Friday, Feb 26th
* I flora yesterday to last an of import solar daytime inwards stocks. In early on trade, nosotros were unable to respite the recent highs in addition to my brusque seat went into the coin rather quickly. Then nosotros saw meaningful buying come upwardly into the market, with subsequent selling unable to accept the marketplace to novel lows on the day. I covered for a minor net in addition to said to myself at that point, "sellers can't accept this marketplace lower." It was ane of those cases where a "failed" merchandise provided meaningful information. We broke to novel highs on the solar daytime in addition to rather rapidly took out the recent highs. That forcefulness has continued inwards overnight merchandise in addition to and hence far looks to last a meaningful upside respite out. Of course, nosotros require to concur yesterday's lows to validate that perspective.
* Here is a nautical chart of short-term breadth alongside SPX shares. Note that we're staying overbought in addition to making higher highs during that time. That's what bull phases of cycles do: they follow forcefulness with strength. We had 237 stocks across all exchanges register fresh three-month highs against 114 lows. That's a breadth expansion.
* As the nautical chart shows, of course, nosotros *are* stretched inwards breadth. Over 80% of SPX stocks are trading higher upwardly their 3, 5, 10, in addition to 20-day moving averages. I would non last surprised to run across some corrective activity inwards the close future, in addition to I would non last surprised to run across that activity base of operations inwards the 1930s/1940s expanse for ES that had been prior resistance. Failure to concur that expanse would give me greater respite regarding the vigor of the rising from recent behave lows.
Thursday, Feb 25th
* After early on weakness yesterday, nosotros launched a important rally, with potent buying readings from the NYSE TICK measure. Now the consequence becomes how nosotros merchandise approximately the recent highs in addition to whether that buying involvement tin last sustained. This is specially relevant, as many of my cycle measures are maturing:
* As you lot tin run across from the nautical chart above, my bigger motion painting trace concern for this marketplace is that we're seeing cycle peaks at progressively lower cost highs, which is exactly what you'd aspect inwards a behave market. That persuasion suggests that, for longer-term traders, selling cycle highs that cannot brand fresh cost highs would last a promising strategy.
* H5N1 concerning aspect of this bigger motion painting is that fiscal shares are straight off the laggards inwards this market, yr to date--not the commodity stocks. Here's a motion painting of sector performance from Finviz.com. When banking stocks are unusually weak, ane has to last concerned most vulnerabilities inside the broader fiscal systems. In this instance the concerns are global, including Communist People's Republic of China in addition to Europe, non only USA fiscal institutions belongings risky high yield/energy debt.
Wednesday, Feb 24th
* Yesterday saw a important pullback inwards stocks--a tendency solar daytime to the downside--with weakness continuing inwards overnight trade. The autumn inwards crude prices, with hopes of production cuts dimming, continues to weigh on stocks as purpose of a full general deflationary theme, with notably weak equity performance coming out of Europe. I hold to rail these macro themes closely.
* Many of my cycle measures are maturing. Should frontward marketplace forcefulness examine unable to decisively respite higher upwardly the 1940s expanse resistance for ES, I would aspect for a fresh leg downwards inwards stocks. The electrical flow marketplace action, with the larger than normal drib yesterday in addition to early on today, reminds me of the cycle that occurred early on inwards 2008, when a Jan depression led to a choppy, but ultimately weak, cycle higher prior to the important drops after inwards that year.
* Here's how nosotros stand upwardly on ane of my favorite measures, an intermediate-term estimate of novel highs versus lows specific to the SPX stocks. Despite yesterday's weakness, we're closer to overbought condition than oversold.
Tuesday, Feb 23rd
* We saw a solid rally on Monday, supportive of the breadth in addition to coin flow pictures noted inwards yesterday's post. I also regime notation that yesterday saw the showtime unopen below xx inwards VIX inwards a while. We're also seeing moderating book inwards stocks. This should Pb to to a greater extent than moderate volatility/daily ranges for the major marketplace averages, which has implications for the placement of stops, targets, etc.
