inability of selling to force prices lower in addition to the inability of buying to force prices to novel highs is ofttimes a skilful nation for toll reversals.  (Interestingly, the NYSE TICK readings for much of the twenty-four hours were much to a greater extent than negative than the TICK readings I aspect at that encompass all stocks, including little caps in addition to transactions on regional in addition to electronic exchanges.  That all-stock TICK is tracked via e-Signal.  I volition hold upward monitoring divergences betwixt these measures closely to regard if there's consistent data there.  As 1 savvy trader pointed out, the NYSE TICK is in all likelihood to a greater extent than dominated past times bonds in addition to bond-related shares trading on the exchange).

*  Meanwhile, we're inward pretty oversold territory every bit the nautical chart below indicates.  This tracks the number of SPX stocks making fresh highs vs. lows over a 5, 20, in addition to 100 twenty-four hours fourth dimension frame.  (Data from Index Indicators).  In the past times duo of years, returns stimulate got been favorable when we've reached such oversold levels.  Since 2010, when this mensurate has been inward its most oversold quartile, the side past times side 5 days inward SPX stimulate got averaged a gain of +.63%.  When the mensurate has been inward the other iii quartiles, the side past times side 5 days stimulate got averaged a gain of solely +.04%.

*  In a time to come post, I'll hold upward talking to a greater extent than virtually my query into marketplace seat cycles.  For now, here's a aspect at 1 of my wheel measures.  It, too, shows us at quite oversold levels.  Since 2012, when cycles stimulate got been inward their most oversold quartile of values, the side past times side 10 days inward SPY stimulate got averaged a gain of +1.05%.  The ease of occasions stimulate got averaged a ten-day gain of solely +.33%. 

 
Monday, Dec 14th

*  When markets knock y'all down, practise you:  a) remain downward in addition to dorsum away; b) grit your teeth in addition to stick amongst what you're doing; or c) figure out what went incorrect in addition to essay to adapt?  How nosotros answer to adversity makes all the difference inward our long-term success.

*  H5N1 genuinely weak marketplace seat is 1 inward which oversold weather condition give way to fifty-fifty to a greater extent than oversold conditions, in addition to that is what nosotros saw on Friday.  The number of stocks making fresh novel lows, which had moderated inward recent sessions, exploded on Friday, next the weakness inward fossil oil in addition to high yield bonds.  Across all exchanges, nosotros had sixty novel three-month highs against 694 novel lows.  That's the highest degree of novel lows since belatedly September.  With fossil oil prices weak overseas, we're having difficulty sustaining an overnight rally.  Failure to bounce meaningfully from oversold weather condition is a alarm sign; I'd rather allow the bulls bear witness themselves in addition to purchase the kickoff pullback than essay to grab knives.    

*  Note how little (IJR) in addition to mid-cap (MDY) stocks stimulate got broken below their Nov levels; also Federal Reserve notation that emerging marketplace seat stocks are closing inward on their September lows.  Wide swaths of the equity markets are weak; this is non how bull markets behave.

*  VIX unopen to a higher house 24 on Friday.  Volatility has picked upward in addition to that tin Pb to painful brusque roofing rallies every bit good every bit vehement downside moves.  It's of import to stimulate got volatility into concern human relationship when sizing positions in addition to deciding upon asset periods for positions.

Info!! Trading Notes: Calendar Week Of October 5Th

Friday, Oct 9th

*  Morning selling push clit per unit of measurement area yesterday could non breach overnight as well as prior 24-hour interval lows, continuing the apartment correction.  In general, when overnight as well as prior 24-hour interval lows/highs concur on early on 24-hour interval selling/buying, it's worth thinking nearly buying the dip/selling the bounce to exploit the potential designing of higher lows/lower highs.  With the Fed minutes, pregnant buying flows ane time over again returned to stocks as well as nosotros over again made novel highs for this move, alongside an expansion inwards the lay out of shares registering fresh highs.  H5N1 total of 242 SPX stocks registered fresh 20-day highs vs. lows, the highest since August 17th (raw information from Index Indicators).  As emphasized yesterday, I'm non seeing the kinds of divergences that would ordinarily precede a substantial correction. We're ane time over again stretched on a multi-day basis, as well as therefore that leaves me inwards the style of buying pullbacks.

