Saturday, July 30, 2011
Wednesday, July 27, 2011
Update to Last Week's Herd Report
First, we have the framework of the S&P. It is trending up, and has formed a cup-and-handle pattern. This pattern is considered a topping pattern, with a reversal probability relatively high. This is actually a triple-topping pattern. So I expect to see a reversal heading downward.
From last week’s post on herds, let’s see what happened this week.
First, I indicated that KOL was up, and that it’s relative strength for the 5 day was 4.5%, and it’s relative strength for 20 day was 5.5%. The relative strength slope was negative, the weekly was lower than the monthly. The probability for a change in trend was high. This week, KOL’s relative strength is 1%. The 20 day is 4.8%. So we are seeing that KOL is beginning to rest and may be heading for a downward trend, considering the framework of the S&P. This is what we expected, looking at the daily relstr and weekly relstr.
The next up was $DJTATO the titans auto herd. Similar to KOL, the weekly was lower than the monthly relative strengths, so we would similarly expect a slowing or possible trend reversal. This week, the relative strength is -.5%, with the monthly at 0. $DJTATO is beginning to rest, as expected, and may be headed for a downward trend.
XME, again similar to KOL, the weekly was lower than the monthly. Again it too is slowing or possible trend reversal.
SLX was flat, at 1% for both the weekly and monthly. The trend of the S&P was up, so we would expect SLX to go with the S&P. In fact, this week it did track upwards with the weekly strength at 1.1% and the monthly has fallen to about 0.5%. So we would expect the steels to continue their upward trend.
Last week, I indicated XTXI and WFT looked great. However, like KOL, their 5 day was significantly below their 20 day performance, so I would have expected, like KOL, that they would retreat this week. They did not. XTXI did a little, but is still at 3.9% for the 5 day, and 17% for the monthly, and WFT is gangbusters at 7% for the 5-day and 8% for the 20 day. Even though a conservative approach for the energy sector was indicated, this sector is still very strong. The relative strength indicator continues to indicate this sector will outperform the S&P next week.
The precious metals sector looked very good with the 5-day relative strength higher than the 20 day on nearly every indicator. We would have expected these to outperform the S&P this week. But they did not. What happened? Looking back at the 5-day strength indicator, it had begun to turn over, with the slope going negative. This trend continued this week.
On the techs, the only uptrend was $DJULTC. Like KOL, the weekly was below the monthly, so we would have expected a rest or perhaps start a downtrend.
All the oils were higher on the weekly than the monthly, so we would have expected the uptrend to continue. It did. Although $DJTENG,, IYE, OIH and USO were beginning to rest, their relative strength was still higher than the S&P (which is down this week). The one that’s beginning to slope downwards is $OIX.X.
XOP, and XES, our shining star from last week, has done the same as KOL. The daily was lower than the weekly, and we’ve seen a rest in the uptrend. The daily is still above the S&P, but just barely.
On the retails, I look at what I wrote last week, and I musta been on drugs. They were all below the S&P. What was I thinking? And they fell again this week so they’re below the S&P by 1% or more. I gotta be more careful what I put here.
In conclusion, most of the herds exhibiting a positive relative strength to the S&P last week are at least resting, and some have moved below the S&P. Of the ones that seemed to be a surprise, we saw the slope of the relative strength curve turning direction. Therefore, we must consider the daily relstr as an indicator of what the weekly will be doing, plus we need to look at the slope of the daily to determine the probability of next week’s daily performance.
Next herd report, I’ll change the format to be:
20 day___5day___5day slope
And I’ll use underbars so the columns will line up.
If it’s OK with Thor, or perhaps for the weekend thread, I’ll post the herd report again in this format. Thor, Lemee know.
From last week’s post on herds, let’s see what happened this week.
First, I indicated that KOL was up, and that it’s relative strength for the 5 day was 4.5%, and it’s relative strength for 20 day was 5.5%. The relative strength slope was negative, the weekly was lower than the monthly. The probability for a change in trend was high. This week, KOL’s relative strength is 1%. The 20 day is 4.8%. So we are seeing that KOL is beginning to rest and may be heading for a downward trend, considering the framework of the S&P. This is what we expected, looking at the daily relstr and weekly relstr.
The next up was $DJTATO the titans auto herd. Similar to KOL, the weekly was lower than the monthly relative strengths, so we would similarly expect a slowing or possible trend reversal. This week, the relative strength is -.5%, with the monthly at 0. $DJTATO is beginning to rest, as expected, and may be headed for a downward trend.
XME, again similar to KOL, the weekly was lower than the monthly. Again it too is slowing or possible trend reversal.
SLX was flat, at 1% for both the weekly and monthly. The trend of the S&P was up, so we would expect SLX to go with the S&P. In fact, this week it did track upwards with the weekly strength at 1.1% and the monthly has fallen to about 0.5%. So we would expect the steels to continue their upward trend.
Last week, I indicated XTXI and WFT looked great. However, like KOL, their 5 day was significantly below their 20 day performance, so I would have expected, like KOL, that they would retreat this week. They did not. XTXI did a little, but is still at 3.9% for the 5 day, and 17% for the monthly, and WFT is gangbusters at 7% for the 5-day and 8% for the 20 day. Even though a conservative approach for the energy sector was indicated, this sector is still very strong. The relative strength indicator continues to indicate this sector will outperform the S&P next week.
The precious metals sector looked very good with the 5-day relative strength higher than the 20 day on nearly every indicator. We would have expected these to outperform the S&P this week. But they did not. What happened? Looking back at the 5-day strength indicator, it had begun to turn over, with the slope going negative. This trend continued this week.
