Info!! Weakness Through The Week

Traders hoping to position inwards a bottom this calendar week were disappointed equally weakness expanded through the week. The advance-decline describe of piece of employment for NYSE mutual stocks, helpfully tracked past times Decision Point (top chart), shows us breaking downwards to novel acquit marketplace position lows. This was no uncertainty aided past times weakness with secondary issues, equally the Russell 2000 stock index made novel acquit marketplace position lows equally well.

The novel high/new depression figures likewise constitute weakness expanding equally the calendar week moved along. Fri saw us register 99 novel 20-day highs across the NYSE, NASDAQ, in addition to ASE against 2564 novel lows. While the novel lows are however fewer than nosotros saw a dyad of weeks ago, in addition to hence far the market's oversold status has non brought pregnant buying interest, equally tin last seen from the coin period of time figures for the Dow industrial stocks (bottom chart). We bring moved from real heavy selling to to a greater extent than neutral levels inwards the four-day average (pink line), but in that location is no bear witness in addition to hence far of sustained buying interest.

Among the xl stocks inwards my handbasket divided evenly with viii S&P 500 sectors, my technical forcefulness stair out finds exclusively 1 inwards a slight uptrend (AMGN), 1 neutral (WFC), in addition to the remaining 38 inwards downtrends. What is pregnant is non simply the wide weakness, but the means inwards which wide weakness has been sustained over time. We are seeing a historic liquidation of stocks and, in addition to hence far, my indicators are non picking upward whatever reversal of that trend.
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Info!! Trading Notes: Calendar Week Of December 7Th

Friday, Dec 11th

*  We got a bounce inward yesterday's trade, entirely to autumn dorsum piece of cake inward the twenty-four hours together with motion dorsum to recent lows inward overnight activity.  I volition hold upward watching downside follow through closely inward early on merchandise today, peculiarly alongside honor to breadth, which--while negative--has improved over the yesteryear 2 trading sessions.  Yesterday nosotros saw 93 stocks brand fresh three-month novel highs together with 342 novel lows across all exchanges.  My bicycle measures are quite unopen to levels that need maintain been typical of intermediate-term marketplace position lows.  That has me careful virtually pounding the downside here.

*  While trader attending has been quite focused on fundamental banks inward Europe together with the U.S., nosotros proceed to consider odd weakness inward emerging markets together with oil.  It's a disconcertingly disinflationary merchandise together with I detect it hard to envision a longer-term flick of higher United States of America rates, higher United States of America dollar, together with higher United States of America stocks if that dynamic continues.  Note the toll taken on the high-yield bond market.  At to the lowest degree hence far, the Red People's Republic of China weakness dynamic seems to hold upward trumping the fundamental banking corporation stimulus dynamic.

*  Note that the VIX closed close 20 yesterday for the 2nd consecutive day.  The median VIX from Jan through July was virtually 14.  The median VIX since the laid about of August has been 17.  I am opened upward to the thought that 2016 could hold upward a higher volatility twelvemonth than 2015 given the to a higher house disinflationary dynamic together with its potential deport upon on global markets. 

Thursday, Dec 10th

*  We saw weakness overnight, hence morn forcefulness inward stocks, followed yesteryear pregnant selling pressure level together with novel toll lows for the latest motion lower.  Interestingly, however, nosotros saw fewer stocks register novel lows on the day.  For example, across all exchanges nosotros had 385 novel three-month lows compared alongside 601 the twenty-four hours previous.  Meanwhile, we're short-term oversold per the breadth nautical chart below, alongside fewer than 20% of SPX stocks trading to a higher house their three- together with five-day moving averages.  We've bounced overnight from the afternoon lows yesterday together with I'll hold upward watching breadth closely on whatever farther weakness.  Should nosotros instruct to intermediate-term oversold levels together with agree to a higher house the toll lows from mid-November, I would laid about looking for an halt of twelvemonth rally inward stocks.

*  We in 1 lawsuit once to a greater extent than saw real dissimilar toll activity yesterday during hours inward Asia, Europe, together with the U.S.  Assuming that toll moves inward 1 fourth dimension zone volition necessarily proceed into side yesteryear side ones has non been a smashing bet for short-term traders.  I detect the electrical flow surroundings to hold upward much amend to merchandise inside each fourth dimension zone, buying oversold levels together with selling overbought levels.  The nautical chart below tracks short-term rate-of-change where each menses represents 500 toll changes inward the ES futures.  This normalizes for overnight trading, exactly silent takes into trouble concern human relationship sweat overnight.

Wednesday, Dec 9th

*  We proceed to locomote off the overbought status per yesterday's post, exactly my intermediate-term bicycle measures are non yet inward oversold territory that has corresponded alongside recent marketplace position lows.  Meanwhile, breadth continues to deteriorate.  Across all exchanges yesterday, nosotros had 21 stocks brand fresh annual highs together with 252 register 52-week lows.  This is to a greater extent than novel lows than nosotros saw at the mid-November marketplace position bottom.  In all, this looks similar a weakening market, non a strengthening one.

*  No uncertainty contributing to the weakness is the odd weakness inward the high-yield bond market.  See the weekly nautical chart of JNK below.  With release energy prices continuing to fall, in that location are increased risks of bond defaults amid petroleum producers.  It is hard to foursquare that dynamic alongside a bull marketplace position thesis.

*  Given the commodity weakness together with heightened prospects for bond defaults, it's non surprising that much of the weakness amid stocks this yesteryear calendar month has come upward from raw materials shares per the graphic below from FinViz.  Even alongside fundamental banking corporation ease roughly the world, deflationary pressures globally need maintain non abated.

Tuesday, Dec 8th

*  I'm watching book carefully every bit the twelvemonth winds down.  It would non surprise me to consider traders pack it inward early on this year, given depression liquidity together with the challenges of P/L.  Tracking book intraday has been real helpful inward gauging how far marketplace position moves tin terminate extend.

