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!! 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!! 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!! 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!! 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!! 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!! Trading Notes: Calendar Week Of 8/24/15

Friday, August 28th

*  Buying weakness yesterday ended upwards beingness a useful strategy for much of the day, exactly a potent selloff as well as and thus buying reversal inward the concluding 2 hours of the trading session made for volatile trading.  I hold to await these volatility aftershocks to endure amongst us, equally noted inward Wednesday's post.  That beingness said, the pure volatility mensurate has been mostly trending downwards over the yesteryear several sessions, though it's yet at historically high levels.  

*  The blueprint of improving breadth has continued.  Interestingly, nosotros had 131 stocks across all exchanges register fresh novel monthly highs as well as 136 brand novel lows.  That novel depression figure compares amongst 726 as well as 840 during the prior 2 sessions as well as 3553 at what appears to endure a momentum low.  As long equally nosotros encounter higher prices, potent NYSE TICK readings, as well as improving breadth, my game innovation is to purchase weakness, specially if it tin arrive at the axe concord higher upwards the overnight lows.

*    Pertinent to the number of declining, exactly yet high volatility, is the pass upwards inward book inward SPY over the yesteryear several sessions.  We peaked at 507 1 chiliad m shares traded on Monday, as well as thus roughly 369, 339, as well as 275 1 chiliad m the yesteryear iii days.  One of my quant routines estimates the probable day's arrive at (very helpful for establishing cost targets on trades), amongst book equally a major input.  By seeing how today's book unfolds, nosotros tin arrive at the axe approximate the probable day's book as well as brand informed estimates equally to probable cost arrive at for SPY.

*  H5N1 mensurate of the breadth of marketplace position clit that I rails daily is the number of NYSE shares that arrive at purchase vs. sell signals for diverse technical measures.  Yesterday nosotros had 520 purchase signals vs. 20 sells for the Parabolic/SAR measure.  We've had xi occasions where we've had over 400 purchase signals on that mensurate since June, 2014, when I began collecting the data.  Three days later, SPY has been upwards viii times, downwards 3 for an average gain of +.49%.  It's equally good pocket-size a sample to hang our hats on, exactly does serve equally a overnice reminder that potent upside thrust leading to a short-term overbought province of affairs (over 90% of SPX stocks are higher upwards their 3- as well as 5-day moving averages) does non necessarily atomic number 82 to "mean reversion".

Thursday, August 27th

*  Per yesterday's post, nosotros did indeed encounter a seek out of lows inward Wednesday's session, followed yesteryear important buying.  The NYSE TICK has provided really practiced tells for the recent marketplace position action, equally wide downticking was followed yesteryear wide upticking really early on inward yesterday's rally.  That clit has continued into the overnight, all of which is consistent amongst the view of having position inward a momentum depression per Tuesday's comment.

*  Another practiced state inward yesterday's merchandise was the continued drying upwards of the number of stocks making fresh novel lows on weakness.  We had 726 monthly lows across all exchanges yesterday versus 840 on Tuesday as well as 3553 (!) on Monday.

*  The pure volatility mensurate continues at high levels, suggesting that book as well as volatility powerfulness endure amongst us for a while.  We remain higher upwards xxx inward VIX, off the highs exactly significantly elevated relative to close of 2015.

*  I notice that the psychological issues faced yesteryear traders inward this recent marketplace position are related to difficulty adapting to the recent changes of trend, correlation, as well as volatility.  Per the recent Forbes article, a big purpose of emotional upheaval inward trading comes from the mismatch betwixt the patterns we've operate out accustomed to seeing inward markets as well as the novel patterns that are playing themselves out inward electrical flow marketplace position action.

*  I regime annotation that 89% of SPX stocks are right away trading higher upwards their three-day moving averages, exactly alone a piffling over 2% are trading higher upwards their 10-day averages.  I await that latter number to growth significantly, equally our correction from the recent weakness plays itself out inward fourth dimension equally good equally price.  My game innovation is to endure opened upwards to buying weakness equally long equally nosotros remain higher upwards the overnight lows.

Wednesday, August 26th

*  The pause of the 1920 degree inward ES referenced yesterday showed us that the mainland People's Republic of China cutting was non a game changer, as well as nosotros continued the volatile downward market.  Interestingly, fewer stocks made fresh novel lows yesterday relative to the twenty-four hours previous.  Specifically, nosotros had 3553 monthly lows across all exchanges 2 days agone as well as alone 840 yesterday.  This would endure consistent amongst having position inward a momentum low, which on major declines tin arrive at the axe precede ultimate cost lows yesteryear weeks or fifty-fifty months.  

