Surprised this afternoon after running the numbers, the SPX is actually flashing buy in here.  The Rut as you can see is correcting nicely (evident in its A/D line today also).  The RUT 10 day high - low % is -46%.. Typically -60% area marks the low of the correction for this index.  The SPX is turning in a relative strong number today.  I will re-run before the market closes to see how this number ends up..  Remember these are end of the day indicators, I run them mid-day looking for accumulating strength.

No underlying improvement here as the market continues to correct.  I favor the downside still.

The week was a Thanksgiving shortened week with a debt crisis thrown into the middle.  Last week I called for a rally to 1105 followed by a sell-off to 1060 area - the range turned out to be 1111.50 (off by 6.50) and a low of 1067 (off by 7). So I must have made a bundle?  I did ok for the week selling my longs at the 1105 mark but I never convinced myself that the sell signal I was trading under was reliable enough to climb in short.  The market breadth remained neutral while there was no real downside price action. (it all came in overnight)

So the good news is I wasn't in the market after Wednesday.  The sad news was that I didn't have enough confidence to trade in short.  Now I am stuck outside in cash and waiting for the market to setup either further down or for another thrust upward.

You can review the indicators for the week's close in my previous post on Saturday:

Zweig - Bearish
40 DMA % Index - Bearish (from intraweek bullish)
10 Day High – Low - Bearish
NYSE 52 Week New Highs - Bearish (close to neutral)

They all point to continuing weakness.  The strongest indicator is 52 Week high which is setup to issue a buy signal sometime this week if there regains any pricing strength.

My original schedule for a bottom in this correction was November 30th, which is Monday.  If we do sell-off hard on Monday I would expect Tuesday to be some-type of bottom forming day.  From there we would have to see if we are gaining any breadth momentum.  Until I see that I will stay and trade short waiting for 1050 to see if that will hold.

My outlook is for short, looking for a bottom around 1050 and then a rally to ???.  I will need to see some indicators mid-week to make that call.   Tuesday will be an important day.. Monday is important too.

So to put it short.  I believe there is more downside to come, at least until the 40% DMA index reaches that 50% number.

Make sure to follow intraweek to get updates.. I will try and post every night this week as I think the indicators will cement one way or another.

Surprised at the 52 Week New High indicators

The real reason I go through the hassle of publishing my charts is to force me to examine them and “see” what they have to say.  On Friday at the close I thought the 52 week new highs had pretty much established their bearishness along with all the other indicators. On re-examination today for this post I noticed that we missed by only a couple of New Highs from going neutral and from just 4 new highs from turning the sell signal into a buy signal. That is interesting, especially on a weak half-day. Wednesday closed the New Highs average at 107 and Friday was 108.

Last Wednesday the NAZ triggered a buy signal of the new highs, on Friday’s close the signal turned from buy to neutral.  I fully expected a full out sell signal based on the weakness.  Again a little amazed that we are not on a flat out sell on the NAZ.

Both the NYSE’s and NAZ’s signal are impressive in that we only put in half a day of trading.  We wait anxiously on Monday now to see how these signals will setup.

Monday’s target bars are quite low with the NYSE having to put in only 50 New Highs to start to turn the indicator.  Any green on Monday and we could easily do that.

New 52 Week High Bonus Chart:

Today I am going to throw in a bonus chart.  I have read some blogs and seen some emails that have mentioned the fact that we just made new market highs on lower 52 week new high numbers.  That was represented as being bearish. This is not necessarily true.  We did the same thing toward the end of August only to get one big thrust to propel us up to even higher highs along with higher 52 week new highs.

I am not saying that is what is happening here but to realize that the “missing” new highs could also be thought of as stored potential energy ready to rejoin the current new highs to propel both indices to a new yearly high.  The charts do look ragged in here and we need to watch the our 5 DMA to see what happens over the next couple of days.

-RLT

 

Zweig 10 day A/D looking towards the weak-side.

The Zweig is heading back yet once again to the oversold area where in my opinion it needs to get to in order to put together a final possible push into the end of the year.  Monday will be an exciting day, either more selling, bottoming or a rejection of Dubai as a problem.  The US $ is still worthy of a watch on our screens.