On the techs, the only uptrend was $DJULTC. Like KOL, the weekly was below the monthly, so we would have expected a rest or perhaps start a downtrend.
All the oils were higher on the weekly than the monthly, so we would have expected the uptrend to continue. It did. Although $DJTENG,, IYE, OIH and USO were beginning to rest, their relative strength was still higher than the S&P (which is down this week). The one that’s beginning to slope downwards is $OIX.X.
XOP, and XES, our shining star from last week, has done the same as KOL. The daily was lower than the weekly, and we’ve seen a rest in the uptrend. The daily is still above the S&P, but just barely.
On the retails, I look at what I wrote last week, and I musta been on drugs. They were all below the S&P. What was I thinking? And they fell again this week so they’re below the S&P by 1% or more. I gotta be more careful what I put here.
In conclusion, most of the herds exhibiting a positive relative strength to the S&P last week are at least resting, and some have moved below the S&P. Of the ones that seemed to be a surprise, we saw the slope of the relative strength curve turning direction. Therefore, we must consider the daily relstr as an indicator of what the weekly will be doing, plus we need to look at the slope of the daily to determine the probability of next week’s daily performance.
Next herd report, I’ll change the format to be:
20 day___5day___5day slope
And I’ll use underbars so the columns will line up.
If it’s OK with Thor, or perhaps for the weekend thread, I’ll post the herd report again in this format. Thor, Lemee know.
Tuesday, July 26, 2011
What capitalism?
A couple weeks ago I mentioned that it was a chance to get a correction if we go down fast and without interruption. Started going down a Thursday like I mentioned, but failed to pick up speed.
Past week I switch to the bull side mentioning that past Thursday should start going up.
It really started Tuesday, getting consolidation Wednesday and effectively Thursday going up but what bothers me the most is not that started two days before, but the fact that it just stop flat. It didn't break the area. So no impulsiveness, neither to the downside nor the upside.
Bottom line is that we are trapped in this range for half a year, and looks hard to break this general zone.
I'm going to wait until July 30th as the first chance to brake out of this zone, that point in time has some chances of a breakout.
But I found August 9th an onwards for 3 or 4 more days, as the most clear point to produce a strong pivot and finally get out of the zone.
Which direction?
I want to study more carefully Aug 9-12 before picking a side, because is made of alignments that I'm very familiar with, who tend to produce nosedive action like in some stretches of the 1931-32 era. Where a 30% leg down was very common.
They are not exactly the same, they never are. Each time are different, but the players are still the same, just in different roles.
I found out that at another times in the past 140 years, even though not too often, it did produce the opposite result, breaking out of a long held range to the upside. Like a pivot point but only in cases where stocks were battered for a decent amount of time.
Can the past six months be defined as that kind of long range with battered stocks?
I'm not that sure, having a nice move up for a couple years being met with a correctionless correction in 2011.
Of course unlike 1931-32 there are elements that are missed to produce that kind of perfect storm, but different to the past 10 months, now is at least possible a big down move.
1931 saw the complete banking industry collapse, went to hell in a handbasket so to speak. Eerily similar, we now have the very same actors walking a very fine line where if just one among a lot of moving parts gets out of whack, we will end up with another fucking crisis in no time.
Same actors, similar astrological alignments ( not that many to the downside and more to the upside) and the potential for some big splash bank failure in two or three weeks, so and I'm just waiting.
Maybe some pundits can find all this debt issue almost amusing, something easily resolved in the next few days. Like no chance at all that anything could go wrong.
That confidence unnerves me, while witnessing how the maffia rings of the ruling class fight to see which group gets the lion's share this time.
If it hadn't been for this fine astrological moment I would have been in that same camp too, about the debt (just a well crafted, well timed fear instilled to the population in order to exact benefits).
In what can probably be define as a rare and highly sophisticated form of "capitalism" but just for a few, we notice that they require an extremely active presence of the state (Federal Governmnet) as a sugar daddy figure, to whom all of them love to beg to, so they don't fail.Negating of course, the creative destruction of real capitalism.
Talking about sugar, sugar growers live out of subsidies from the state/consumers, and ethanol producers, and...where capitalism went?
All these criminal clowns, like any aristocratic clown is going to sell people hard that they are capitalists, ruling from Gotham City the nation. What did you expect? Ever heard of the 5th ammendment?
Their lack of practice mastering real capitalism is what make me nervous about the whole debt thing.
All this thinking aloud does not mean a definite direction but is way to show that there's chances of a big move Aug 9th-12th, in my view.
I'm wary to see a lot of alignments that can reenact in a mini scale, a painful time like the 30's but at least the forces that can produce an upward break now are present, and are many, compared to that old time who displayed only two bullish potential alignments. And we all know what happen to them, got crushed with massive amounts of downward antagonic forces .
So no clue yet about the direction but July 30th could mean a smaller pivot and August 9-12 as the big pivot that after all these months, can get the stock market moving again.
Next time I'm going to see if I can fine tune the direction.
Good luck everybody
Dan
Past week I switch to the bull side mentioning that past Thursday should start going up.
It really started Tuesday, getting consolidation Wednesday and effectively Thursday going up but what bothers me the most is not that started two days before, but the fact that it just stop flat. It didn't break the area. So no impulsiveness, neither to the downside nor the upside.
Bottom line is that we are trapped in this range for half a year, and looks hard to break this general zone.
I'm going to wait until July 30th as the first chance to brake out of this zone, that point in time has some chances of a breakout.
But I found August 9th an onwards for 3 or 4 more days, as the most clear point to produce a strong pivot and finally get out of the zone.