*  We proceed to locomote off an overbought status (see below), alongside entirely pocket-size losses inward large caps exactly greater weakness amid smaller caps.  That weakness has contributed to overall weak readings alongside honor to the number of stocks making novel highs vs. lows.  For example, nosotros had 194 stocks across all exchanges brand fresh 3-month highs yesterday against 546 novel lows.  That number of novel lows was the weakest reading since early on October.

*  If I had to need a surprise for stocks inward 2016, it would hold upward that involvement charge per unit of measurement sensitive issues grab a bid, shrugging off whatever hike from the Fed together with focusing instead on the (modest) path of charge per unit of measurement increases going forward.  It is increasingly clear that this volition hold upward an abnormal hiking cycle.

Monday, Dec 7th

*  Here's what I consider amid talented traders who can't seem to brand their trading their career.

*  We've moved rapidly from oversold to overbought on my short-term measure, which is a 50-period charge per unit of measurement of alter measure, where each menses is defined every bit 50,000 ES contracts traded.  (See below).  It's non odd to consider some upside follow through subsequently such a thrust, hence I'm flexible inward trading today's session. 

*  One agency I similar to remain flexible is yesteryear going alongside statistics that I've gathered that detect that the bulk of trading days either seat inward their highs or lows for the twenty-four hours during the commencement sixty minutes of trade.  By watching early on flows, including uptick/downtick values, I tin terminate instruct a feel for whether we've made a probable high or depression for the twenty-four hours together with merchandise the ease of the session accordingly.  

*  The weakness inward petroleum prices inward the wake of the OPEC coming together has implications for release energy shares, commodity currencies, together with economical strength/weakness of diverse countries.  Ultimately it is hard to reconcile commodity weakness alongside growth perspectives leading the Fed to probable hike this month.  Some interesting views need maintain popped upward lately regarding the possibilities of 2016 recession.  If that scenario is to hold, nosotros should consider piddling follow through to Friday's rally inward stocks.

Info!! Indicator Update For February 21St

Last week's indicator review observed that nosotros had a bounce off momentum lows, exactly no resumption of bullish marketplace action. That changed significantly this by week, every bit nosotros failed to get got out the prior week's lows in addition to rallied higher through the week.

Sector Technical Strength (a proprietary, short-term mensurate of trending) turned bullish across some of the sectors (top chart), amongst notable week-over-week forcefulness amid Industrial, Materials, Consumer Discretionary, in addition to Financial shares. Follow-through volition live on of import to sustaining the upside trend; fifty-fifty relatively pocket-size weakness would plough 4 of the 8 sectors to neutral trending status.

We tin likewise run across the abrupt advance inwards the Cumulative Demand/Supply Index (second nautical chart from the top), which has rallied steadily from its lows. Such abrupt rallies get got historically led to farther toll forcefulness 20-days out, every bit upside momentum inwards the Index typically precedes toll peaks.

Our 2d nautical chart from the bottom shows that 20-day novel highs are 1 time once to a greater extent than handily outnumbering novel lows; this inwards business office reflects really company forcefulness amid little cap issues. Despite early on weakness on Fri owing to the Fed news, nosotros registered a fresh weekly high inwards the number of shares making 20-day peaks. That indicator has non been losing steam.

Finally, the helpful nautical chart from Decision Point at bottom shows that we've seen odd recent advance/decline forcefulness amid the little cap issues comprising the S&P 600 Index. Indeed, the advance-decline describe of piece of job specific to the little caps is dorsum close its bull highs. I would persuasion a clear pause of this indicator to novel highs to live on a bullish development.

In all, I am watching the indicators closely to run across if nosotros stall out in addition to brand a lower transcend some electrical current levels vs. choke on forcefulness in addition to exam the bull highs across the major indexes. I emphasized inwards final week's review that nosotros were seeing an intermediate-term correction inwards an ongoing bull market. This by week's activeness is consistent amongst that perspective.
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Info!! Indicator Review For June 16Th

Last week's indicator review flora picayune to hold upwards excited almost for the bulls, amongst a weakening motion painting across the board. This has led to a period of time of funds out of stocks over the past times calendar week together with farther indicator weakness.

Across the NYSE, NASDAQ, together with ASE, novel 65-day lows continued to expand this past times calendar week (top chart), far outnumbering novel highs. For 3 consecutive days, nosotros registered over 2000 20-day lows, a province of affairs that, since 2004, has tended to Pb to a marketplace bounce over the next week. Among merely the mutual stocks listed on the NYSE, nosotros striking 150 novel 52-week lows at terminal week's nadir, which is pregnant weakening over the prior week, but non nearly every bit weak every bit the readings inwards Jan together with March. This designing of expanding novel 52-week lows was evident amidst the S&P 600 pocket-size caps too and, to a lesser degree, amidst the S&P 400 midcaps (which convey been the strongest grouping of the 3 during the post-March rally).

With the selling, every bit noted inwards a recent Twitter comment, we've neared oversold levels (bottom chart) inwards the cumulative Demand/Supply index which convey lately marked intermediate-term marketplace lows, together with we've striking levels from which the marketplace has typically shown positive returns over the adjacent month. Still, we'll involve to run across to a greater extent than sustained forcefulness inwards the novel high/low numbers together with the coin flows to become excited almost the upside.

The marketplace weakness has extended to most stock sectors. After dipping a flake below 30% during the week, the percent of S&P 500 issues trading to a higher house their 50-day moving averages shut at 47% on Friday. That's downwards from 80% at the marketplace high. The Fri percentages for pocket-size caps together with midcaps respectively are 51% together with 55%. Once again, nosotros run across considerable variation amidst the sectors: every bit of Friday, solely 28% of S&P 500 fiscal issues are trading to a higher house their 50-day averages together with 37% of consumer discretionary stocks, but 83% of loose energy stocks together with 59% of technology scientific discipline shares are to a higher house their benchmarks.