*  Earlier entries mentioned the real strong buying push clit per unit of measurement area during this rise.  On a five-day basis, we've seen buying forcefulness that has alone been introduce on nine prior occasions since 2012.  Ten days later, SPX was upward 8 times, downward ane time for an average gain of nearly +3.0%.  Once again, this highlights the momentum upshot ane time institutions dominate on the buying side.

*  Volatility continues to decline, alongside VIX straight off below 18.  If this is similar past times strong buying cycles, nosotros volition run into pocket-size pullbacks as well as farther grind higher on lower volatility until breadth divergences stimulate to appear. 

Thursday, Oct 8th

*  Buying dips indeed proved to move a useful strategy inwards Wednesday's session, equally nosotros closed ane time over again alongside strength.  Across all exchanges, nosotros saw over G stocks register fresh monthly highs, a novel high for this upleg.  In full general I don't decease overly concerned nearly sustained downmoves unless nosotros run into a preceding menses of fourth dimension inwards which fewer stocks participate inwards the strength.  Thus far, the participation has been solid, alongside the buying push clit per unit of measurement area mentioned yesterday continuing strong.  We're quite extended inwards the curt run, as well as therefore the consolidation we're seeing inwards overnight trading is non unusual.  My leaning is to permit this consolidation to run its course of report earlier resuming long positions.  Even inwards salubrious uptrends, it's non odd to acquire a pullback inwards which the bulk of shares merchandise below their iii as well as 5-day moving averages.  I'd facial expression at such a pullback equally a potential buying opportunity; I'd likewise move interested inwards buying whatever flattish correction that stays higher upward the 1960-ish level.

*  Note that VIX continues lower as well as continues to remain below 20.  I proceed to take away heed people lay the comport thesis out there, but the marketplace is but non trading that agency at present.  I believe investors run into the global weakness out at that topographic point as well as are already buying stocks inwards anticipation of farther easing from cardinal banks.  Traders who hold back for the actual cardinal banking concern announcements earlier buying may move making a mistake.  With Friday's weak jobs lay out inwards the U.S., an accomodative monetary policy across the the world was pretty good ensured.  Markets are forrad looking.

*  Below you lot tin run into a short-term charge per unit of measurement of alter indicator (red) plotted vs. ES futures (10/2/15 to the present), where each bar represents 500 cost changes inwards the index.  This normalizes for activeness during wearisome periods, such equally overnight.  I similar the perspective equally a short-term overbought/oversold measure.  In general, I similar buying oversold levels when we're making higher lows as well as higher highs as well as vice versa.  I similar taking profits when nosotros acquire overbought/oversold as well as can't brand novel highs/lows.

Wednesday, Oct 7th

*  We did indeed acquire the consolidation noted inwards yesterday's postal service and, as well as therefore far, we're seeing some belongings of the consolidation as well as buying of the dip inwards overnight trading.  I'm watching to run into if nosotros tin concur those overnight lows, alongside a leaning toward buying weakness that holds higher upward ES 1960.  My short-term models remain modestly bearish, however, as well as therefore I'm opened upward to the possibility of farther consolidation.

*  Readers volition retrieve that I interruption the uptick/downtick statistics into split upward measures of buying push clit per unit of measurement area as well as selling pressure.  The buying push clit per unit of measurement area has been real strong over the past times v trading sessions.  Returns 3-5 days out conduct hold been choppy, alongside picayune edge, but 10 days out nosotros run into fifteen occasions up, 2 downward for an average gain of over 2%.  We'll ask to run into distinct selling push clit per unit of measurement area to entertain a provide to a bearish regime; we'd likewise ask to run into VIX top 20.

*  Put/call ratios conduct hold come upward downward quite a chip from the recent marketplace lows.  That's some other argue I wouldn't move surprised past times sloppy trading nigh term.  I likewise banker's complaint the upside breakouts inwards emerging marketplace currencies (CEW) as well as commodities (DBC); both are reversals of the previous bearishness unopen to China.