*  Yesterday nosotros had fewer than 5% of all SPX stocks trading higher upwards their 3, 5, 10, 20, as well as 50-day moving averages.  Going dorsum to 2006, at that spot bring alone been iv occasions inward which we've seen similar wide weakness:  10/7 as well as 10/9 of 2008; 11/20 of 2008; as well as 8/8 of 2011.  Over the adjacent iii trading days, SPY moved -9.74%; 9.68%; 13.95%; as well as 4.75%, respectively.  Note the really high volatility going forward.

*  Note also that the dates higher upwards did non brand ultimate cost lows for a number of months, exactly ultimately led to major bull marketplace position moves.

*  I am warning for the possibility of our putting inward lows close term as well as am watching that 1830-1850 degree inward ES closely.  I would await the combination of brusk roofing as well as value buying inward the high volatility surround to create a major snapback rally from these really oversold conditions.

Tuesday, August 25th

*  The volatility warning proved useful for Monday's trade, equally nosotros blew out to a VIX of forty yesteryear the unopen as well as traded amongst a daily truthful arrive at inward excess of 8%.  We traded good off the day's lows, inviting the hypothesis that we've seen a momentum depression for this downwards move.

*  Contributing to the view of a momentum depression is the unusually broad, weak breadth.  Over 400 SPX stocks made fresh 20 twenty-four hours lows yesterday.  We haven't seen that form of wide weakness since early on August, 2011.  That indeed was a momentum low, exactly regime annotation that stocks drifted lower, albeit amongst fewer stocks registering novel lows, for a yoke of months after that.

*  I volition endure watching commodities closely, equally these bring been a useful warning for EM equity weakness as well as weakness inward States of America stocks.

*  I volition also endure watching the ES 1920 area, equally that was the close recent depression prior to the mainland People's Republic of China statement of a reserve ratio cut.  If that displace yesteryear mainland People's Republic of China was a game-changer, that degree inward ES should hold.  Game innovation is to purchase weakness that holds higher upwards that 1920 level.

Monday, August 24th

*  There's a really primal betoken toward the destination of the recent Forbes article:  many times what nosotros translate equally a trading occupation genuinely represents *information*.  For example, the trader who has difficulty pulling the trigger may really good intuit that the marketplace position surround has changed as well as that what had been practiced risk/reward may non endure thus at the moment.  Similarly, frustration could endure a really practiced early, emotional signal that regimes bring changed.  We pass a lot of fourth dimension trying to preclude as well as fighting emotions inward trading when mayhap nosotros should endure focused on learning from them.

*  With honour to the recent article, also regime annotation the v things I facial expression for to position changing regimes.  Very helpful inward adapting to marketplace position conditions.  These volition endure relevant 1 time we're cook for the conduct to turn.

*  We hold to encounter cost behaviour that is wildly unlike from what nosotros seen through close of 2015.  For example, from midnight to viii AM EST thus far today, we've printed 150 bars based upon 500 ticks of cost movement.  By contrast, on the Mon 2 weeks ago, from midnight to viii AM nosotros printed half-dozen such bars.  My pure volatility mensurate continues to brand novel highs, important that we're getting to a greater extent than crusade from to a greater extent than volume, exactly also to a greater extent than crusade per unit of measurement of volume.  This makes gamble management tricky, equally nosotros tend to rely on the same fourth dimension frames for asset periods without realizing that asset a merchandise for a sixty minutes right away is similar asset for a twenty-four hours before inward the year.

*  We closed Fri amongst fewer than 5% of SPX stocks trading higher upwards their 3, 5, as well as 10-day moving averages.  That form of wide short-term weakness has been to a greater extent than typical of 2010 as well as 2011 markets than recent ones.  Very often, when we've had such wide weakness, the showtime thrust downwards has been followed yesteryear farther weakness, which is what we've seen overnight.  I hold to favor selling bounces until there's approximately evidence that selling pressure level cannot hold to yield weakness across the vast bulk of sectors.
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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!! Trading Notes, Calendar Week Of January 4Th, 2016

Friday, Jan 8th

*  We finished Th with real weak breadth, every bit over 2000 stocks across all exchanges registered fresh monthly lows.  Moreover, fewer than 10% of SPX shares shut below their 3, 5, in addition to 10-day moving averages.  In a correction, such oversold levels to a greater extent than oft than non atomic number 82 to relatively quick bounces.  During comport moves, weakness tin beget farther weakness earlier whatever bounce materializes.  Early August, 2011 was a notable instance inwards point.  We saw buying run across the marketplace with the mainland People's Republic of China create overnight in addition to and so ane time again with the rigid payrolls number.  Still, we're registering lower cost highs in addition to so I can't conclude we're out of the woods exactly because we're oversold.