 

Our week-ending 10 Day High – Low for the NYSE finally looks like it is correcting after almost 10 days on a confusing sell signal, price finally followed through to the downside.

Dubai or not Dubai that is the question.  Would the market not have sold off except for the Dubai news? On Monday we will get our answer but overall the market was ready to correct.

Now I begin looking for a bottom and an eventual buy signal hopping for a thrust like in the past corrections.  Or this time will we find out that this is it for the year and just sell off our profits?

The markets need to get down to that –50% level on this indicator to satisfy the bears with some cash and to entice the bulls to come in for some more so short term view 3 days out is more weakness.

 

Our 40 DMA % Index went from being our only bullish signal on Thursday into a sell signal by the time the markets were closed early on Friday.

Compare this chart to the last one published.  You can see a history of this chart by selection 40 DMA % Index in the upper right corner under charts.  That should produce an archive of past charts if I am doing it right…. more to come..

I will be posting my weekly charts as the day goes on.  Sometime tomorrow (Sunday) I will wrap up a conclusion for the next 3 to 5 days giving my extend forecast for the week.  Take a look at each chart as they are published and let me know what you think the week has in store.

-RLT

 

A funny thing happened on the way to the top this week.  The underlying market breadth has been going through a correction.  The signal that have served me so well during this bull run are once again setup to start firing “BUY” from a prolonged sell signal that saw no follow through price action to the downside. 

So do I buy the “BUY” signal?  Probably.  It hasn’t happened yet.  It is setup to happen on Friday during that runted session. I won’t go in heavy.  I will buy light on Friday if the signals hit and add into the market if they prove to be legitimate buy signals.  If we do start to fall off the signals will in-validate themselves fairly quickly so I need not be overly concerned about “being trapped”

Here is how the signals are setting up:

Zweig:

This never got to the oversold area.  I had a date of 11/30 set aside for the end of a downward leg followed by another thrust into the end of the year.   Instead we have been building up the A/D line in the last few days which has turned this indicator upside down.

NYSE 52 Week New Highs

Our 52 week new highs put in a higher bar but  not as high as two days ago and more importantly not as high as 5 days ago so this left the indicator still on the sell side.  Worthy to note however is that the hurdle bar for Friday is quite low so anything shy of a hard selloff should put this indicator into a buy mode.

% Above 40 DMA Index

This remains our most bullish indicator  Already on the buy side of the 20 DMA it is interesting to note that the 20 DMA is starting to curl up much like it did at the beginning of July.

10 Day High – Low

Still on a sell signal buy like some of the other indicators, the Friday hurdle seems pretty beatable.  A gap down opening with further selloff would keep us on sell but it very close to turning the other way.

We are building up another stack of new highs, or we could be still coming down from the last stack.  The way the math works out on this indicator a close with above 188 new highs today would issue a buy signal on the NYSE.  We already had one false flash on the RUT a couple of days ago.  In the event we don’t make the 188 today, Friday has to make 44 on its stunted day.  Next Monday would be a goal of 46.  So it is interesting that if this could confirm what we are seeing on the 40% DMA index we could get another buy signal before too long.

This indicator lately has not be performing well as we have rallied with market breadth weakness.  There is an underlying sell going on that is not reflected in indices.  (Maybe a flight to quality).  Currently they are setting up to issue a buy signal, perhaps into the closing today if we rally, but if Friday has any strength it should be in the Buy camp.

This is currently the most bullish of the indicators I am tracking.  I show a very similar setup to the July turn around in the breadth of the number of stocks trading above their 40 day moving average.

 

I will do just one post tonight with all the indicators.  Read the Mid-day post since there really was no change from mid-day to the end of day.  I am only reposting to have an archive of the indicators.

My summary is that some-type of sideways correction is still in place.  We did get the run up to 1105 that I expected, it is just that I foresaw a correction down to the 1050 area which has not happened.  

The Zweig still needs a couple of days to correct and my bias is on the downside for the next couple of days.

That being said we are in a crazy 3 days here with most likely very like volume tomorrow and that insane half day on Friday.  Plenty of opportunity for market shenanigans.