Tuesday, Oct 6th

*  Great summary of my recent podcast alongside Better System Trader from The Waiter's Pad; thanks, Mike!

*  We saw real proficient follow through to Friday's strength, equally the volatility addition the buying flows (volume-weighted NYSE TICK) created pregnant upside momentum.  We saw 780 stocks across all exchanges brand fresh one-month highs against 143 novel lows.  We've come upward off a chip overnight as well as my models are moderately bearish over a 3-5 24-hour interval horizon, as well as therefore some consolidation is to move expected.  My sense, however, is that many traders conduct hold missed this rally as well as volition move interested inwards buying dips, which could maintain consolidations modest--as much inwards fourth dimension equally inwards price.

*  Another argue I facial expression some consolidation is that we're quite stretched on a short-term basis, alongside over  90% of SPX shares trading higher upward their 3, 5, as well as 10-day moving averages.  When we've had a moderate VIX nether those circumstances (between fifteen as well as 25; due north = 12 going dorsum to 2006), the side past times side 24-hour interval has been upward iii times, downward nine for an average loss of -.12%.  Indeed, 10 of the 12 occasions posted a lower unopen over the side past times side ii trading days.  That beingness said, the side past times side 10 days conduct hold been 8 up, four downward for an average gain of +.37%, alongside 10 of the 12 occasions posting a higher unopen inside v trading days.  So non much border inwards general, though my base of operations instance is to run into consolidation inwards the side past times side 24-hour interval or ii that is worth buying into.

*  I mentioned yesterday that I'm keeping an optic on VIX.  We're below twenty for the kickoff fourth dimension inwards a while; if whatever consolidation does occur inwards a flattish fashion, reducing realized volatility, that would advise a provide to the onetime volatility government as well as would move bullish overall for stocks.

Monday, Oct 5th

*  In my Forbes blog, I review ane of the best marketplace books I've read inwards a long time.  It's a detailed handling of high yield markets as well as a peachy reminder of how nosotros tin larn a peachy bargain nearly the markets nosotros merchandise past times studying as well as agreement related markets.

*  Fri was a 24-hour interval worth studying inwards detail.  We had a weak payrolls lay out as well as stock futures sold off hard.  We opened alongside selling on the day, equally NYSE TICK hitting several quite negative figures, but cost stopped going lower as well as the downticks began making higher lows.  This emboldened buyers to come upward in, upticks swamped downticks, as well as nosotros injure upward alongside a real strong 24-hour interval to the upside.  That forcefulness has continued into overnight trading, equally it indeed appears that nosotros conduct hold successfully tested the downside.  The oversold intermediate-term indicators that I referenced final calendar week volition non hitting overbought levels for a spell as well as volatility appears to move at the bull's back, as well as therefore I facial expression an surroundings inwards which pullbacks volition move bought.

*  I volition move watching VIX closely here.  One thought I'm playing alongside is that we've entered a higher volatility regime, much equally what happened inwards 2007 prior to the 2008 comport market.  VIX mostly bottoms ahead of stock marketplace highs and, inwards the electrical flow environment, that wouldn't surprise me.  That 2007 menses was a rangy topping marketplace alongside proficient swings due to the higher volatility.

Info!! On The Thursday Radar

* Testing the Lows - Stocks are in 1 lawsuit once again moving lower, equally nosotros interruption below the closing lows of a dyad of weeks ago. The advance-decline work for NYSE mutual stocks has broken to novel lows, exactly the reveal of stocks registering fresh lows has remained below its storey of ii weeks ago. Specifically, nosotros had 414 NYSE mutual stocks brand fresh 52-week lows on Midweek according to more views from Abnormal Returns. Recession, credit problems, in addition to marketplace spend upwards haven't run their degree in addition to a host of other worthwhile perspectives from Charles Kirk. I proceed to ship major themes in addition to marketplace indicators daily more views from Abnormal Returns. Recession, credit problems, in addition to marketplace spend upwards haven't run their degree in addition to a host of other Nice marketplace study from Quantifiable Edges finds something interesting: reduced volatility is non e'er bearish.

* Getting Ready for Halloween - Financial Ninja more views from Abnormal Returns. Recession, credit problems, in addition to marketplace spend upwards haven't run their degree in addition to a host of other shows scary Fed charts that convey gotten scarier.