Later this week, I'll devote a course of written report postal service to the Cumulative NYSE TICK, which has been making consistent novel lows through the week, validating what we're seeing inwards coin flows. Until nosotros run across greater testify of need for stocks, it volition hold upwards hard to sustain a bull move. That having been said, I'm non all the same seeing the sort of selling that typified the markets inwards the starting fourth dimension quarter of this year. As long every bit that's the case, nosotros seem to hold upwards trading inwards a wide gain defined past times the March lows together with the recent marketplace highs.
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Info!! Sector Update For September 7Th

Last week's sector review noted that Technical Strength, a proprietary mensurate of short-term trending, was bullish across the viii S&P 500 sectors that I follow weekly. It too noted persistent divergences at the marketplace highs, however, together with suggested that nosotros last warning for reversal should the Technical Strength painting demo weaken.

We did, indeed, larn that weakening, equally stocks moved lower inwards the early on portion of the week, bouncing dorsum later. Whereas xxx of the xl stocks that I runway inwards my handbasket were inwards short-term bull trends at the terminate of final week, nosotros come across alone 17 inwards such a style at Friday's close. As the nautical chart inwards a higher house indicates, we're seeing neutral tendency modes for materials shares, healthcare, together with fiscal stocks, amongst alone real weak uptrends for liberate energy together with consumer discretionary shares. Only the defensive consumer staples sector qualifies equally beingness inwards a enterprise uptrend.

Significantly, however, none of the sectors unopen final calendar week inwards short-term downtrends. Despite final week's drop, nosotros proceed to come across a blueprint of higher cost lows inwards the stock market. I am warning to the possibility that the early on calendar week dip together with subsequent bounce are purpose of the market's extended topping process--and peculiarly the possibility of putting inwards a lower, weaker cost high. Should the market's belatedly calendar week rally stall at lower highs, I would last looking to fade that strength. Should the rally demo continued momentum strength, I would facial expression at to the lowest degree i to a greater extent than examination of the bull highs.

Here is how the sectors shaped upwards equally of Friday's close:

MATERIALS: 40
INDUSTRIAL: 240
CONSUMER DISCRETIONARY: 180
CONSUMER STAPLES: 300
ENERGY: 140
HEALTH CARE: -60
FINANCIAL: 100
TECHNOLOGY: 180

Note that the commodity-sensitive liberate energy together with materials sectors dropped significantly inwards the final week, reflecting commodity weakness. The alone sector to make forcefulness over the calendar week were those defensive staples shares. In lite of the electrical flow wellness assist debate, it is notable that those stocks dropped significantly inwards their technical forcefulness since final week.

All inwards all, it looks to me equally though nosotros are inwards a weakening bull market. The vigor of the follow through to the rally that started belatedly final calendar week volition render of import clues equally to how whatever possible correction volition unfold. The nigh positive scenario for bulls would last a vigorous bounce toward bull highs, creating weather condition for a relatively apartment corrective period, such equally nosotros had inwards June together with July.

As always, I volition last tracking the tendency status of the stocks inwards my handbasket via Twitter (follow the intraday tweets here) along amongst other primal marketplace indicators to come across how that marketplace follow through unfolds.
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Info!! Sector Update For March 1St

Last week's sector review concluded, "It is non only the weakness, but the designing of sector weakness--with relative describe inwards defensive sectors together with relative weakness amidst economically-sensitive ones--that suggests that nosotros cause got all the same to plough the corner on the bear." That weakness continued through this past times week, as the viii S&P 500 sectors that I runway regularly displayed sustained weakness inwards the Technical Strength mensurate (a quantification of trending behavior).

Here is how the sectors measured upward past times Friday's close:

MATERIALS: -380 (14%)
INDUSTRIAL: -420 (2%)
CONSUMER DISCRETIONARY: -340 (15%)
CONSUMER STAPLES: -260 (13%)
ENERGY: -400 (10%)
HEALTH CARE: -500 (6%)
FINANCIAL: -360 (6%)
TECHNOLOGY: -220 (20%)

Recall that Technical Strength for the sectors varies from -500 (very rigid short-term downtrend) to +500 (very rigid short-term uptrend), alongside readings betwixt -100 together with +100 signifying no meaningful trending. We tin come across that all of the sectors are inwards downtrends. The really weak reading amidst wellness attention issues is specially notable, as this has been a defensive sector that has outperformed the marketplace inwards recent weeks. The concerns over reimbursement plans inwards the proposed budget cause got taken a toll on that sector, leaving traders together with investors alongside few places to hide.

When nosotros expect at a longer fourth dimension frame, focusing on the percent of stocks inwards each sector that are trading higher upward their 20-day moving averages, as reported past times Decision Point, nosotros come across equal weakness. None of the sectors shows 50% or to a greater extent than of its components higher upward that cost benchmark; none are fifty-fifty close.

What makes this marketplace notable is that oversold levels are remaining oversold from calendar week to week, rather than leading to important rallies. The 785-790 expanse inwards the S&P 500 Index (ES) futures represents intermediate-term resistance; as long as nosotros cannot sustain rallies higher upward that level, the marketplace volition demand to probe lower cost levels to detect important buying involvement together with perceived value.

As always, I volition endure updating the tendency condition of stocks inwards my handbasket (equally weighted amidst the viii sectors) each morning time earlier the marketplace opened upward via Twitter (free subscription via RSS). I cause got constitute that this is an effective agency of tracking day-to-day shifts inwards the market's tendency status.
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Info!! Trading Notes: Calendar Week Of December 28Th

Thursday, Dec 31st

*  I'm ever amazed how poorly traders perform inwards chore interview situations. Here is what years of experience, both every bit an interviewee together with an interviewer, get got taught me most winning at the chore interview.

*  The weakness yesterday has continued into early on trading today, raising the odds that we've seen a toll peak for the electrical current cycle.  If that is the case, nosotros could run into a meaningful correction dorsum toward prior wheel lows.  As has been the illustration for a while, weakness inwards the crude oil marketplace has accompanied stock weakness.

*  Here's where nosotros stand upwards amongst my favorite intermediate-term overbought/oversold measure.  It appears to live on cresting, every bit produce my wheel measures.

My best wishes to readers for a happy, healthy, together with profitable 2016!!