 

This is our one Bullish more neutral as it hangs so far for a second day above its 20 DMA.  Any sell-off PM today should drive it back into sell signal territory.. Any strength and we will be safe here on this signal.

Our 10 DAY hi-low on both the SP500 and Rut 2000 remain in sell mode.

Even with a relatively weak ad line the Zweig sit pretty strong at just shy the 50% number.  The next 3 days the math works out that weaker A/D lines will have a larger negative impact.. We are watching this for an un-expected turn up.  If you are in the room and you see the A/D race indicators go + 2:1 today then you will know that market is moving counter to my expectations. We should weaken.

Both the RUT and SPX are on the Sell/Hold side.  The Rally was not enough to turn the indicator bullish.  If tomorrow is positive, even NR7 positive it would be enough to turn this indicator.  I will try to remember to run this index mid-day tomorrow for our trading room.  It should give us a good sentiment heads up on what is developing.

This is the most bullish of the indicators having rejected its one day in sell territory only to push above our buy/sell line (the 20 period moving average).  This is a two day confirming indicator and one day either side puts it neutral.  A follow through tomorrow on the high side would turn me bullish on this indicator, a reversal back across the 20 DMA tomorrow is my expectation since I have called for 3 to 5 days of weakness post OPEX.

The Zweig did that kick thing.. the question for tomorrow is will it continue up in a thrust it will it back off down toward oversold.  I believe we are still on our way down on this indicator where we will build a base for another rally thrust going into the end of the year.

The new highs failed to turn upward because of the height of the hurdle candle (d-5) that was being replaced.  Tomorrow that hurdle is lowered down to 188 and gets easier all week for this indicator to turn itself around.

The 10 day high – low indicator runs through all the issues in the Russell 2000 and SP500 counting the number of stocks hitting a new 10 day high and subtracting from the count the number of stocks hitting a new 10 day low.

The indictor for Monday shows a downward bias to the –50% level but historically a bounce after market shenanigans like OPEX is possible.

 

 

The 40 DMA % Index runs through all the NYSE stocks and counts the number of issues that are trading above their 40 day moving average.

An indicator crossing below the 20 day moving average of the indicator has been a sell signal.  A filter of 2 days applied makes a confirmation.  We are sitting one day below on both the NYSE and the RUT.

Our Zweig has failed to make it into overbought and indicates as it has in the past during this run that this thrust is over as far a making new highs.  I expect a return at least to the red line area before the markets mount another push for the top.

We could get a last attempt over the next couple of days up to 1105 ES which should be cautioned as a bull trap. Like the green circled area during the end of October.

 

On Friday, the NYSE 52 Week New Highs remained weak indicating more downside potential.

To turn the indicator around on Monday we would need 338 New Highs.  Only a strong gap opening would get us there. Watch the futures tonight.

This posting is more of a rant then anything.  Here it comes.  I hate posts that contain feeling words when it comes to market information.  We have all read them:

• It sure feels toppy in here
• I think we are oversold
• Seems like the bears are in control
• What bothers me is that …

You get the message.  In fact this post itself is a feely post.  It start off with “I hate…”

To become better traders we need to put aside our feelings and concentrate on facts.  Is the market oversold?  Is it toppy?  How do you measure toppiness?  What is toppiness?

When you get posts or newsletters or read blogs that have these “code” words in it, you need to read it as the author does not know nor does he/she have an answer.   Unless you have quantified the “gut” success of the author ignore the feelings.  Strike them from the record.   Too often we go looking for confirmation on our “feelings” and we find market empathy.  We must approach the markets with feeling neutrality and trade the quantifiable information we can extract.

I too often use these soft words too in my postings but I pledge to become better.  You will notice as you start to read more and more newsletters who are the emotional traders and who trade on information.  Learn to decode and you can start to find the best information out there.

RedlionTrader

Click on image to go to website to play..

I did a little research looking for times when the $SPX was making new highs but the $RUT was in an extended period of correct.  I found this Bull market take off In 1995..  It is interesting that it aligns almost exactly to the day of the year.