* Moral of the Story - When the fiscal crisis outset actually starting hitting markets hard, I looked in addition to looked in 1 lawsuit again at the implications of fiscal rescue for inflation in addition to the U.S. of America dollar. I looked into buying gilded equally 1 agency of playing the theme; I looked at ways of expressing dollar weakness versus other currencies. Each fourth dimension I looked, the obvious trades looked horrible to me; they expressed *such* a consensus idea. Small investors were hoarding gilded coins in addition to bloggers were screaming almost the terrible inflationary consequences of bailouts. Well, perhaps these trades volition eventually pan out, exactly I would convey gotten smoked past times next my gut. Joe Granville used to say, "If it's obvious, it's manifestly wrong." Gold is agency off its highs in addition to the U.S. of America dollar continues to rally higher, peculiarly versus euro; deflation in addition to flights to security are the operative themes for now. It actually pays to know what other people are thinking, peculiarly when they're thinking similarly in addition to volition convey to bail out of ideas that don't come upwards to fruition.
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Info!! Trading Notes: Calendar Week Of November 16Th

Friday, Nov 20th

*  We moved higher during the morning time merchandise on Thursday, staying to a higher house the overnight lows, but thus something interesting happened.  Volume fizzled together with nosotros injure upward with a deadening make day.  This highlights the importance of tracking book inwards existent time.  My favorite way of doing that is with "relative volume":  a mensurate of electrical current book versus the normal book for that item fourth dimension of day.  Below is a nautical chart for yesterday's relative volume.  Values below 1.0 stand upward for subnormal volume.  You tin encounter how book became subnormal every bit the twenty-four hours progressed.  That agency directional participants are taking the sidelines.  And that leads, to a greater extent than oft than not, to make days.

*  The possible skilful tidings is that we're getting depression volume, flattish corrections next moves higher off the recent oversold levels.  That is consistent with the scenario of testing the recent highs together with has me continuing to purchase weakness that stays to a higher house prior twenty-four hours together with overnight lows.  I'm currently working on a suite of innovative bike indicators; every bit y'all tin encounter below, we're coming off an intermediate-term bike depression together with are nowhere well-nigh levels associated with bike peaks.

 Thursday, Nov 19th

*  The strategy of buying weakness that stayed to a higher house the overnight lows--and thus buying weakness that stayed to a higher house morning time lows--worked good on Wednesday, every bit stocks rallied strongly with the unloose of Fed minutes.  We've bounced off oversold levels (see nautical chart below of short-term breadth inwards SPX shares) together with instantly are initiative off to encounter short-term overbought levels.  I move yesteryear away along to aspect a seek of recent highs together with aspect to implement yesteryear buying weakness that stays to a higher house cardinal levels.

*  The unloose of the Fed minutes led to fresh book entering the market, with well-above levels of book for that fourth dimension of day.  Such expansion of book indicates that novel participants ask hold entered the marketplace together with it's cardinal to encounter which way they're leaning, every bit these are to a greater extent than oft than non directional traders running large size. By tracking NYSE TICK, nosotros tin encounter the grade to which the novel book is leaning to the purchase or sell side.  When at that spot is a distinct buying or selling bias with these participants, it tin plough what started every bit a fairly normal twenty-four hours into a robust tendency day. 

Wednesday, Nov 18th

*  We held overnight lows inwards early on merchandise together with moved nicely higher, taking out Monday's highs, but thus cruel dorsum into the make together with ask hold stayed at that spot inwards overnight trading thus far today.  The inability to sustain the forcefulness has me treating this every bit a potential bottoming process, which is clearest when y'all aspect at the Russell 2000 Index together with retail stocks (XRT).  We are oversold on an intermediate-term basis; I'm looking to purchase weakness that stays to a higher house the overnight lows.

*  The aligning of shorter together with longer-term perspectives that I similar is using overnight together with previous day's highs together with lows every bit reference points together with buying weakness that stays to a higher house overnight together with prior day's highs together with lows together with selling forcefulness that stays below highs for the overnight together with prior day's sessions.  When keying off levels inwards this way, it's relatively slow to position halt levels.  Those levels too assist me differentiate cost activity based on U.S. flows from cost activity based on flows from Asia together with Europe.