* Breadth continues to expand with the marketplace rally. I to a greater extent than oftentimes than non larn most skeptical of marketplace rallies when a meaningful proportion of shares halt participating inwards the strength. Those are oftentimes the sectors that Pb the subsequent downside. H5N1 skilful instance from the most recent cycle was liberate energy shares: they weakened far before than the wide market. Right now, we're seeing solid, expanding breadth, which is typical of a relatively immature stage of an upward marketplace cycle. That doesn't hateful nosotros can't induce got corrections, but those are contained inwards before cycle phases in addition to are meant to last bought. Yesterday nosotros had 934 stocks across all exchanges register fresh monthly highs against 109 novel lows. The concluding fourth dimension nosotros had in addition to hence many stocks making monthly highs was early on November, 2015.
* I create regime notation that, short-term, we're pretty stretched on those breadth measures. Below is a useful overbought/oversold measure, which is a five-day moving average of 5, 20, and100-day novel highs versus novel lows for all SPX shares. (Raw information from Index Indicators). It's non odd for this to travel past times out ahead of cost during potent marketplace cycles, but it's also non odd to run across some corrective activity prior to whatever upside continuation. As cycles mature, I'm much keener on buying pullbacks than counting on upside momentum next cost highs. In a potent cycle, whatever such pullbacks are relatively contained in addition to arrive at off at successively higher cost lows. Despite the recent strength, I am real opened upwardly to the possibility that the electrical flow cycle volition non last a potent ane in addition to volition terminate below the grade of the prior cycle as purpose of a longer-term marketplace correction.
Monday, Feb 22nd
* Can nosotros systematically brand ourselves to a greater extent than successful inwards our work, our relationships, in addition to inwards markets? Here are the breadth in addition to coin flow motion painting noted yesterday.
* I hold to discovery it useful to rail the number of NYSE issues that give purchase versus sell signals across a multifariousness of marketplace indicators. Here's a composite mensurate of indicators with relatively depression correlations that adjusts the indicators for differences inwards volatility, in addition to hence that each contributes to a greater extent than or less equally. We've moved higher upwardly the nix line, but are non withal at levels commonly associated with an overbought market.
* I flora yesterday to last an of import solar daytime inwards stocks. In early on trade, nosotros were unable to respite the recent highs in addition to my brusque seat went into the coin rather quickly. Then nosotros saw meaningful buying come upwardly into the market, with subsequent selling unable to accept the marketplace to novel lows on the day. I covered for a minor net in addition to said to myself at that point, "sellers can't accept this marketplace lower." It was ane of those cases where a "failed" merchandise provided meaningful information. We broke to novel highs on the solar daytime in addition to rather rapidly took out the recent highs. That forcefulness has continued inwards overnight merchandise in addition to and hence far looks to last a meaningful upside respite out. Of course, nosotros require to concur yesterday's lows to validate that perspective.
* Here is a nautical chart of short-term breadth alongside SPX shares. Note that we're staying overbought in addition to making higher highs during that time. That's what bull phases of cycles do: they follow forcefulness with strength. We had 237 stocks across all exchanges register fresh three-month highs against 114 lows. That's a breadth expansion.
* As the nautical chart shows, of course, nosotros *are* stretched inwards breadth. Over 80% of SPX stocks are trading higher upwardly their 3, 5, 10, in addition to 20-day moving averages. I would non last surprised to run across some corrective activity inwards the close future, in addition to I would non last surprised to run across that activity base of operations inwards the 1930s/1940s expanse for ES that had been prior resistance. Failure to concur that expanse would give me greater respite regarding the vigor of the rising from recent behave lows.