What our $SPX vs.. $RUT look like now – Currently at 42 since the $RUT has made a new leg-up high:

In November, 1995 it took 52 for the $RUT to correct while the $SPX made anemic new highs.

Of course one big difference in 1995 was the un-employment was waning (down to 6.5% from a high of 7.5%).  But it has happened.

 

 

-http://ttthedge.com

You hear it every time the unemployment numbers comes out..

“Yeah its bad but unemployment always lags the recovery”

That is true when measured against stock prices, but how much is the lag?

About 6 months on average, you can go out 9 months but 8 months is a maximum norm.  8 Months from March 9th would push us to November, so right in here right now over the next two months we should start to see some improvement in unemployment to validate this bull run.

Time is running out on this recovery.. Let’s see if any of that stimulus money goes into anything else besides increasing companies bottom lines.

Plotted this out this morning.  $SPX vs. Unemployment rate.  The strength of the spike as you can see since 1960 is unprecedented.  I hope we start to see a topping here soon.  This economy is still very damaged.

[Click on image to get full size]

The 52 week new highs totally fell apart today.  It will take a couple of days of re-building A/D lines to begin popping the new highs up.

Notice how we were unable to build a pile as large as the last thrust, this market is starting to run out of steam.

Our open house this week is about to come to and end.  It makes me sad because we have met so many great people and amazing traders.  If you have missed the event please try and stop by tomorrow.

We are proud of our new trading room. Even more proud of our trading record. We know that the combination of both make us the #1 spot on the net for great traders to get together to learn, share and collaborate on profitable trades. As far as I know, we are the only service that post all their trades for your perusal, I can even email you the spreadsheets..  All our calls are time-stamped in the traders chat log.

If you haven’t seen our new room take a look at this screen shot:

You can follow our trades, post your own trades and get a sense of the market.  We have traders in our group that trade bonds, equities, ETFS, futures, options.. just about anything. 

We have a 50 seat maximum and we are just about filled with members but there are a few spots left open.  We would like to have you in one of our seats.

Stop by tomorrow this is our trading group’s web address: http://ttthedge.acrobat.com/traders

If you would like to browse through our member’s only website you can go there too : http://pv.ttthedge.com

If you have questions about membership contact either me: redliontrader@gmail.com or tom @ tomandprisha@msn.com

I hope you can stop by to see what we offer.

 

- Marlin (aka RedlionTrader)

http://redliontrader.com

There are some warning signs that the current thrust has reached its top and we should chop around and correct and then repeat.  The first is our Zweig:

We would like the NYSE A/D Zweig indicator  to move above that 60 line.  It is at the level where the last thrust broke down now.  Another leg down on this indicator today would indicate that the top is in place..

The 10 Day Hi-Lo charts are showing some weakness in here.

 

The SP500 10 day Highs-Lows has weakened enough to curl the 5 DMA over which has been flagging the start of horizontal consolidation that has led to pullbacks.  We need to monitor that today.

 

52 Week highs:

52 Week highs need to pile in today in order to keep the bull thrust alive.  This right now is our most positive indicator.  If you are live in the trading room with us today we will update you.  If you can not be live with us today then follow Redsdata at twitter.com for live new high data every 30 minutes.  Watch the D5 number.. it needs to stay positive all day today as does the D1 number.  If this gap open holds through this mornings econ news there should be a good push out of the gate.

 

Hope to see you in the room.

I am having a hard time being motivated in writing today’s weekly update because I don’t really want to look at the data and charts because I know already they are mixed.  Last week we put in a hard up week but it certainly didn’t feel like it to me.   We were long going into the week and I was overly optimistic of a strong thrust catching the bears in a trap and propelling us up to new highs on all indices including the RUT. Instead we have stalled out and the RUT continues to lag behind while the Dow runs away.  This is not a good divergence and later this week we will look at some research I am working on showing what predictive qualities there are to an SPX/RUT divergence.

Zweig:

Let’s take a quick look at the Zweig, it has rolled over and is most likely heading down.