Wednesday, Dec 30th

*  I was looking for signs of weakening breadth inwards Tuesday's session together with what nosotros got was the reverse:  consistent buying through the session, accompanied past times describe inwards commodities.  New highs amid SPX stocks, besides every bit across all exchanges, hitting their highest grade since early on December.  The nautical chart of breadth amid SPX stocks exclusively shows that nosotros snuff it on strong, amongst over 80% of stocks to a higher house their 3, 5, together with 10-day moving averages.  While lucre taking from such levels is non at all unusual, that breadth describe is non typical of a marketplace most to morph into a bear.

*  My intermediate wheel mensurate is maturing every bit shown below:

*  My five-day mensurate of selling pressure level is at unusually depression levels, pregnant that it's been every bit much the absence of selling every bit the presence of huge buying that has lifted the marketplace recently.  Past occasions when we've seen similar depression selling pressure level levels get got been slow December, 2014; slow February, 2015; the 3rd calendar week inwards March, 2015; together with the 3rd calendar week inwards May, 2015.  All led to short-term moves lower inside a affair of days.


Tuesday, Dec 29th

*  Continued lucre taking early on inwards the solar daytime on Mon led to an afternoon bounce together with farther describe overnight, every bit nosotros engage inwards what looks similar topping behavior.  I volition live on watching breadth measures closely: if this, indeed, is topping, nosotros should run into reduced breadth.  Yesterday nosotros had 311 stocks across all exchanges brand fresh monthly highs versus 239 novel lows.  Two days earlier, the novel highs were 514 together with 168.  Below is a nautical chart that tracks fresh three-month novel highs minus lows (red line) versus SPY (blue line):

*  The relative weakness inwards commodity related sectors (XLB, XLE, XME) continues, every bit does relative weakness amid high yield bond funds (JNK, HYG) together with emerging marketplace stocks (EEM) together with Cathay (FXI).  These snuff it on to live on on my radar, every bit they are important drags on stocks overall.


Monday, Dec 28th

*  Friday's partial session finished amongst a slow decline, which has continued into the overnight session, every bit stocks seem to live on next crude oil prices.  I snuff it on to hold off to commodity together with credit markets, besides every bit the relative functioning of emerging markets to developed markets, to update views on deflationary impacts upon the global economy.  It is hard to envision a bull marketplace surroundings if we're seeing falling commodities, yield crimp flattening, weak emerging markets, together with distressed credit markets.

*  Influenza A virus subtype H5N1 few of my overbought/oversold measures are non at levels commonly seen at marketplace tops, together with hence I'm opened upwards to the possibility of simply about back-and-forth crusade this week.  Should nosotros locomote off the prior oversold grade inwards fourth dimension to a greater extent than than inwards toll together with pose inwards a lower high, that could ready the phase for a stronger downward move.  

*  It would non surprise me to run into lite trading this week, given many traders' want to get got fourth dimension off before the novel year.  Low book mostly accompanies narrow ranges.  So far, however, the day's downward motility inwards crude oil is non a pocket-size move.  This is worth watching.

Info!! Trading Notes: Calendar Week Of 8/10/2015

Friday, August 14th

*  For me, the standout observation for today's merchandise is that the yuan stabilized at the overnight fix, nosotros got a little popular inwards stocks, in addition to thus at that spot has been no follow through and, equally I write, that little popular has been alone reversed.  Meanwhile petroleum in addition to copper buy the farm on to languish close their recent lows.  The quest for devaluation inwards Communist People's Republic of China is a answer to economical weakness in addition to perchance the best real-time approximate of that weakness is inwards commodities pricing.  I create got problem seeing whatever sustained bull displace inwards stocks until the deflationary pressures reflected past times commodities weakness abate.

* 

*  My diverse breadth measures create got been peaking and, recently, bounces inwards stock marketplace seat breadth create got non been sufficient to elevator the index to novel highs (see nautical chart of Intermediate Strength above).  I'm content, given the dynamics above, to create got a little swing seat for a displace to oversold levels. The models are neutral, in addition to it would non create got a huge amount of weakness to plow them bullish, thus at this juncture I'm non anticipating a full-on deport marketplace seat move.  Too, equally the higher upwards nautical chart shows, we've seen a drying upwards of the set out of stocks making fresh lows.  Should nosotros larn near-term cost weakness in addition to fewer stocks making novel lows, I volition role that equally a tactical chance to create got profits.  If the weakness hypothesis is correct, nosotros should non create got out the overnight highs inwards today's trading session.  With models non lined up, I'm happy to create got a relatively brusk leash for seat trades.

*  The breadth volatility mensurate referenced yesterday is at the lowest levels seen since piece of cake February/early March.  Such depression levels create got been associated alongside weak returns over a adjacent five-day basis.  Pure volatility has likewise moved below median levels, likewise associated alongside weak forrad returns over a swing basis. 


Thursday, August 13th

*  Yesterday's banker's complaint nearly caution chasing oversold levels when pure volatility is high turned out to last to a greater extent than right than I expected, equally nosotros reversed the recent weakness in addition to rallied strongly inwards SPX.  We dropped all the way below 2050 inwards the ES futures early on inwards the day, a two-week low.  Interestingly, nosotros only saw 1058 stocks across all exchanges brand fresh monthly lows vs. 1078 on 8/6 in addition to 1862 on 7/27.  Note a set out of sectors that held upwards alongside relative strength, including the yield-sensitive utilities in addition to consumer staples shares.  The commodity-related stocks create got likewise held up.  This told us that the early on driblet was to a greater extent than nearly sector rotation than full-on risk-off--a valuable tell.  Market breadth has non been weakening alongside the recent Communist People's Republic of China related selloff.

*  Pure volatility remains unusually elevated fifty-fifty alongside yesterday's rebound; when this occurs, at that spot is unremarkably to a greater extent than upside left inwards the move, equally the combination of volatility in addition to forcefulness leads to near-term momentum.