*  My primary bike stair out is inwards oversold territory, but non nevertheless at levels that receive got lately corresponded to intermediate-term marketplace lows.

*  Note the ascent inwards VIX; my pure volatility stair out is likewise elevated, which agency that nosotros are non alone probable to watch heavy volume, but likewise to a greater extent than movement per unit of measurement of volume.  That has of import implications for sizing of positions, halt placement, etc.



Thursday, Jan 7th

*  Yesterday's ship service noted the macro headwinds from China/EM/commodities in addition to pointed out that intermediate cycles had non nevertheless bottomed for stocks.  Overnight we're seeing to a greater extent than of the headwind dynamics, with some other 24-hour interval of weak merchandise inwards mainland People's Republic of China in addition to oil trading sharply lower.  That has dragged stocks downward significantly.  Selling bounces remains the operative strategy; my bike measures are inwards oversold territory, but non nevertheless at levels associated with recent marketplace bottoms.

*  Because of the mainland People's Republic of China dynamic, of import marketplace moves are occurring exterior of United States trading hours.  That has of import implications for both day-traders in addition to for those belongings positions overnight.  Day-traders operating during United States hours are finding markets already extended past times the fourth dimension trading starts.  Traders belongings private stocks overnight are discipline to gap risk.  It's a classic instance of a modify inwards markets that requires traders to adapt.

*  In yesterday's trade, novel three-month lows expanded, ending divergences that appeared to hold upwardly showing upwardly alongside breadth figures.  With today's weakness, I expression farther negativity of breadth.  While my intermediate bike measures are non inwards bottom territory quite yet, short-term we're quite oversold (see nautical chart below) in addition to my stair out of pure volatility (volatility per unit of measurement of volume) has ane time once again spiked.  That combination raises the odds for short-term, sudden short-covering rallies.

*  The collapse of oil hurts commodity producing countries, hurts major growth areas of the United States economy, in addition to reflects a province of affairs inwards which need from weak economies overseas cannot overcome increased supply.  Below is a nautical chart of the past times twelvemonth inwards WTI crude.  The comport inwards oil has snuff it the comport inwards stocks.

Wednesday, Jan 6th

*  After an indecisive session yesterday inwards which bulls could non mountain much follow through to the rigid bounce belatedly Monday, we've continued the downtrend inwards overnight trade, with oil notably trading weaker.  I snuff it on to watch China/EM/commodity weakness every bit major headwinds for stocks.  My intermediate bike stair out is non nevertheless inwards bottom territory, per the nautical chart below:

*  Interestingly, hence far we're non seeing every bit many stocks making novel lows every bit nosotros did at similar levels inwards Dec next declines.  I'm especially impressed with how utilities stocks in addition to unloosen energy stocks receive got held upwardly reasonably good despite the Fed charge per unit of measurement hike concerns in addition to falling oil prices, respectively.  My base of operations instance expectation is for a interruption of the Dec lows in addition to an expansion of breadth weakness, but I am real aware of the alternate scenario inwards which weakness cannot expand novel lows.  That would hold upwardly to a greater extent than consistent with a merchandise inwards which we're closer to the bottom of a hit than poised for a truthful comport correction.

Tuesday, Jan 5th

*  Great ship service from Bella on the form of self-observation in addition to diligence it takes to hold upwardly a consistently successful trader.

*  We continued the sudden turn down inwards early on merchandise Monday, but per yesterday's observation re: volatility, nosotros saw a ferocious late-day rally that wiped out the day's declines.  The intraday advance-decline trace had been showing forcefulness into the afternoon, leading to that belatedly 24-hour interval rally.  When we're oversold in addition to selling can't force the marketplace to novel highs, that's when we're most vulnerable to the sudden curt squeezes.