52 Week New Highs:

The NYSE 52 week new highs chart has a 5 day moving average that is still increasing but barely.  It would take a run away Monday to reset this indicator into a bull mode with new highs passing that bar pointed to by the yellow arrow (224 New Highs). In order to garnish that we would need a gap and run tomorrow morning.  At 10am we would need to have over 80 new highs in our back pocket, that will be something to watch for on the Twitter feed and in the trading room.

 

% of Stock over their 40 DMA

This is the most encouraging indicator I have.  The NYSE line is back above its 19 day moving average and moving in the correct direction.  A good Monday should set this in the correct direction. The RUT like on all the other indicators has some more work to-do to get there.

My other indicators like the 10Day High Low indicators are all mixed.  The RUT is on a sell signal while the SPX is on a buy/hold.  I need one more day to consolidate the indicators.  For that reason I have moved to cash until the day reveals its hand.   It will take a Monday morning rally of a strong nature to pull the indicators back in line with a bull run.  Any weakness or lackluster closing should push those indicators in the buy mode to the sell side.

Tomorrow we will watch the new highs, continue to monitor the RUT/SPX divergence and look for a turn around in the Zwieg.  It should be a busy day.  If you can join us in the room [ http://TTTHedge.acrobat.com/Traders] we will have the indicators up on the screen.

See you in the markets.

Marlin aka RedlionTrader.

 

This is my latest version of the !RL_PCT indicator that I use both for trade planning/mapping and intraday monitoring.  Those that trade live in our trading room at http://TTTHedge.com have seen me use this indicator daily.

I have added several new features including a Gain mode as well as a Pullback Mode.

This is the indicator in action on a 60 minute chart of RIMM since the beginning of November. The indicator tracks the lowest low and plots according to the user’s input the Gain since the latest low.  RIMM has had quite a run from the beginning of November, up 20% by November 11th and has now pulled back to the 16% level. 

Here is the same symbol with the indicator running the Pull-Back mode (-1). You can see that the last RIMM pull-back was to the –6% area, currently we are sitting at the –4% area, perhaps waiting another –2% would be the best time to buy in here.

Directions for use.  Hint.. click on the image to get a larger version of the image.

Download Now

choose your support level.. email only support is $9.99 for the indicator, one on one help for up to 30 minutes is $24.99 with the indicator.

Support Level

30 Minutes 1 on 1 $24.99 Email only $9.99

$24.99 - !RL_PCT - W/30 minutes one on one support $9.99 - !RL_PCT - with email support

For the past 4 months I have been tracking the trades for TTTHedge.com, a trading group that I am a member or and meets everyday in a live trading room.  Each trading call I have written down in a spreadsheet and posted on our member’s site.  I now have a complete three months of trades which I am willing to share with anyone interested, and these are my results summarized.

We started with a theoretical portfolio of $100,000 for our short term 1-5 day trading portfolio (TRADERS)  and and $500,000 for our longer swing trade portfolio (MAIN).  At the end of the quarter (August, September and October) the portfolios had $137,852 and $573,366 respectively.  This represents a 38% gain in the TRADERS account and 15% gain in the MAIN account.  For comparison the SPX cash during that same time frame only had a net return of 5%. 

Here is a summary of our trading production:

These are impressive returns.  What I find even more impressive is how they were accumulated.   This accumulating profit chart paints a picture of how the profits added up.

 

 

The drawdowns are reasonable, running about 10% in the worse case and taking about 5 trading days to get back to regaining profits.  I will happily send you the spreadsheet to do your own more in-depth analysis.

Why is that important?  If you are looking for a trading style that not only accumulates capital but also generates cash flow Tom’s trading style is a great choice. You don’t get stuck in deep long drawdowns and hedging helps insure that there are almost always profits to be taken. 

If you are already member, you know what a great deal being part of TTTHedge.com is.  If you are not a member yet but are interested in trying out our service just send us an email  (trial@TTTHedge.com) for a free 3 day trail. 

If you are already and email member, stop by the room sometime (http://TTTHedge.acrobat.com/traders) and say hi.

Hope to see you in the room.

Marlin (aka: RedlionTrader)

We are in day 6 of a possible "Zweig Thrust" setting up. $$  This would be a marker for another bull leg.  Can the A/D line hold today?