*  The 3-5 hateful solar daytime models are mixed:  i is neutral, the other mildly bearish.  The adjacent hateful solar daytime model is neutral.  These are the kinds of signals yous buy the farm far the middle of trading ranges.  I could last persuaded to purchase intraday weakness that holds higher upwards the overnight lows for a short-term merchandise higher based on the potent pure volatility, but otherwise don't perceive a potent edge.

*  My breadth volatility mensurate is hitting multi-week lows.  That's a mensurate of the volatility of hateful solar daytime to hateful solar daytime breadth in addition to it's been a helpful measure.  When breadth volatility has been inwards the lowest one-half of its distribution since 2014, the adjacent 5 days inwards SPY create got averaged a loss of -.01%.  When inwards the highest one-half of its distribution, the adjacent 5 days inwards SPY create got averaged a gain of +.34%.  If nosotros were to larn other volatility readings dropping, the models would probable plow bearish.


Wednesday, August 12th

*  Communist People's Republic of China devaluation continues equally major driver of stocks globally.  While developed marketplace seat equities create got traded inwards a arrive at over the past times several months, emerging marketplace seat stocks create got been inwards a consistent downtrend (see EEM nautical chart above).  This suggests that a major engine of recent global economical increment is no longer a contributing factor.  It is this weakness in addition to non the stimulus value of the weaker Asian currencies that is driving stock in addition to commodity markets lower in addition to stimulating a flying to the security of character yield.

*  The 3-5 hateful solar daytime models for SPX are neutral; the adjacent hateful solar daytime model ended Tuesday real modestly bullish.  The models cannot component inwards idiosyncratic marketplace seat factors such equally the devaluation, thus I am non relying upon them for signals at this time.  Sometimes this fourth dimension actually is different.

*  My mensurate of "pure volatility"--the average cost displace per unit of measurement of trading volume--has buy the farm elevated, which way that nosotros could encounter outsized moves (including countertrend ones) equally book picks up.  This has of import implications for the setting of stops in addition to targets on trades in addition to makes it peculiarly unsafe to chase overbought or oversold cost levels.

*  General game invention is to buy the farm on to sell bounces inwards SPX that terminate at lower highs.  If the devaluation genuinely is contributing to an ongoing risk-off trade, nosotros should non merchandise higher upwards the levels seen merely prior to the most recent yuan fix.  I buy the farm on to harbor doubts nearly whatever form of sustained Fed hiking inwards the human face upwards of what is increasingly looking similar a currency state of war of competitive devaluations.  

Tuesday, August 11th

*  Communist People's Republic of China devaluation primal slice of overnight news; USD rises vs. Asia; stocks hand dorsum a chunk of Monday's gains.  Communist People's Republic of China devaluation affirms regime describe of piece of job organisation over economical weakness.  Difficult to encounter much inwards the way of Fed hiking alongside Asian goods becoming cheaper inwards U.S. in addition to dampening inflation.  Also hard to encounter Fed hiking inwards whatever sustained way inwards the human face upwards of what is increasingly looking similar a currency war.  All inwards all, this is consistent alongside the macro themes of late outlined in addition to should last supportive of U.S. stocks offering yield.  Economic benefits of lower inflation/lower prices are tempered past times headwinds from higher USD.

*  My 3-5 hateful solar daytime models for SPX turned modestly bearish at cease of hateful solar daytime on Monday, but reaction to the Communist People's Republic of China intelligence swamps model effects.  Next hateful solar daytime model for SPX turned from modestly bullish to neutral.  

*  General game invention is to sell bounces inwards SPX that neglect to create got out Mon highs.  Commodity markets create got been a adept proxy for the Asia weakness theme, in addition to it is hard to encounter stocks sustaining a rally if that subject is dominant.

Info!! Trading Notes, Calendar Week Of January 18, 2016

Friday, Jan 22nd

*  Yesterday's postal service noted the possibility that nosotros had set inwards a momentum depression for the recent marketplace position cycle.  Price activity on Th was supportive of that hypothesis, every bit nosotros saw real important selling pressure level inwards the afternoon, alongside multiple NYSE TICK readings below -1000.  That was similar inwards selling intensity to the puking nosotros saw at the cost lows, precisely immediately nosotros were asset higher inwards price.  The market's might to brand higher cost lows together with higher highs is what nosotros expression for if we've indeed set inwards a momentum low.  Meanwhile, we've moved higher overnight, 1 time to a greater extent than consistent alongside the momentum depression notion.  (Note the recent important forcefulness inwards crude oil prices, every bit well).  Bottom trouble is that, short-term, nosotros look to travel transitioning from a "sell the bounce" to a "buy the weakness" mode. 

*  Here's a dainty persuasion of breadth amid SPX stocks, which tracks the number of stocks making 5, 20, together with 100-day novel highs vs. lows.  Note how we've stayed oversold far longer than during recent declines; besides banking firm complaint how we're silent inwards oversold territory despite the recent bounce.  I hold back stronger breadth numbers earlier nosotros consider a seek of recent marketplace position lows.

*  Yesterday was the start twenty-four hr menstruum inwards xi sessions inwards which nosotros registered fewer than one 1000 stocks across all exchanges registering fresh monthly cost lows.  Still, alone 46% of SPX shares are trading inwards a higher house their 3-day moving averages together with alone 31% inwards a higher house their 5-day averages every bit of yesterday's unopen (data from Index Indicators).  Those curt term breadth measures should decease on to strengthen if we've indeed seen that momentum low.

Thursday, January 21st

*  We saw concentrated selling early on inwards the twenty-four hr menstruum followed past times a vigorous rally alongside important buying forcefulness that erased much of the day's losses.  The breadth numbers were peculiarly extreme alongside 44 stocks registering fresh monthly highs against 3250 novel lows.  The depth of the oversold condition, combined alongside the vigor of the buying, opens to the door to the hypothesis that we've set inwards a momentum depression for this downward cycle.  With the reaction to the ECB coming together well-nigh recently, we've moved higher inwards trading.  We should consider farther upside follow through together with divergences inwards the breadth information on farther weakness if, indeed, we've set inwards a momentum low.

