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.
* 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.
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