*  I'm too keeping a unopen optic on commodities.  Hard to believe nosotros tin sustain a wide rally if at that spot continues to endure deflationary dynamics inwards markets.

Tuesday, Nov 17th

*  Once 1 time to a greater extent than nosotros saw a skilful illustration of how flows inwards stocks are alone dissimilar during side yesteryear side fourth dimension zones.  Weakness inwards the index futures when they opened for the weekend was followed yesteryear buying involvement inwards Asian together with European hours together with thus an explosion of buying at the NY open.  The buying occurred on strong NYSE TICK, volume, together with volatility, confirming a rejection of the opening lows together with setting upward an upside tendency day.  Here are four things I aspect for inwards an upside tendency day.

*  What has worked good for me is viewing each of the major fourth dimension periods (Asian trade, European trade, U.S. trade) every bit split days together with non necessarily expecting continuity from 1 fourth dimension menstruum to another.  In a sense, each twenty-four hours offers 3 daytrading periods, with the lion's part of motility inwards U.S. indices occurring during London together with NY hours.

*  Buying involvement has followed through inwards the overnight market; my leaning is to purchase weakness that holds to a higher house the overnight lows.  As mentioned yesterday, my intermediate term measures had non yet reached typical oversold levels; still, given the thrust of the recent displace higher, my leaning is to purpose whatever farther weakness every bit an chance to buy.

Monday, Nov 16th

*  This is 1 of the to a greater extent than of import posts I've written of late together with helps explicate why trying to eliminate our trading mistakes together with bad trading practices is oft the incorrect way to educate ourselves every bit traders.  It too helps explicate why the harder nosotros travail to larn disciplined, the less disciplined nosotros tin become. 

*  Stocks cruel inwards tardily merchandise together with overnight inwards answer to the Paris attacks, but ask hold bounced good off lows every bit I write.  As long every bit nosotros pose inwards lower cost highs, I retrieve it's premature to assume we'll rally only because we've been oversold.  As the posts terminal calendar week indicated, nosotros ask hold non yet been at oversold levels that ask hold of late corresponded with intermediate-term marketplace position lows, per the nautical chart below that tracks novel highs versus novel lows with the SPX shares.

*  My mensurate of pure volatility shows relatively petty spike during this decline compared with the elevated volatility per unit of measurement of book nosotros saw during the August together with September drops.  This would endure consistent with a marketplace position making an intermediate term correction rather than an actual fresh comport leg down.  My base of operations instance continues to endure a seek of the recent marketplace position highs, but it would non surprise me to encounter quite a few divergences on whatever such test.

Info!! Trading Notes, Calendar Week Of January 11, 2016

Friday, Jan 15th

*  Thursday's rally was short-lived, together with that has been the outstanding characteristic of the recent downturn inwards the stock market.  As noted inwards the prior posting (below), nosotros accept stayed oversold for far longer than has been typical of corrections inwards 2014 together with 2015.  The weakness inwards stone oil continued overnight together with we've broken to novel lows for the displace next the information release this morning.  Selling bounces that scroll over at lower toll highs continues to live on the winning strategy.

*  The nautical chart below of ane of my main bike measures is worth a M words.  Quite simply, this is a dissimilar bike from those of the past times 2 years together with suggests to me that we've entered a dissimilar regime.  Using patterns from the recent past times to extrapolate into the near-term time to come is hazardous to our wealth.

Wednesday, Jan 13th

*  Tuesday was the commencement twenty-four hours inwards which nosotros saw the position out of stocks making fresh novel lows reject twenty-four hours over day.  To this point, it has been quite a wide decline, amongst fewer than 10% of SPX stocks trading inwards a higher house their 50-day moving averages together with exclusively nigh a quarter of the stocks trading inwards a higher house their 200-day moving averages.  Indeed, yesterday was the commencement twenty-four hours inwards nearly 2 weeks inwards which we've seen to a greater extent than than one-half of stocks closing inwards a higher house their 3-day moving averages.  That is unusually consistent weakness together with is but ane of the things leading me to believe that this is to a greater extent than than a mere correction inwards a bull market.