*  The weakness has continued inwards overnight merchandise and, per the intermediate overbought/oversold stair out below, we're non nevertheless at oversold levels that receive got historically led to sustained bounces.  This stair out is based on 5, 20, in addition to 100-day novel highs versus lows alongside SPX stocks alone (data from Index Indicators):

*  That beingness said, we're quite short-term oversold per the stair out of the percentages of SPX stocks trading inwards a higher house their short-term moving averages, per the nautical chart below.  When we're oversold similar this on a curt fourth dimension frame, my leaning is to play make-it, take-it with curt positions in addition to non necessarily count on moves to extend over longer fourth dimension horizons.

*  Right now, it's exactly a one-day observation, but I practise notice that despite yesterday's wide weakness, fewer stocks across all exchanges made fresh novel lows than at the Dec depression points.  It would hold upwardly real pregnant if those downside divergences were to concur upwardly on farther weakness inwards stocks.



Monday, Jan 4th

*  With the sudden turn down inwards mainland People's Republic of China to kickoff the novel year, stocks receive got sold off sharply overnight.  The turn down on the heels of an already short-term oversold marketplace confirms nevertheless farther that the intermediate-term bike has turned downward, per the nautical chart below:

*  My stair out of "pure volatility"--the volatility that nosotros watch per unit of measurement of marketplace book traded--has exploded higher with the overnight move.  Spikes inwards pure volatility ordinarily hap nigh marketplace bottoms, but the bike stair out inwards a higher house is nowhere nigh a bottom level.  My trace organisation hither is that we're starting 2016 at a higher volatility regime, where we'll non alone watch high book in addition to volatility, but higher volatility for each unit of measurement of book traded.  That agency nosotros could watch large moves fifty-fifty on relatively curt fourth dimension horizons.  Short-covering rallies tin hold upwardly painful when volatility regimes explode.

*  mainland People's Republic of China in addition to emerging markets broadly receive got underperformed United States stocks for a patch now.  This tendency may hold upwardly accelerating, every bit concerns nigh global weakness inwards the human face upwardly of a rigid United States dollar receive got hold.  Such a global tendency would snuff it far hard for the Fed to engage inwards farther tightening in addition to could weigh on the United States economy.  These are themes I'll hold upwardly tracking early on inwards 2016.

Info!! Trading Notes: Calendar Week Of 8/17/2015

Friday, August 21st

*  It was a 2d right away twenty-four hr menses of real weak book flows; the failure to sustain bounces was evident relatively early on inwards the twenty-four hr menses in addition to quite telling, every bit the gain marketplace gave way to a trending trade.  Stocks making fresh novel lows expanded in addition to almost 600 NYSE issues unopen below their lower Bollinger Bands.  Interestingly, when that has happened inwards the past times year, at that topographic point has tended to move farther downside over the adjacent v trading days.  We are real stretched to the downside short-term, with fewer than 10% of SPX stocks trading higher upward their 3 in addition to five-day moving averages.  With VIX at 19, I await to a greater extent than volatile moves in addition to the possibility of strong short-covering moves.

*  My adjacent twenty-four hr menses in addition to 3-5 twenty-four hr menses models cause got turned moderately bullish, reflecting the short-term oversold condition.  Intermediate term measures are non at levels that we've late seen at intermediate-term lows.  I volition move watching the lineament of bounces from the oversold degree closely; if weak, I would await farther downside.  My game programme is to hold off for those bounces earlier reinstituting shorts.  I'm also opened upward to short-term buying of weakness that fails to brand fresh toll lows.

*  Pure volatility is quite high, which agency that each unit of measurement of book produces significantly to a greater extent than toll campaign than it did at recent marketplace peaks.  With expanded volatility, moves tin extend farther than nosotros would expect--very relevant to run a jeopardy management.

Thursday, August 20th

*  Volume flows were weak through the day, confirming the bearish expectations of the models in addition to the downside stock merchandise inwards the wake of commodity/China weakness.  This weakness has carried forrad to premarket trade.  Short term indicators are at levels stretched to the downside, but intermediate-term ones are not.  For example, nearly 17% of SPX shares are trading higher upward their 3-day moving averages.  That creates an surroundings ripe for a counter-trend bounce.

*  The possibility of counter-trend bounce is also heightened past times the fact that 1 of my 3-5 twenty-four hr menses models is flashing a bullish signal, the showtime inwards quite a few days.  Should nosotros run into weakness inwards today's session non confirmed past times book flows in addition to breadth, I would move willing to participate on the long side for a short-term trade.  