Which direction?
I want to study more carefully Aug 9-12 before picking a side, because is made of alignments that I'm very familiar with, who tend to produce nosedive action like in some stretches of the 1931-32 era. Where a 30% leg down was very common.
They are not exactly the same, they never are. Each time are different, but the players are still the same, just in different roles.
I found out that at another times in the past 140 years, even though not too often, it did produce the opposite result, breaking out of a long held range to the upside. Like a pivot point but only in cases where stocks were battered for a decent amount of time.
Can the past six months be defined as that kind of long range with battered stocks?
I'm not that sure, having a nice move up for a couple years being met with a correctionless correction in 2011.
Of course unlike 1931-32 there are elements that are missed to produce that kind of perfect storm, but different to the past 10 months, now is at least possible a big down move.
1931 saw the complete banking industry collapse, went to hell in a handbasket so to speak. Eerily similar, we now have the very same actors walking a very fine line where if just one among a lot of moving parts gets out of whack, we will end up with another fucking crisis in no time.
Same actors, similar astrological alignments ( not that many to the downside and more to the upside) and the potential for some big splash bank failure in two or three weeks, so and I'm just waiting.
Maybe some pundits can find all this debt issue almost amusing, something easily resolved in the next few days. Like no chance at all that anything could go wrong.
That confidence unnerves me, while witnessing how the maffia rings of the ruling class fight to see which group gets the lion's share this time.
If it hadn't been for this fine astrological moment I would have been in that same camp too, about the debt (just a well crafted, well timed fear instilled to the population in order to exact benefits).
In what can probably be define as a rare and highly sophisticated form of "capitalism" but just for a few, we notice that they require an extremely active presence of the state (Federal Governmnet) as a sugar daddy figure, to whom all of them love to beg to, so they don't fail.Negating of course, the creative destruction of real capitalism.
Talking about sugar, sugar growers live out of subsidies from the state/consumers, and ethanol producers, and...where capitalism went?
All these criminal clowns, like any aristocratic clown is going to sell people hard that they are capitalists, ruling from Gotham City the nation. What did you expect? Ever heard of the 5th ammendment?
Their lack of practice mastering real capitalism is what make me nervous about the whole debt thing.
All this thinking aloud does not mean a definite direction but is way to show that there's chances of a big move Aug 9th-12th, in my view.
I'm wary to see a lot of alignments that can reenact in a mini scale, a painful time like the 30's but at least the forces that can produce an upward break now are present, and are many, compared to that old time who displayed only two bullish potential alignments. And we all know what happen to them, got crushed with massive amounts of downward antagonic forces .
So no clue yet about the direction but July 30th could mean a smaller pivot and August 9-12 as the big pivot that after all these months, can get the stock market moving again.
Next time I'm going to see if I can fine tune the direction.
Good luck everybody
Dan
Thursday, July 21, 2011
Wednesday, July 20, 2011
The Locusts are Restless
China GDP is coming down, but inflation is on the rise (depending on what you read). GDP may be coming down because banks are tightening and building may be slowing. We know where that leads, right? But reported inflation is rising and is somewhere around 6%, according to the International Herald Tribune.
US says Pakistan leadership has lost credibility. (one could argue if they ever even had any to start with). US cut aid by 1/3. Going to improve the situation? No.
Egyptians back in the streets protesting. Instead of going bowling?
12 killed across Syria as thousands join protests.
Afgan’s president’s brother is assassinated. He was getting too powerful. Other afgani leaders are afraid, at least one has received a death notification by the Taliban.
Quad Daffy’s global legitimacy crumbles. US recognizes the rebel government and unfreezes assets for them to use.
We all know about the budget. Minn’s sad state of affairs. Bernank says massive layoffs will happen if no increase in the debt ceiling. Does that tell you our economy is based on a paper tiger or what? See what the results are for outsourcing?
Here’s the herd report. I should do this more often, I know. I think a lot of the news above is being baked in. I see money rotating into metals, gold, and stocks with international sales. As most of you know, I developed a screener which measures a stock’s performance against the S&P500. There is a 5-day performance factor, and a 20 day performance factor. If you see the 5 day at 0%, and the 20 day at –7%, you could conclude that this sector is turning around, heading positive. I know ithe data in the columns won’t line up, you’ll have to be flexible. I used % as the delimiter between the data points.
For a surprise, have a look at education. Big trend up, surprisingly. Relative strength for 20 day is around 10%, and for 5 day is around 4%. I don’t have a herd for the edu’s, so I’ve averaged (equally weighted) APOL STRA DV ESI COCO CECO as the indicator.
Food’s not so good. $DJTFOB is tracking the S&P for the last 5 days, 0% difference, but the 20 day for foods is 2% below the S&P.
Banks suck. Here’s the data:
Herd 5 day 20 day
XLF 0% -2%
SKF 5% -4%
$BKX -2% -6%
KRE -1% -4%
KBE -1.5% -6%
Chemicals are flat, at 0.
Coal is up. KOL is 4.5% for 5 day, and 5.5% for 20 day.
Aerospace (defense) ITA is –3% for 5 day and 20 day as well. I don’t have a defense herd, and it takes too long to do an average of the ones I follow. But I expect with the pentagon budget cuts looming, they won’t be doing well.
Autos are up. $DJTATO is 1% for the 5 day, and 4.5% for the 20 day.
Metals are looking good. Here:
Herd 5 day 20 day
XME 3.5% 7.5%
SLX 1 % 1%
Energy looks great:
Herd 5 day 20 day
XTXI 5% 15%
WFT 1% 5%
Financials suck.