*  Below is a breadth mensurate I hold for SPX stocks, capturing the percentages closing inwards a higher house short-term moving averages (data from Index Indicators).  We tin dismiss encounter that nosotros accept stayed oversold far longer than is park inwards a normal correction.

*  Yet approximately other await at marketplace weakness is a running full of purchase vs. sell signals for all NYSE stocks across diverse technical measures, such every bit Bollinger Bands (data from Stock Charts).  The character of the bounce nosotros tin dismiss muster from these oversold levels volition nation us a lot nigh whether this is business office of a multi-year gain or a commencement leg inwards a larger comport marketplace move.  My bike measures are at lower levels than nosotros accept seen during recent corrective moves, which ane time once to a greater extent than opens my thinking to the possibility that nosotros are inwards a dissimilar regime, non the rangy corrective agency of much of 2014 together with 2015.  

Monday, Jan 11th

*  What is the undercover behind the unloose energy degree of extraordinary performers?  This article tackles this most of import topic.  Success is non nigh controlling your emotions, but rather channeling them toward ever-greater achievement.

*  Late weakness inwards States stock index futures on Fri spilled over to early on overnight trading earlier a reversal inwards European hours.  We are straightaway quite oversold, amongst fewer than 10% of SPX shares trading inwards a higher house their 3, 5, 10, 20, together with 50-day moving averages.  (Data from Index Indicators). Interestingly, where this wide weakness has occurred for the commencement fourth dimension inwards a calendar month (7 occasions since 2006), the marketplace posted a lower daily unopen inwards all 7 occasions inside a five-day period.  Five of the occasions, however, posted a higher daily unopen inside 2 trading sessions, amongst iv of the 5 exceeding 1.5%.  Bottom draw of piece of employment is that I'm prepared for two-way activity together with for volatility, amongst VIX closing Fri inwards a higher house 27.

*  One of my favorite overbought/oversold measures is inwards oversold territory, but banking concern complaint that the lows at October, 2014 together with August, 2015 occurred at fifty-fifty to a greater extent than oversold levels.  Just because we're oversold doesn't necessarily hateful we're at a bottom.  I prefer to remain open-minded.

*  Back to those 7 occasions inwards which nosotros saw fewer than 10% of SPX stocks trading inwards a higher house their 3, 5, 10, 20, together with 50-day moving averages.  The dates inwards which those occurred included September together with November, 2008; May together with June, 2010; together with August, 2011.  In all those occasions, nosotros saw bounces but farther toll lows over coming months.  H5N1 major telephone phone traders ask to brand hither is whether we're currently seeing a correction inwards a bull marketplace or the unfolding of a bear.  I'm opened upward to the latter together with volition live on watching closely for the character of bounces from here.
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Info!! Premarket Briefing: Hovering At The Highs

While S&P 500 stock index futures (ES) are hovering nearly their bull highs (top chart), NASDAQ 100 futures (NQ; bottom chart)--as good equally modest caps--have already gotten there. We're besides standing at highs inwards the advance-decline trouble specific to NYSE mutual stocks. With the marketplace showing resilience belongings inwards a higher house the early on May highs, I expression to run across us brand a run for novel highs today--unless the utilisation numbers render quite a disappointment.

Meanwhile, vi of the final 10 trading sessions, the S&P 500 Index (SPY) has shown a twenty-four hr menstruum session high-low hit of less than 2%. Volatility continues to decline; traders ask to accept that into account, equally marketplace crusade is increasingly punctuated past times ease periods of piddling movement.

I volition last on the route today, then intraday tweets in addition to posts volition last limited.
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Info!! Indicator Update For June 29Th

Last week's indicator review concluded that nosotros had lost upside momentum too were probable trading inwards a hit defined yesteryear May's lows too June's highs. After dipping toward May lows early on inwards the week, nosotros bounced higher afterwards inwards the calendar week too ended on Fri pretty some the midpoint of that wide range. Accordingly, we didn't run across dramatic trending demeanour amid the S&P 500 sectors that I follow; prices remain relatively some levels recorded inwards early on May.