*  That beingness said, to reiterate a signal made for a piece now, this wheel has been deeper on the downside than cycles over the past times ii years together with is to a greater extent than consistent alongside downward moves inwards 2010 together with 2011 than 2014 together with 2015.  These deeply oversold declines inwards 2008, 2010, together with 2011 eventually went on to brand farther cost lows good later the momentum signal at which we'd maxed out the number of shares making novel lows.

*  Here is an overbought/oversold mensurate that I rail based on number bars rather than time-based bars.  What I expression for inwards a comport marketplace position is overbought levels at lower cost highs; those are ofttimes expert regions for shorting.  In a bull market, yous expression for oversold levels at higher cost lows.  Those are ofttimes expert areas for buying.  In a attain market, you'll consider successive overbought together with oversold levels at similar cost extremes.

Wednesday, Jan 20th

*  Stocks came good off their highs during merchandise Tuesday alongside accompanying crude oil weakness together with that weakness has continued inwards overnight trading.  That has taken us to novel cost lows together with pretty good negated whatever divergences nosotros were seeing inwards the data, every bit noted yesterday.  The of import say inwards Tuesday's trading was the inability of rallies to sustain either inwards fourth dimension or price, every bit nosotros made successive lower highs.  If nosotros were coming off a momentum low, we'd hold back to consider value buyers sustain buying.  When buying is non sustained, there's a expert likelihood that it's to a greater extent than short-covering than initiatory interest.

*  Meanwhile, whether yous expression at VIX, volume, or the pure volatility mensurate that I follow (volatility per unit of measurement of trading volume), all are elevated, precisely none of seen the kinds of capitulation spikes that get got characterized past times sudden declines.  H5N1 interruption of the 2014 together with 2015 lows may aid yield such spikes; it's something I'm watching for.

*  Once again, to emphasize the themes from concluding week's notes, in that location is every prove that this spend upwards is unlike inwards graphic symbol from the corrections we've seen during the past times ii years.  Oversold levels that had led to sustained rallies--characteristic of a attain trade--are no longer finding buying interest.  It is hard to imagine sustaining a movement higher until nosotros tin let on a bottom inwards crude oil together with related commodities.  

*  It is besides hard to imagine the Fed sustaining a programme of charge per unit of measurement hikes inwards the confront of deteriorating fiscal conditions.  The marketplace position spend upwards is getting to the signal where it volition dent consumer confidence.  Note the superior relative functioning of utility shares.  Yield becomes attractive every bit a flying to safety, precisely yield is besides to a greater extent than attractive if rates are probable to remain lower for longer.

Tuesday, Jan 19th

*  Everyone wants to merchandise alongside confidence together with conviction, but that agency that nosotros get got to maintain heed together with torso inwards peak conditioning, especially during busy markets.

*  We traded to novel lows for this movement on Friday, precisely interestingly nosotros saw the start prove of divergences inwards the novel lows information for SPX stocks.  For example, nosotros had 129 to a greater extent than novel 100-day lows than novel highs on Friday, surprisingly curt of the 167 differential on Wednesday.  Only 8.96% of SPX stocks traded inwards a higher house their 10-day moving averages on Friday, precisely that was silent higher than Wednesday's degree of 4.98%.  (Data from Index Indicators).  Among SPX sectors failing to brand novel lows on Fri were XLU, XLE, together with XLV.  The relative forcefulness of the XLE shares is notable, given the recent weakness inwards oil.  We've bounced good off Friday's lows inwards vacation together with pre-market trade. 

*  Last week's trading notes observed prove that the electrical flow marketplace position downturn has been to a greater extent than persistent than recent corrections.  When we've had important declines inwards August, 2011 together with May, 2010, nosotros saw follow-through weakness fifty-fifty later a momentum depression was reached.  I am opened upwards to that possibility inwards the acquaint market.  If, however, nosotros get got indeed set inwards a momentum low, nosotros should consider to a greater extent than of a two-way merchandise going forrad than what we've seen thence far inwards 2016.

*  My intermediate term forcefulness measure, which takes into concern human relationship 5, 20, together with 100-day novel highs vs. lows amid SPX shares, opens the calendar week inwards unusually oversold territory.  With VIX closing inwards a higher house 25 on Friday, nosotros should decease on to consider meaningful volatility.

Info!! Indicator Update For September 8Th

Last week's review noted continued signs of weakness with the indicators together with questioned the market's upside potential. We did, indeed, come across weakness during the week, with the marketplace moving into moderately oversold territory (top chart) together with expanding the number of stocks registering fresh 65-day lows (middle chart), every bit a number of wide indexes tested their July lows. Still, fifty-fifty with the decline, all was non looking correct for the bears. Sectors that had led the downside, such every bit retail, housing, together with fiscal issues, were no longer behaving inwards a weak manner. We began seeing divergences with many of the indicators, suggesting that the weakness inwards the NYSE Composite, NASDAQ 100, together with S&P 500 Index were non beingness mirrored across the wide attain of marketplace sectors. Indeed, if nosotros expect at 52-week lows with the S&P 500 stocks (bottom chart; credit to Decision Point), nosotros come across a clear drying up--not an expansion of weakness.

With the government's bailout of the GSEs, we're straightaway seeing a sizable rally earlier the marketplace opened upwards on Monday. I volition travel watching the follow-through on this rally carefully to approximate whether nosotros accept seat inwards a pregnant bottom inwards the stock market. If nosotros have, nosotros should sustain a positive NYSE TICK with wide sector participation. This would railroad train the atmospheric condition for a decisive interruption inwards a higher house the resistance at the 1300 share inwards the S&P 500 futures. Failure of a follow-through on the rally would render us to a mode of probing the July lows. The marketplace doesn't actually assist with whether yous concur with the government's actions or not; our project every bit traders is to read render together with demand. So far, nosotros saw waning need every bit nosotros approached 1300 together with and then waning render every bit nosotros broached the July lows. Influenza A virus subtype H5N1 selection upwards inwards need hither would travel potentially significant, triggering substantial short-covering. I'll travel updating indicators each AM earlier marketplace days via Twitter.
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Info!! Tracking The Comport Upon Of Recession Fears On The Stock Market

The themes of weakness noted recently continued through week's end.