Herd 5 day 20 day
KCE -1 % -6%
Oh, my pressssioussssss looks pretty to me as well as Gollum:
Herd 5 day 20 day
GLD 4% 2%
$DJTBAS 0% 3%
GDX 10% 12%
IAU 4% 2%
SLV 13% 10%
ZSL -3% -30% (could be a good short for a quick pop)
Healthcare looks like DOWN to me (I would never recommend trading individual stocks in this category because of the FDA news, and the algos read the news faster than I possibly can).
Herd 5 day 20 day
IYH 0% -2%
IXJ 0% -2%
XLV 0% -2%
VHT 0 % -1.5%
The Homies are certainly notwhere you wanna be.
Herd 5 day 20 day
$HGX.X -2% -5.7% (The PHILX housing sector)
$DJTCNS -2% -5.7%
XHB -2% -4%
ITB -2% -6.7%
Insurance isn’t the winner either:
Herd 5 day 20 day
$DJTINN -2.5% -6.7%
KIE -2% -4.7%
IAK -2% -4%
Staples “natto – so – good – o”. (Natto is Japanese and IMHO is not so good)
Herd 5 day 20 day
$DJTNCG 0% 0%
XLP 0% -2%
DBA 1.4% -1.5%
Techs are mixed, big cap techs up, semis and software down.
Herd 5 day 20 day
$DJULTC 1.4% 4.6%
SOX.X -4.4% -3%
SMH -4.5% -2.5%
IGV -3% 0%
Oils
Herd 5 day 20 day
$DJTENG 1% 0%
IYE 3% 4%
OIH 2.6% 5%
$OIX.X 2.3% 2.9%
USO 2% 0%
DIG 5.1% 10%
Oil operations XOP is a shining star, with 6.4% on the 5-day, and 9.2% on the 20 day.
Oil equipment XES is also up there with 2.4% on the 5 day, and 7.6% on the 20 day.
Reits don’t look good.
Herd 5 day 20 day
IRET 0% -7.7%
ICF 0% 0%
CUZ -2.5% 0%
Retails are holding their own, but consumer services are down. TIF of course, but consider the client.
Herd 5 day 20 day
$DJTRET 0% -1%
RTH 0% 1%
UCC -2% 4%
TIF 2% 7%
XRT 0% 3%
The solars aren’t so good right now:
Herd 5 day 20 day
TAN -2.5% -7%
GEX -1.7% -7.5%
Tellys aren’t doing well
Herd 5 day 20 day
IYZ -2% -3%
$DJTTEL 0% -3.4%
Transports are getting depressed with $DJT at –2% on the 5 day and 0% on the 20 day, and $DJTTR at –1.5% on the 5 day, and 0% on the 20 day.
Utilities:
Herd 5 day 20 day
$DJTUTS 0% -5%
UTH 0% 2%
XLU 0% -2%
IDU 0% -3%
US says Pakistan leadership has lost credibility. (one could argue if they ever even had any to start with). US cut aid by 1/3. Going to improve the situation? No.
Egyptians back in the streets protesting. Instead of going bowling?
12 killed across Syria as thousands join protests.
Afgan’s president’s brother is assassinated. He was getting too powerful. Other afgani leaders are afraid, at least one has received a death notification by the Taliban.
Quad Daffy’s global legitimacy crumbles. US recognizes the rebel government and unfreezes assets for them to use.
We all know about the budget. Minn’s sad state of affairs. Bernank says massive layoffs will happen if no increase in the debt ceiling. Does that tell you our economy is based on a paper tiger or what? See what the results are for outsourcing?
Here’s the herd report. I should do this more often, I know. I think a lot of the news above is being baked in. I see money rotating into metals, gold, and stocks with international sales. As most of you know, I developed a screener which measures a stock’s performance against the S&P500. There is a 5-day performance factor, and a 20 day performance factor. If you see the 5 day at 0%, and the 20 day at –7%, you could conclude that this sector is turning around, heading positive. I know ithe data in the columns won’t line up, you’ll have to be flexible. I used % as the delimiter between the data points.
For a surprise, have a look at education. Big trend up, surprisingly. Relative strength for 20 day is around 10%, and for 5 day is around 4%. I don’t have a herd for the edu’s, so I’ve averaged (equally weighted) APOL STRA DV ESI COCO CECO as the indicator.
Food’s not so good. $DJTFOB is tracking the S&P for the last 5 days, 0% difference, but the 20 day for foods is 2% below the S&P.
Banks suck. Here’s the data:
Herd 5 day 20 day
XLF 0% -2%
SKF 5% -4%
$BKX -2% -6%
KRE -1% -4%
KBE -1.5% -6%
Chemicals are flat, at 0.
Coal is up. KOL is 4.5% for 5 day, and 5.5% for 20 day.
Aerospace (defense) ITA is –3% for 5 day and 20 day as well. I don’t have a defense herd, and it takes too long to do an average of the ones I follow. But I expect with the pentagon budget cuts looming, they won’t be doing well.
Autos are up. $DJTATO is 1% for the 5 day, and 4.5% for the 20 day.
Metals are looking good. Here:
Herd 5 day 20 day
XME 3.5% 7.5%
SLX 1 % 1%
Energy looks great:
Herd 5 day 20 day
XTXI 5% 15%
WFT 1% 5%
Financials suck.