Recall that the Demand/Supply Index (DSI) is a proprietary index of the publish of stocks closing to a higher house too below the volatility envelopes surrounding their short-term moving averages. The Cumulative DSI (top chart) is a running total of daily DSI levels, adjusted to practise a cipher mean. During rallies, the Cumulative DSI volition remain to a higher house cipher for prolonged periods, every bit to a greater extent than stocks unopen amongst rigid momentum than weak momentum. This yesteryear calendar week nosotros dipped below cipher earlier bouncing dorsum into positive territory; this oft occurs during the early on stage of marketplace corrections. It continues the blueprint of weakening momentum noted final week.

Similar weakness was seen inwards the novel high/low information (middle chart), every bit nosotros saw novel 65-day highs deed slightly below novel lows early on inwards the weak earlier bouncing higher. The novel highs peaked inwards early on June too accept been moving lower since; indeed, much of this yesteryear calendar week nosotros saw 20-day lows outnumber 20 twenty-four hr menses highs yesteryear handy margins. We require to maintain 20-day highs to a higher house lows to sustain the belatedly calendar week bounce; a reversal dorsum to a surplus of novel lows would propose farther correction.

Finally, nosotros tin run across from the Decision Point nautical chart that the advance-decline business specific to S&P 500 stocks (bottom chart) has shown exclusively a weak bounce too is good off its highs after dipping final calendar week below May lows. H5N1 drib inwards the A/D business below final week's lows would propose a to a greater extent than serious correction to the bull deed that started inwards March.

In all, nosotros look to maintain inwards a wide trading hit betwixt May's lows too June's highs. The continued weakness amid the indicators suggests that nosotros may run across farther correction ahead; should nosotros deed to farther weakness inwards the DSI too concur final week's lows (and grade of stocks making 20-day lows), I would last an aggressive buyer. H5N1 interruption of final week's lows accompanied yesteryear farther indicator weakening would last indicative of a to a greater extent than substantial marketplace correction that I would last reluctant to fade.

Indicators, every bit usual, volition last updated each twenty-four hr menses earlier the marketplace opened upward via Twitter; you tin follow tweets here or read the latest 5 posts on the weblog page nether "Twitter Trader."
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Info!! Indicator Update For April 5Th

Last week's indicator review institute that upside momentum had pulled back, exactly that petty had changed from the prior week's bullish outlook. This past times calendar week has seen a continuation of this mode, equally nosotros reached fresh bull highs inwards the major stock marketplace averages too novel highs inwards the advance-decline draw of piece of occupation specific to NYSE mutual stocks.

Sector behaviour continues to live solidly bullish (top chart), equally assessed past times the proprietary Technical Strength measure. Note that we've barely seen whatsoever bearish readings inwards Technical Strength over the past times 4 trading weeks. Energy stocks showed the greatest gain inwards strength, on the heels of a rigid stone oil market. We likewise saw gains amid Materials shares, reflecting commodity strength. All sectors are inwards short-term bullish modes, amongst Technology stocks displaying weakness relative to the others.

As I mentioned recently, at that spot are yellow caution signals for the bull, including diminished upside momentum too quite bullish sentiment. The weakened momentum is evident from the Cumulative Demand/Supply Index (middle chart), which yet remains really modestly positive. Recall that this index tracks the cumulative lay out of stocks trading to a higher house vs. below their volatility envelopes; it tends to peak ahead of price, too this wheel appears to live no exception. As long equally nosotros run across successive troughs inwards the Cumulative DSI at higher cost levels, the longer-term tendency of the marketplace remains up.

Finally, nosotros run across that novel 20-day highs vs. lows (bottom chart) accept weakened noticeably equally this rally has progressed. This is perchance the greatest of the yellowish lights that I'm seeing inwards the market: the rally is becoming to a greater extent than selective, non broadening. That typically precedes corrective action. Th saw over 500 novel 20-day lows; a continued altitude of that lay out would brand me especially cautious most the upside.

In sum, it appears that nosotros accept an aging bull wheel inside the larger bull marketplace that began final year. As always, I'll live posting updates to the indicators each morning time earlier the opened upward via Twitter.
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