* Sector Deterioration - My recent review of sector forcefulness too weakness constitute forcefulness confined to a real express component division of the S&P 500 universe. In the final ii weeks, the pct of Consumer Discretionary stocks trading higher upwards their 50-day moving averages has plunged from over 70% to 30%. The corresponding pct for Financial stocks has dropped from 65% to 28%. Meanwhile, we're soundless seeing 59% of Consumer Staples stocks trading higher upwards their 50-day averages, every bit coin flows expire along to reverberate defensiveness too fears of recession.

* New Flight to Safety? - I've been watching the tax-free bond funds of late, largely because I committed a chunk of long-term portfolio coin toward those. Interestingly, when nosotros had stock marketplace selloffs inwards August too March, at that spot were selloffs with tax-free bonds, reflecting fears of default. During the recent stock marketplace weakness, however, a pose out of tax-free funds accept been making six-week cost highs. We're likewise seeing to a greater extent than or less forcefulness deport through to investment-grade corporates. Even every bit nosotros cost inwards recession, nosotros may hold upwards discounting the probability of Armageddon.
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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 October 19Th

Friday, Oct 23rd

*  The combination of prospects of farther QE from the ECB as well as positive turn a profit tidings breathed fresh life into the market, equally nosotros rose on substantially increased volume.  The increased book told us that fresh participants were coming into the market; the positive skew of the NYSE TICK told us that the participation was dominantly to the purchase side.  Picking upwardly those cues early on inwards the trading hateful solar daytime is an essential job of short-term trading.  Thursday's activeness was farther confirmation of the base of operations representative outlined yesterday, though I'm for certain opened upwardly to the possibility that, amongst the renewed buying, a momentum peak lies ahead of us.

*   Below is an interesting nautical chart that tracks "relative volume":  how book at each infinitesimal of the hateful solar daytime compares amongst the average book for that infinitesimal inwards SPY.  Influenza A virus subtype H5N1 value of 1.0 way that book is average for that fourth dimension of day.  Influenza A virus subtype H5N1 value of 2.0 is a total criterion difference inwards a higher house average; 3.0 is 2 criterion deviations inwards a higher house average; etc.  Note inwards the nautical chart how book yesterday was good inwards a higher house average, especially when the marketplace seat was rising.  Great tell.

*  Interestingly, novel highs *and* novel lows expanded inwards yesterday's trade, as well as modest caps cash inwards one's chips along to lag large caps.  I'm watching that human relationship closely, equally good equally the novel highs/lows.

Thursday, Oct 22nd

*  Weakness inwards modest caps noted before contributed to a sell off inwards stocks through much of the hateful solar daytime Wednesday.  My mensurate of buying vs. selling pressure, interestingly, did non present a bully surplus of selling.  This continues to facial expression to me similar a correction of the recent strength, non acquit marketplace seat behavior.  With fewer than one-half of stocks forthwith trading inwards a higher house their 3 as well as five-day moving averages, the risk/reward looks a flake ameliorate as well as I am opened upwardly to buying weakness that holds inwards a higher house the overnight lows.  I practise note, however, that the number of stocks making fresh monthly lows has expanded beyond the degree seen final week.  Continued expansion of that number would brand me to a greater extent than concerned regarding the market's downside.  

*  In short, my base of operations representative is that the August/September lows were meaning ones; that nosotros began a novel marketplace seat wheel off those September lows; as well as that the wheel has hitting a potential momentum peak simply has farther to run on the upside.  Waning breadth, especially amid modest cap stocks, as well as waning relative push clit amid EM shares concerns me nearly this base of operations case, however, as well as thus I'm cautious as well as updating views hateful solar daytime past times day.

*  Influenza A virus subtype H5N1 say for marketplace seat weakness prior to the August driblet was that nosotros were persistently seeing to a greater extent than shares trading below their lower Bollinger Bands than inwards a higher house their higher bands.  At present, we've been seeing the opposite: to a greater extent than stocks trading inwards a higher house their upper bands (see nautical chart below).  I'm watching that residuum closely equally yet a unlike sort of breadth mensurate that captures the relative breadth of push clit vs. weakness.

    


Wednesday, Oct 21st

*  Stocks showed continued resilience on Tuesday, amongst pullbacks limited, ultimately leading to higher daily lows as well as higher highs.  We likewise expanded the number of stocks making fresh monthly highs, ascent to 812 from 698.  Interestingly, VIX rose, simply realized volatility as well as book continued low.  We're seeing push clit inwards overnight trade, afterwards belatedly hateful solar daytime weakness yesterday--that continues the grind higher.

*  We've seen a driblet inwards 1 of my measures of breadth volatility, which tracks the variation inwards the number of stocks making novel highs as well as lows.  Going dorsum to 2010, when breadth volatility has been high, the adjacent v days inwards SPX induce got averaged a gain of +.52%.  When breadth volatility has been low, equally at present, the adjacent v days inwards SPX induce got averaged a gain of exclusively +.03%.  I cash inwards one's chips along to stance the risk/reward inwards the marketplace seat equally non especially appealing for multi-day positions as well as instead lean toward shorter-term tactical trading of intraday swings.

*  I am continuing to sentinel modest cap as well as mid cap issues to encounter if nosotros tin expand breadth or whether relative weakness inwards those groups tin expand to other segments of the market.  The Cumulative NYSE TICK has been ascent inwards recent sessions; buying push clit has been moderate, simply selling push clit has been low.  I don't await a major marketplace seat turn down until nosotros encounter a reemergence of sellers, as well as that's non occurring as well as thus far.