Herd 5 day 20 day
KCE -1 % -6%
Oh, my pressssioussssss looks pretty to me as well as Gollum:
Herd 5 day 20 day
GLD 4% 2%
$DJTBAS 0% 3%
GDX 10% 12%
IAU 4% 2%
SLV 13% 10%
ZSL -3% -30% (could be a good short for a quick pop)
Healthcare looks like DOWN to me (I would never recommend trading individual stocks in this category because of the FDA news, and the algos read the news faster than I possibly can).
Herd 5 day 20 day
IYH 0% -2%
IXJ 0% -2%
XLV 0% -2%
VHT 0 % -1.5%
The Homies are certainly notwhere you wanna be.
Herd 5 day 20 day
$HGX.X -2% -5.7% (The PHILX housing sector)
$DJTCNS -2% -5.7%
XHB -2% -4%
ITB -2% -6.7%
Insurance isn’t the winner either:
Herd 5 day 20 day
$DJTINN -2.5% -6.7%
KIE -2% -4.7%
IAK -2% -4%
Staples “natto – so – good – o”. (Natto is Japanese and IMHO is not so good)
Herd 5 day 20 day
$DJTNCG 0% 0%
XLP 0% -2%
DBA 1.4% -1.5%
Techs are mixed, big cap techs up, semis and software down.
Herd 5 day 20 day
$DJULTC 1.4% 4.6%
SOX.X -4.4% -3%
SMH -4.5% -2.5%
IGV -3% 0%
Oils
Herd 5 day 20 day
$DJTENG 1% 0%
IYE 3% 4%
OIH 2.6% 5%
$OIX.X 2.3% 2.9%
USO 2% 0%
DIG 5.1% 10%
Oil operations XOP is a shining star, with 6.4% on the 5-day, and 9.2% on the 20 day.
Oil equipment XES is also up there with 2.4% on the 5 day, and 7.6% on the 20 day.
Reits don’t look good.
Herd 5 day 20 day
IRET 0% -7.7%
ICF 0% 0%
CUZ -2.5% 0%
Retails are holding their own, but consumer services are down. TIF of course, but consider the client.
Herd 5 day 20 day
$DJTRET 0% -1%
RTH 0% 1%
UCC -2% 4%
TIF 2% 7%
XRT 0% 3%
The solars aren’t so good right now:
Herd 5 day 20 day
TAN -2.5% -7%
GEX -1.7% -7.5%
Tellys aren’t doing well
Herd 5 day 20 day
IYZ -2% -3%
$DJTTEL 0% -3.4%
Transports are getting depressed with $DJT at –2% on the 5 day and 0% on the 20 day, and $DJTTR at –1.5% on the 5 day, and 0% on the 20 day.
Utilities:
Herd 5 day 20 day
$DJTUTS 0% -5%
UTH 0% 2%
XLU 0% -2%
IDU 0% -3%
Tuesday, July 19, 2011
Quiet week
Patiently waiting here, that's really the tough part.
I expected Thursday 7th or Friday 8th, to be the last chance for a reversal that, if gaininig momentum, could very well have meant the end of the Sept 2010 uptrend.
It had a promising start Friday and Monday 11 but I mentioned that it had to go down fast and furious so to speak, to muster some strenght. But after past Monday it just went quiet and become a back and forth ping-pong kind of game among two 950 pounds gorillas in slow motion, with the clear intent to make the public appreciate the nuance of each and every one of the movements they have for display, between naps.
Yes, today we close at the lows but to be an important drop it should have had to do better than what it did. A mere 5% from the top since July 8th doesn't sound too strong.
My view is going to start switching back to the original trend by this coming Wednesday afternoon and early Thursday to the long side, if we keep performing in the same range of the past week. Because the time to mount an attack to the uptrend and make it revert big time is almost over, in my view, for several weeks at least.
The amount of constrains, astrologically speaking, that a potential down move have to face after Wednesday or Thursday are probably too great for it to become successful.
So back to square 1 and watching if 1280-1300 holds for two more days, in that case off to the races to the upside again.
Good luck everybody
Dan
I expected Thursday 7th or Friday 8th, to be the last chance for a reversal that, if gaininig momentum, could very well have meant the end of the Sept 2010 uptrend.
It had a promising start Friday and Monday 11 but I mentioned that it had to go down fast and furious so to speak, to muster some strenght. But after past Monday it just went quiet and become a back and forth ping-pong kind of game among two 950 pounds gorillas in slow motion, with the clear intent to make the public appreciate the nuance of each and every one of the movements they have for display, between naps.
Yes, today we close at the lows but to be an important drop it should have had to do better than what it did. A mere 5% from the top since July 8th doesn't sound too strong.
My view is going to start switching back to the original trend by this coming Wednesday afternoon and early Thursday to the long side, if we keep performing in the same range of the past week. Because the time to mount an attack to the uptrend and make it revert big time is almost over, in my view, for several weeks at least.
The amount of constrains, astrologically speaking, that a potential down move have to face after Wednesday or Thursday are probably too great for it to become successful.
So back to square 1 and watching if 1280-1300 holds for two more days, in that case off to the races to the upside again.
Good luck everybody
Dan
Wednesday, July 13, 2011
Probably a useless post
Sorry for the worthless post, but maybe it will give you some ideas to pursue.
Here’s a graph of the SPY, weekly. As you can see, we’ve been in a 9.5% range since last December. Because some of us are investors, this range stuff is for the birds. Rock’s investment accounts have done little.
I’ve looked at sector rotation, and can’t determine any trend. I see pundits on Bloomberg spouting off on value stocks, staples, energy, precious metals, oils, nearly every sector. I think they’re guessing, but try to convince us enough to give them our money and let them navigate the 9% range.
