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.
* 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.
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.
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.
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