RedlionTrader

Earnings, Opex and New Highs.. Oh My.. 4/13/2010

2010-04-13T08:45:00.001-04:00

Quite a week we have in store as push to new highs with OPEX expiration and kicked off earnings, Alcoa lead the earnings parade with their usual disappointing routine. The Alcoa management must do that on purpose? They are so creative and reliable that it is amazing to watch. The markets took a little step back and Alcoa seemed to have been priced correctly into the close as not to cause too much damage. So we continue on the week:

Asia

Japan now has put in 2 days of selling off with continued weaker turn in Hong Kong but the Shanghai put in a strong day testing the lows and then rallying into the afternoon with a 1% gain for the day.

Europe

Slow start to Europe this morning selling off from the start and currently trading on their lows.

United States:

Economic News:'

8:30 news could be dollar moving as we take a lot at trade balances and the import price index.

Earnings:

We had some early morning earnings that outdid the Alcoa announcement hopefully moving in the bull direction. High Tech will get their first glimpse tonight as Intel and Linear Tech have been called an now must show their hands.

Charts:

10 Day High – Low:
Nasdaq charts did not generate last night but I did a hand calculation and the Nasdaq along with the NYSE and RUT put in neutral scores yesterday.

40 DMA % Index:

NYSE, Nasdaq and RUT are still below their 20 DMA on this index, we are not getting enough conviction here to move index up keeping us in this perpetual grind up but no real breakout. The NYSE and NASDAQ score a 0 where the RUT actually put in a weaker day yesterday and stays in the bear column.

52 Week new highs:

I am on the road this week so I don’t have all the charts like at home. I have put up the Nasdaq chart which was by far the strongest yesterday. It scores a +2 as it has turned up the 5 DMA and put in a stronger new day bar. You can see clearly now looking back that we had some type of corrective event that last week of March. Price action you can barely see it but the breadth charts all show the brief weakness followed by this current slow grinding push. The RUT and NYSE didn’t have as good day as the Nasdaq and were unable to turn the 5 DMA and therefore put in neutral scores.

Conclusion:

The charts score a neutral 0 day with mixed data. The 10 Day High – Low was neutral, the 40 DMA % index was –2 and the 52 week new highs was +2. The market is slowing drifting higher and higher but without a lot of conviction (that should be obvious in the volume). Sellers have no reason to sell as the drift upward is strong enough to keep them in hold mode but the warning here is the number of buyers is drying up too and should the sellers want to get out.. watch out.. A downward move here could be pretty breath taking. Of course the same is true for an upward thrust. Should buyers become more interested we could see a pretty good thrust… but I am more suspicious of the downside.

$SPX.X

Everyday I see a top. I have a hard time scrolling down my charts as I think we are there. You will notice that today I have the 1200 line as top (that was higher then yesterday). I think we could test that today but am not a believer in breaking through, so I am more interested in looking at lows. The 1194.50 area would close yesterday’s gap. Below that there is resistance at 1192 then 1189. Below that would be trouble. That top 1200 is like a magnet if we do break through with some momentum we could rocket, however, I think we continue to touch and probe and then fail only to try again so I will go long on any run up to 1200 where I will reverse and short for the next couple of days or unless we clearly establish a beachhead above the 1200 area.

The safe bet is up and the momentum is in that direction but not as convincing as say the end of February. We either need some renewed breadth or a quick correction to clear the path for better gains.

Careful.. stops.. don’t be convicted to a direction.. the market isn’t.

Marlin aka RedlionTrader http://ttthedge.acrobat.com/traders

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2010-01-13T17:59:00.000-05:00

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Morning Warm ups - Gaps are getting boring..

2009-12-24T08:24:00.001-05:00

It looks today like another gap up.

Around the world while we were sleeping:

Asia put in another strong performance. Good manufacturing numbers out of Japan helped to boost the Nikkei and the Yen.

Europe is mostly green across the board with a subdued rally this am, but green is green and our futures sit currently at +2.75 on the ESH10s. That makes 4 days in a row of a potential gap opening. The dollar is suffering weakness which also helps the bulls case.

US Economic News:

It is Christmas eve but our government is hard at work., passing healthcare reform and delivered as a Christmas present to all Americans and their guest. That is not the only part of government at work we have numbers coming out this morning too, hopefully the bean counters get to go home after they push the buttons for the 8:30 releases.

The durable goods number could erase the gap this morning on the open.. The reaction to a terrible New Home sales yesterday and a less then stellar sentiment number was an immediate sell-off followed by buying strength through most of the day to close on highs in the NQ and RUT. I would expect that weak numbers today will be treated the same. This market wants to rally.

For the jobless claims, it would be great if Santa could deliver that decade down from last week and show continued downward progress. What we don't want to do is jump back above that 500K number. Yuck. So plenty of news prior to the market to either set the gap opening or erode it down to flat.

Outlook..