When I look at the weekly charts of my herds, within their range, it seems we’re stuck. My strategy last year was to look at trends, and after a trend change seemd to be taking place, then I play that trend. The problem is 9% isn’t enough range to be very successful. I was a little successful, but nothing compared to last year. So I’ve changed my strategy. Now I look for the weakest stocks, and the strongest stocks, and play them depending on whether there’s a pop open or a poop open. I get out every night. No more ANF unscheduled “we’re doing great” after hours conference calls will affect me (BTW, ANF is back where it was prior to that infamous Adam and Eve call). This has made my trading account very successful..
So one other thing I’ve been doing is study the closing/opening. Because overnight volumes are so low, I can’t fathom why the whole market moves 1% at open. My feeling is that there will be some manipulation going on at night, and the direction will be telegraphed to friends who make trades at the end of the day. I’vwe read a bunch of articles on this, but none have panned out.
So here’s some 3 minute charts of the end of the day, and the beginning of the next, to see if anyone can make any headway. I’ll continue the recording because a lot of these were taken over a low-volume holiday (US July 4th). For those of you looking at the tiny print, the start of the day is near the right-hand lower corner.
Here’s a graph of the SPY, weekly. As you can see, we’ve been in a 9.5% range since last December. Because some of us are investors, this range stuff is for the birds. Rock’s investment accounts have done little.
I’ve looked at sector rotation, and can’t determine any trend. I see pundits on Bloomberg spouting off on value stocks, staples, energy, precious metals, oils, nearly every sector. I think they’re guessing, but try to convince us enough to give them our money and let them navigate the 9% range.
When I look at the weekly charts of my herds, within their range, it seems we’re stuck. My strategy last year was to look at trends, and after a trend change seemd to be taking place, then I play that trend. The problem is 9% isn’t enough range to be very successful. I was a little successful, but nothing compared to last year. So I’ve changed my strategy. Now I look for the weakest stocks, and the strongest stocks, and play them depending on whether there’s a pop open or a poop open. I get out every night. No more ANF unscheduled “we’re doing great” after hours conference calls will affect me (BTW, ANF is back where it was prior to that infamous Adam and Eve call). This has made my trading account very successful..
So one other thing I’ve been doing is study the closing/opening. Because overnight volumes are so low, I can’t fathom why the whole market moves 1% at open. My feeling is that there will be some manipulation going on at night, and the direction will be telegraphed to friends who make trades at the end of the day. I’vwe read a bunch of articles on this, but none have panned out.
So here’s some 3 minute charts of the end of the day, and the beginning of the next, to see if anyone can make any headway. I’ll continue the recording because a lot of these were taken over a low-volume holiday (US July 4th). For those of you looking at the tiny print, the start of the day is near the right-hand lower corner.
Monday, July 11, 2011
Still a chance
July 11th, 2011
Hello
I mentioned past week that I was expecting a drop Thursday or Friday as the last chance to mount a correction. If the drop I said looks wimpy not gathering strenght we’ll go up big.
Well Friday the drop came.By the end of the day however it corrected more than one third of the drop.So today was a very telling day, having me on the fence, in the sense that could be powerfull enough to start a nice correction.
Meaning that the pressure to a downward move is gathering strenght so I’m more inclined to see action to the downside now with a caveat in the price action: the drop should be swift and continous from now on, not like what happened in May. The move down should be clean and fast.
If back and forth starts developing means that the drop ended. Is easier to follow a movement when is almost uninterrupted in one direction, as soon as stops acting that way I’ll get out.
And the last thing to keep in mind is that the move up that started in September I expected to last 10-14 months with no big drops. (July-Nov 2011)
Meaning that if this last chance to the downside that I mentioned past week starts getting strenght I would consider the up move since September finished and an entirely new cycle or pattern will start developing.
And of course an end to the Sep move means carte blanche for the market to drop a substantial amount. Of course the starting phase (since past Friday till this coming Thursday) should be very impulsive to the downside to consider in my view that a new cycle was born.Will see
Dan
Hello
I mentioned past week that I was expecting a drop Thursday or Friday as the last chance to mount a correction. If the drop I said looks wimpy not gathering strenght we’ll go up big.
Well Friday the drop came.By the end of the day however it corrected more than one third of the drop.So today was a very telling day, having me on the fence, in the sense that could be powerfull enough to start a nice correction.
Meaning that the pressure to a downward move is gathering strenght so I’m more inclined to see action to the downside now with a caveat in the price action: the drop should be swift and continous from now on, not like what happened in May. The move down should be clean and fast.
If back and forth starts developing means that the drop ended. Is easier to follow a movement when is almost uninterrupted in one direction, as soon as stops acting that way I’ll get out.
And the last thing to keep in mind is that the move up that started in September I expected to last 10-14 months with no big drops. (July-Nov 2011)
Meaning that if this last chance to the downside that I mentioned past week starts getting strenght I would consider the up move since September finished and an entirely new cycle or pattern will start developing.
And of course an end to the Sep move means carte blanche for the market to drop a substantial amount. Of course the starting phase (since past Friday till this coming Thursday) should be very impulsive to the downside to consider in my view that a new cycle was born.Will see
Dan
Friday, July 8, 2011
Wednesday, July 6, 2011
Different Strokes
I just want to applaud Dss for her great post on Friday last. She has identified a bunch of resources which are common sense, easily used, and forceful allies.
What I’d like to do is complement that post with this one, which will give a different viewpoint and action option, depending on your time framework, and risk appetite.