Thursday, Feb 25th
* After early on weakness yesterday, nosotros launched a important rally, with potent buying readings from the NYSE TICK measure. Now the consequence becomes how nosotros merchandise approximately the recent highs in addition to whether that buying involvement tin last sustained. This is specially relevant, as many of my cycle measures are maturing:
* H5N1 concerning aspect of this bigger motion painting is that fiscal shares are straight off the laggards inwards this market, yr to date--not the commodity stocks. Here's a motion painting of sector performance from Finviz.com. When banking stocks are unusually weak, ane has to last concerned most vulnerabilities inside the broader fiscal systems. In this instance the concerns are global, including Communist People's Republic of China in addition to Europe, non only USA fiscal institutions belongings risky high yield/energy debt.
Wednesday, Feb 24th
* Yesterday saw a important pullback inwards stocks--a tendency solar daytime to the downside--with weakness continuing inwards overnight trade. The autumn inwards crude prices, with hopes of production cuts dimming, continues to weigh on stocks as purpose of a full general deflationary theme, with notably weak equity performance coming out of Europe. I hold to rail these macro themes closely.
* Many of my cycle measures are maturing. Should frontward marketplace forcefulness examine unable to decisively respite higher upwardly the 1940s expanse resistance for ES, I would aspect for a fresh leg downwards inwards stocks. The electrical flow marketplace action, with the larger than normal drib yesterday in addition to early on today, reminds me of the cycle that occurred early on inwards 2008, when a Jan depression led to a choppy, but ultimately weak, cycle higher prior to the important drops after inwards that year.
* Here's how nosotros stand upwardly on ane of my favorite measures, an intermediate-term estimate of novel highs versus lows specific to the SPX stocks. Despite yesterday's weakness, we're closer to overbought condition than oversold.
Tuesday, Feb 23rd
* We saw a solid rally on Monday, supportive of the breadth in addition to coin flow pictures noted inwards yesterday's post. I also regime notation that yesterday saw the showtime unopen below xx inwards VIX inwards a while. We're also seeing moderating book inwards stocks. This should Pb to to a greater extent than moderate volatility/daily ranges for the major marketplace averages, which has implications for the placement of stops, targets, etc.
* Breadth continues to expand with the marketplace rally. I to a greater extent than oftentimes than non larn most skeptical of marketplace rallies when a meaningful proportion of shares halt participating inwards the strength. Those are oftentimes the sectors that Pb the subsequent downside. H5N1 skilful instance from the most recent cycle was liberate energy shares: they weakened far before than the wide market. Right now, we're seeing solid, expanding breadth, which is typical of a relatively immature stage of an upward marketplace cycle. That doesn't hateful nosotros can't induce got corrections, but those are contained inwards before cycle phases in addition to are meant to last bought. Yesterday nosotros had 934 stocks across all exchanges register fresh monthly highs against 109 novel lows. The concluding fourth dimension nosotros had in addition to hence many stocks making monthly highs was early on November, 2015.
* I create regime notation that, short-term, we're pretty stretched on those breadth measures. Below is a useful overbought/oversold measure, which is a five-day moving average of 5, 20, and100-day novel highs versus novel lows for all SPX shares. (Raw information from Index Indicators). It's non odd for this to travel past times out ahead of cost during potent marketplace cycles, but it's also non odd to run across some corrective activity prior to whatever upside continuation. As cycles mature, I'm much keener on buying pullbacks than counting on upside momentum next cost highs. In a potent cycle, whatever such pullbacks are relatively contained in addition to arrive at off at successively higher cost lows. Despite the recent strength, I am real opened upwardly to the possibility that the electrical flow cycle volition non last a potent ane in addition to volition terminate below the grade of the prior cycle as purpose of a longer-term marketplace correction.
Monday, Feb 22nd
* Can nosotros systematically brand ourselves to a greater extent than successful inwards our work, our relationships, in addition to inwards markets? Here are the breadth in addition to coin flow motion painting noted yesterday.
* I hold to discovery it useful to rail the number of NYSE issues that give purchase versus sell signals across a multifariousness of marketplace indicators. Here's a composite mensurate of indicators with relatively depression correlations that adjusts the indicators for differences inwards volatility, in addition to hence that each contributes to a greater extent than or less equally. We've moved higher upwardly the nix line, but are non withal at levels commonly associated with an overbought market.
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