*  Pure volatility mensurate is elevated, also highlighting possibility of near-term bounce in addition to VIX unopen higher upward 15.  Neither are at levels associated with intermediate-term bottoms, but I make await to run into to a greater extent than volatile merchandise going forward, which has implications for sizing, stops, in addition to targets.

Wednesday, August 19th

*  Whereas Monday's marketplace could non sustain selling pressure--the number of downticks across stocks was modest--Tuesday was the reverse, with express buying.  The book current mensurate was solidly negative on the day, in addition to nosotros could non cause got out the overnight highs.  This record activity fit good with the bearish model signals from yesterday, in addition to we're seeing farther toll weakness inwards premarket today.  I croak along to doubtfulness a sustained upside for stocks every bit long every bit nosotros run into continued commodity weakness, which speaks to global economical weakness, especially inwards EM.

*  We tin run into breadth weakness inwards the number of stocks persistently trading nether their lower Bollinger Bands versus those trading higher upward (see below; raw information via Stock Charts).  Note how the difference inwards the cumulative Bollinger residue preceded the drib inwards Oct of 2014.  We are currently seeing quite a massive divergence; at that topographic point are exactly to a greater extent than stocks across the NYSE universe trading with important weakness than with important strength.

*  Next twenty-four hr menses in addition to 3-5 twenty-four hr menses models are neutral, in addition to nosotros croak along to function on the bearish swing dot from yesterday.  Game programme is to croak along to sell bounces that cannot move past times the overnight highs in addition to monitor book flows, specially should nosotros essay out back upward inwards the ES 2070s area.  Downside activity without expansion of downside record activity has been a adept brusque term dot for net turn a profit taking on the brusque side. 

Tuesday, August 18th

*  We had an impressive rally 1 time nosotros held Friday's lows inwards the ES.  My book current mensurate entirely got every bit depression every bit -250 early on inwards the morning, compared with values good below -1000 when we've hitting genuinely oversold levels.  That was a sign that, similar Friday, nosotros exactly were non seeing aggressiveness alongside sellers.  The ensuing rally has turned my adjacent twenty-four hr menses model real modestly bearish in addition to the 3-5 twenty-four hr menses models cause got turned bearish.  We are at levels of pure volatility that cause got been associated with weak adjacent 3-5 twenty-four hr menses returns.  My game programme is to brusque bounces that remain below the recent highs.  On a swing basis, I am warning for indications of to a greater extent than aggressive selling that would cause got us below the recent back upward inwards the 2070s.  That existence said, I'm also watching XLE in addition to XLB carefully for whatsoever indications nosotros could move bottoming inwards the commodity-related sectors.  That would offering of import back upward to stocks on whatsoever push clit back.

*  My adjacent query projection volition move to runway book flows inwards the premarket in addition to also at terminate of day, including the afterward market.  It is non clear to me how the flows inwards these fourth dimension periods mightiness move related to those inwards the adjacent period, but at that topographic point are meaningful flows, especially terminate of day, that could offering clues every bit to the adjacent day's trade.

Monday, August 17th

*  This article goes into depth nearly what I believe to move the greatest surgery work affecting traders. I run into a existent mismatch betwixt how traders recollect nearly chance in addition to how they really larn by their positions. It's also glib to exactly attribute this to "lack of discipline" or failure to follow plans/process.  Quite literally, traders croak caught betwixt 2 imperatives in addition to the inability to reconcile those results inwards the quandary where nosotros programme trades but don't merchandise those plans.

*  We've been seeing a reject inwards stocks making fresh novel highs for the past times several months (see nautical chart above), but we've also seen a drying upward of novel lows during the rangebound trade.  My adjacent twenty-four hr menses in addition to 3-5 twenty-four hr menses models are real modestly bearish in addition to several of my measures are moderately overbought in addition to inwards ranges where nosotros typically run into weakness.  My game programme is selling forcefulness that fails to cause got out overnight highs.

*  Friday's merchandise saw a distinct drying upward of downside volume flows, followed past times consistent though moderate buying flows.  Flows exceeding Fri levels on either side would strike me every bit important inwards establishing administration for early on merchandise this week.  When you lot run into concerted hitting of bids or lifting of offers across the stocks trading the highest volume, you lot know that major marketplace participants are putting uppercase to work.  That wasn't happening on Friday, every bit SPY book was at real depression levels.  Need to run into bear witness of meaningful book flows earlier assuming whatsoever breakout from the recent designing of declining novel lows in addition to novel highs.
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