First, a repeat of Dss’ SPY chart:
As you can see, she’s drawn a line from the high on April 30 to the high on May 31, and to where it intersects the price action on the current rally. She said she uses price action for her trade, so I’m interpreting that to mean that her line has identified a downtrend, and the price action would dictate a short is appropriate to follow the market trend downwards.
Here’s my SPY chart, and I’ll show you my price action.
At black line (1), the SPY established an upchannel. The price action violated that upchannel at (2).The next day, after (2), the stochastic %K crossed over the %D with conviction (some space between the lines), indicating the price action downward was confirmed. I might enter a short position at that time.
(The downchannle lines are drawn by TDAmeritrade’s StragegyDesk, and the width of the channel’s math is proprietary, but believe me, it does a good job).
At line (3), the downward price action violated the limits of the downchannel. I might have moved out of my short at that time, or perhaps reduced the short position.
But take a look at the day after (3), and you’ll see the stochs going horizontal. This means there’s no price confirmation. Not surprisingly, the volume on that day is quite low, indicating no participation in the channel violation. With no volume follow-through, I’m out. I won’t take chances when other folks aren’t participating.
At (4), we had 3 days of horizontal price action, then we see an upchannel trend was established. I might have entered a long position, but I wouldh’t have added to the entry because at (5) we had a dramatic channel violation to the downside. In the morning, I would have exited my long entry position (often I enter a position with 25 shares, and add as I see W’s on the 15 minute chart). At (5), there was significant volume, and the day after (5) was pretty good volume, so I would have re-entered a short position at that time.
At (6) we violated the downchannel again, and I would have exited the short position at that time. Take a look at the difference in slope of the stochastics at (6) compared to (1). Do you see a significant commitment difference? The slope is much more positive at (1). I might have waited until I saw more commitment by volume or price action, which became obvious at 2 days after (7), where I would have started a long position. I have held that long position long until now, when I see the stochastics are overbought (higher that 80%) and will be reducing my long positions until I see some volume commitment in the next day or two.
Your exercise: do the math. If you started short where Dss started her line, and stayed short until the line was violated, would you have made more or less money than I, hopping in and out, using the thinner price channels and violations?
What I’d like to do is complement that post with this one, which will give a different viewpoint and action option, depending on your time framework, and risk appetite.
First, a repeat of Dss’ SPY chart:
As you can see, she’s drawn a line from the high on April 30 to the high on May 31, and to where it intersects the price action on the current rally. She said she uses price action for her trade, so I’m interpreting that to mean that her line has identified a downtrend, and the price action would dictate a short is appropriate to follow the market trend downwards.
Here’s my SPY chart, and I’ll show you my price action.
At black line (1), the SPY established an upchannel. The price action violated that upchannel at (2).The next day, after (2), the stochastic %K crossed over the %D with conviction (some space between the lines), indicating the price action downward was confirmed. I might enter a short position at that time.
(The downchannle lines are drawn by TDAmeritrade’s StragegyDesk, and the width of the channel’s math is proprietary, but believe me, it does a good job).
At line (3), the downward price action violated the limits of the downchannel. I might have moved out of my short at that time, or perhaps reduced the short position.
But take a look at the day after (3), and you’ll see the stochs going horizontal. This means there’s no price confirmation. Not surprisingly, the volume on that day is quite low, indicating no participation in the channel violation. With no volume follow-through, I’m out. I won’t take chances when other folks aren’t participating.
At (4), we had 3 days of horizontal price action, then we see an upchannel trend was established. I might have entered a long position, but I wouldh’t have added to the entry because at (5) we had a dramatic channel violation to the downside. In the morning, I would have exited my long entry position (often I enter a position with 25 shares, and add as I see W’s on the 15 minute chart). At (5), there was significant volume, and the day after (5) was pretty good volume, so I would have re-entered a short position at that time.
At (6) we violated the downchannel again, and I would have exited the short position at that time. Take a look at the difference in slope of the stochastics at (6) compared to (1). Do you see a significant commitment difference? The slope is much more positive at (1). I might have waited until I saw more commitment by volume or price action, which became obvious at 2 days after (7), where I would have started a long position. I have held that long position long until now, when I see the stochastics are overbought (higher that 80%) and will be reducing my long positions until I see some volume commitment in the next day or two.
Your exercise: do the math. If you started short where Dss started her line, and stayed short until the line was violated, would you have made more or less money than I, hopping in and out, using the thinner price channels and violations?
Tuesday, July 5, 2011
About assumptions
Happy 4th of July everybody,
I know, I know...why on earth should I make a call like the one I did on past Friday at dastrostockmarket.com about selling all my SPY calls at 2:55 pm and buying puts other than for a strong urge from my little narcissism just to bask in the glory for a few hours/couple days?
( By the way the s&p hit a glass ceiling at 2:59. One hour later charged again and surpassed it for only seven minutes and up to now that movement was stopped in it's tracks, it's still down).
Gratification to my retarded ego and patting him in the back could be read as part of it, indeed, but the true relevant parts in my call were:
a)Telling what I see like in a mechanical way, as a way to learn to trust what I see no matter my opinion or how ridiculous it could be seen. It's a way to corner emotional impulses out of the picture.Putting it in the open forces me to do my best because my ego is very very worried with my propensity to make calls due to the risk of being seen as just plain stupid.
So I let him enjoy the moment but showing him who's in charge, he can take the credits, but he can not force me to not do something just for vanity or fear.
b) Giving credit to Astrology for pointing something that in my experience I never was able to reach in any other way. And showing that some kind of force, energy, influence or fractal representation really exists despite not being able to see it or touch it. Otherwise it would have been imposible to try to time the equity market.