Tuesday, Oct 20th

*  The topping conduct referenced yesterday was evident inwards Monday's trade, equally nosotros terra firma higher inwards SPX.  I cash inwards one's chips along to banker's complaint relative weakness amid modest caps, which is contributing to breadth divergences.  We saw 698 novel monthly highs on Mon against 166 lows.  That is against over K novel highs on the seventh through the 9th.  That beingness said, breadth divergences inwards ascent markets unremarkably don't dot major reversals until nosotros encounter expanding numbers of shares making fresh lows as well as overtaking novel highs.  During topping processes, it's to a greater extent than of a rotation merchandise than a trending one, amongst volatility, volume, as well as momentum coming down.  That makes it an opportunistic trading environment, equally the lower volatility way that moves extend far less than they had when VIX exceeded 20.

*  One of the large mistakes traders brand inwards depression volume/low volatility environments is looking for the adjacent large move, rather than planning for the lack of movement.  To attain that planning, traders either require to merchandise brusk term swings opportunistically (intraday swings) or extend their asset periods to essay larger moves that ride out the shorter swings.  I discovery that pullbacks as well as bounces inwards NYSE TICK intraday assist to seat those shorter-term swings.

*  Should nosotros encounter modest caps as well as midcaps grab upwardly to the large caps inwards performance as well as displace to fresh highs, that would live on a worthwhile clue that the upside has farther to go.  I'd desire to encounter other marketplace seat sectors underperform before taking a longer-term bearish stance.

Monday, Oct 19th

*  I'll live on tweeting from Stocktoberfest the adjacent duet of days.  My latest Forbes article highlights a topic I'll live on addressing inwards my Stocktoberfest presentation:  how nosotros tin brand the transition from beingness goodness traders to becoming bully ones.  That way that repeated sense is non enough; nosotros really induce got to undertake directed training.  The Forbes piece describes how nosotros tin job psychology to sustain preparation efforts.

*  Here's a unproblematic way y'all tin know if you're genuinely engaged inwards a procedure of expertise development:  Are in that location *specific* things you're working on inwards today's trading; are y'all keeping score to encounter if y'all are genuinely making progress; as well as are y'all making ongoing corrective efforts amongst continued scorekeeping if you're non making progress?  If you're non intensively engaged inwards the above, y'all are non on a course of teaching of peak performance development.

*  Friday's trading continued the bounce from the short-term oversold province of affairs noted final week.  We 1 time once again are at a juncture where I'm non enamored of the risk/reward province of affairs here.  Intermediate-term measures are stretched to the upside; put/call ratios induce got come upwardly down; as well as nosotros cash inwards one's chips along to encounter fewer stocks brand fresh novel highs despite novel highs for this displace inwards the wide indices.  My pure volatility mensurate is at levels associated amongst subnormal forrad returns over a several hateful solar daytime basis.  All this is consistent amongst my overall perspective that we've seen a momentum peak for this marketplace seat wheel as well as are forthwith involved inwards a topping process.  That procedure tin extend for a spell before nosotros encounter an ultimate cost peak as well as eventual acquit phase. 

*  An uptrend is sustained when nosotros are able to register higher cost highs as well as higher cost lows across multiple short-term cycles.  So far, that is what we've been doing.  Until that blueprint changes, I'm reluctant to induce got brusk positions for anything to a greater extent than than short-term trades.
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Info!! Sector Update For September 7Th

What a difference a calendar week makes. The final sector update institute the bulk of sectors inward small-scale uptrends, amongst testify of sector rotation rather than strong upward trending. Over the by week, money has continued to menstruum out of stocks too most of our sectors stimulate got flipped from small-scale uptrends to small-scale downtrends. What this agency inward utilisation is that I'm viewing the marketplace through ii sets of lenses. One is the lens of the short-term trader, who is seeing the marketplace weaken from solar daytime to day, calendar week to week. (By Friday, for example, nosotros posted over 2400 fresh 20-day lows amidst NYSE, NASDAQ, too ASE issues; a total indicator review volition look tomorrow AM and, equally always, I volition travel updating the indicators prior to each trading solar daytime potentially meaning divergences betwixt the electrical current marketplace activeness too the weakness that nosotros saw at the July lows. In short, we're seeing more fearfulness too selling than inward the by few weeks, precisely fewer stocks are participating inward that selling than at recent marketplace lows.

So basically nosotros stimulate got ii scenarios: the kickoff is that we've begun a fresh leg downwards inward the marketplace too volition decisively accept out the July lows across the major indexes. The 2nd scenario--and, frankly, the 1 I'm leaning toward--is that the July through early on September weakness is business office of a bottoming process, amongst waning participation to the downside.

Here are the Technical Strength (trending) numbers for each of the 8 S&P 500 sectors that I follow, amongst the pct of stocks inside each sector trading higher upward their 50-day moving average (in parentheses):

MATERIALS: -80 (40%)
INDUSTRIAL: -200 (20%)
CONSUMER DISCRETIONARY: -100 (57%)
CONSUMER STAPLES: +40 (61%)
ENERGY: -460 (5%)
HEALTH CARE: -240 (30%)
FINANCIAL: +240 (64%)
TECHNOLOGY: -320 (19%)

We tin come across that the unloose energy too technology scientific discipline shares are dramatic underperformers, equally the marketplace is pricing inward the effects of slow/no increase inward the economy. Consumer staples stocks are outperforming equally defensive issues, but--interestingly--we're too seeing underperformance amidst wellness assist shares. That may reverberate renewed concerns nearly cost-cutting inward that expanse inward the wake of the Presidential election. Amazingly, fiscal shares are leading the pack; it volition travel interesting to come across how they response to the regime bailout of FNM too FRE.

Note how the percentages of stocks higher upward the 50-day moving averages is quite discrepant across sectors: in 1 lawsuit again, we're seeing enough of sector rotation. At this point, the percentages are non nigh levels ordinarily associated amongst intermediate-term marketplace bottoms, despite the fact that we're at fresh annual lows inward the NYSE Composite Index too nigh those lows inward the S&P 500 Index. This is however unopen to other reflection of the divergences I'm seeing inward the electrical current market. Either nosotros stimulate got much farther to larn on the downside, or the bulk of shares stimulate got set inward their lows for the electrical current comport cycle. I'll travel tracking the indicators closely to handicap the odds of these really dissimilar scenarios; remain tuned...
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