And here we get to the meat of this post:
It is said that Goebbels (ministry of information in nazi Germany) said
"... follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous"
Well the big lie is that nobody can time the market, is just delusional, something not possible. Of course that lie is designed to just make people throw their arms give up and don't keep trying.
How convenient! and how this translates to the day to day market operations?
Well, if the majority of people end up believing that lie, they tend to assume that the best they can get from the market is staying in, like f***king forever; because it's imposible to time that thing right? And who benefits from this false assumption?
Big guns, that knowing that if people keep participating in the market but only in a passive way they become just mere providers of liquidity to allow the big guns to get in and out without even breaking a swet.
Brainwashing people is always the first step to render them incapable of mounting a defense.
So whenever you hear or read that big lie please, just mount a good defense.
I'm going to wait till after 2:30 to decide about selling my SPY puts. Of course unless everything is going parabolic off the bat in the morning. Thursday and Friday are the days that are going to tell me if the correction is over, at least for the next 4-5 weeks.
Dan
I know, I know...why on earth should I make a call like the one I did on past Friday at dastrostockmarket.com about selling all my SPY calls at 2:55 pm and buying puts other than for a strong urge from my little narcissism just to bask in the glory for a few hours/couple days?
( By the way the s&p hit a glass ceiling at 2:59. One hour later charged again and surpassed it for only seven minutes and up to now that movement was stopped in it's tracks, it's still down).
Gratification to my retarded ego and patting him in the back could be read as part of it, indeed, but the true relevant parts in my call were:
a)Telling what I see like in a mechanical way, as a way to learn to trust what I see no matter my opinion or how ridiculous it could be seen. It's a way to corner emotional impulses out of the picture.Putting it in the open forces me to do my best because my ego is very very worried with my propensity to make calls due to the risk of being seen as just plain stupid.
So I let him enjoy the moment but showing him who's in charge, he can take the credits, but he can not force me to not do something just for vanity or fear.
b) Giving credit to Astrology for pointing something that in my experience I never was able to reach in any other way. And showing that some kind of force, energy, influence or fractal representation really exists despite not being able to see it or touch it. Otherwise it would have been imposible to try to time the equity market.
And here we get to the meat of this post:
It is said that Goebbels (ministry of information in nazi Germany) said
"... follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous"
Well the big lie is that nobody can time the market, is just delusional, something not possible. Of course that lie is designed to just make people throw their arms give up and don't keep trying.
How convenient! and how this translates to the day to day market operations?
Well, if the majority of people end up believing that lie, they tend to assume that the best they can get from the market is staying in, like f***king forever; because it's imposible to time that thing right? And who benefits from this false assumption?
Big guns, that knowing that if people keep participating in the market but only in a passive way they become just mere providers of liquidity to allow the big guns to get in and out without even breaking a swet.
Brainwashing people is always the first step to render them incapable of mounting a defense.
So whenever you hear or read that big lie please, just mount a good defense.
I'm going to wait till after 2:30 to decide about selling my SPY puts. Of course unless everything is going parabolic off the bat in the morning. Thursday and Friday are the days that are going to tell me if the correction is over, at least for the next 4-5 weeks.
Dan
Friday, July 1, 2011
Signs of a Rally - Updated
Updated SPY chart, notice that the down trend line has been decisively broken, which could explain the strong rally. Also institutions are probably putting money to work in the new quarter.
I thought I would post a few charts and talk about the indicators that I use to predict market trend changes. I don't use any of these indicators in a vacuum, I look for specific divergences, price patterns, and use price action as confirmations. I ignore the news during these turning points as the news is always the worst at bottoms.
Reading about China's inflation, Greece's debt problems, or record home price declines in the United States is interesting, but I have not yet figured out how to make money from that type of information, as always I am always more interested in the reaction to the news than the news itself. I also try to ignore talk about window dressing, the end of QE2, short covering rallies etc., while making my decision and letting the market internals do the talking.
No group of indicators is perfect but by looking at these indicators and statistics I can put the odds in my favor which is about all any trader can hope to accomplish.
McClellan Oscillator - I look for buy divergences to form. 4/18/11 and 6/16/11 are two examples. 4/18/11 was a 4.48% rally, the 6/16/11 is 4.08 as of this writing. A buy divergence in this Oscillator from 11/30/10 resulted in a 13.76% rally.
Other breadth indicators that I use extensively are from both the NYSE and the NASD:
Advances-Declines 5, 10, 30 day sma which is an over bought/oversold oscillator.
New Lows
Three measures of Up Volume/Total Volume
Cumulative Tick
Advancing Issues
Based upon my notes of 6/17/11, these were all signaling either oversold conditions, or buy divergences.
Internally, the statistics were diverging, (improving) as the market tested it's lows.
June 15 S&P 500 1265.42
Declining issues 2598
New Lows NYSE 79
Advancing Volume 81322
June 24 S&P 500 1268.45
Declining Issues 1941
New Lows NYSE 38
Advancing Volume 344510
I will then start looking at individual stocks and "herds" as Rock calls them for stocks or sectors that are showing relative strength. I sort and scroll through several hundred stock and ETF charts, indicator charts and my excel spreadsheets to see evidence of confirmation.
At the same time I look to see if the VIX, TRIN, or TICK is confirming the divergences that have formed.
I keep excel spreadsheets that I update daily to record the internals from the WSJ. I use Worden's Telechart 2007 to perform scans on the market and indicators.
Combining all of these indicators, statistics and oscillators is essential to seeing inside the market and making the correct call and acting upon it, using stops, of course. No system is perfect but I have found this system to work very well at trend changes.
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