I ran my numbers last night and yesterday was very bullish. The underlying breadth sentiment was in all three indices. The topping signal for us is the Zweigs which have gone overbought on all indices and will look for a reprieve, but they can stay overbought for a few days and this market with low volume and high breadth sentiment could explode. It is like a Mento dangling over a bottle of coke. Watch the new highs and the A/D lines today.. if they start to weaken and accelerate to the downside than the show is over and head for the exits.

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Morning Warm ups - Gaps are getting boring..

2009-12-24T08:23:00.001-05:00

It looks today like another gap up.

Around the world while we were sleeping:

Asia put in another strong performance. Good manufacturing numbers out of Japan helped to boost the Nikkei and the Yen.

US Economic News:

Outlook..

Zweigs - starting to work to overbought..

2009-12-23T22:47:00.001-05:00

I haven't been posting shots of the Zweigs lately because they simply have been boring. Sitting in the neutral area they have not moved to overbought or oversold. The lack of Advance/Decline patterns (which mimicked the price action) made for a very difficult call on the direction of the breakout.

We still have not made it to overbought on the NYSE but check out the lighter indices:

Each one of them has managed to breakout to the overbought area. While they can chomp around up here for a couple of days, it does tend to indicate that the top is very near here until a correction and then another thrust.

52 Week New Highs - continue to pile in..

2009-12-23T22:39:00.000-05:00

The RUT new highs are almost up to the highs set in October. They are coming in strong. We are now in 5 day cycle where we have to set consecutively higher new highs in order to maintain the momentum. The 375 set today means we would like around 180 at the open. That most likely would need another gap up opening and then a follow through on the half day. The gap will be the clue.

10 Day high - low indicator - +6 Score... Strength continues to build..

2009-12-23T22:35:00.001-05:00

.. all three indicators built strength today. The DOW which I do not track was the lacked and the RUT was the leader. It looks like one more day or at least one more attempt at a high or a high is in store. I would expect the NYSE number to reach into the 40's before a correction will start.

40 DMA % Index ... Scores a perfect +6.. nice price action with expected follow through..

2009-12-23T22:30:00.001-05:00

.. There is most likely still a little upside left from what has turned out to be a terrific year end thrust. The indicators are starting to get to extremes and we are at a point where shorts most likely are going to be safe but waiting and patience is the name of the game here, waiting for the market to show its weakness. Right now it isn't showing much weakness.

Morning Warm up - Bears are hibernating

2009-12-22T08:08:00.001-05:00

Bears are in retreat around the world this morning as even China puts on a good performance last night.

Japan was up almost 2% while China held to about .7% after being up over 1% but sliding a little into the close.

Across the watery divide to Europe which is continuing it Christmas rally mood.

London is a leader this morning with a 1% rally and the rest of Europe is following along. All markets are in the green as of 7:40am this morning.

Morning Econ News:

Our ES futures are up 6 pts from their 4:15pm close which is quite strong, but there is some econ news that will either throw a little cold rain or add sunshine to today's parade.

GDP will most likely stay unchanged and this finishes the 3Q GDP releases and now we start a Q1 2010 cycle.

Existing homes if they hit their 6.25M expected number (the left Colum is expectations the right column is last report's value) that will show continued improvement in the home sector. This news comes in a half hour after the market opens and could be a buzz killer if the market rallies in the first 30 minutes. Eyes will be on the Richmond Mfg index at 10 am also as these manufacturing indices have hit a little rough patch in the last 30 days.

Today's Chart

Correlation. That is when one chart looks a lot like the other chart. If one chart is going up the other is also going up. That had been the situation for the US stock market and the EURUSD forex pair. From the chart below we are seeing that the strong correlation that existing just last week appears to be breaking as both the US dollar and the markets are in rally mode.

The good news is that the market can rally with out a falling dollar. The bad news is that the market now has to fundamentally perform and can not count on a dollar carry trade to boost it's prices. Economic numbers are more important the ever as we shift gears here into an economic recovery mode.

-Happy Holidays

Marlin - aka RedlionTrader

All indicators scored a +14 and missed a perfect bull score by +4..

2009-12-21T20:34:00.001-05:00

As mentioned in the New 52 week high post, the NYSE was the cause of weakness today. We will watch in the live trading room in the first 30 minutes at the open to get a feel for how the breadth is performing. You can see it in our live A/D line indicators as well as the market thrust indicator.

If we confirm during the day that the NYSE is going to turn to bullish long and the RUT and the NADQ maintain their long sentiment then I will be scalping on the long side. If these don't set up I will be setting myself up to short in a 10 day window from here.

See you all tomorrow in the room.

52 Week New highs.. Scored +4 because..

2009-12-21T20:30:00.000-05:00

.. the NYSE was weak today, especially when compared to its stellar performance a week ago. That now makes two days in a row that the NYSE was not able to turn the bullish corner. In the past month of chop the NYSE has been the leading signal to which the others caught up. So either that cycle has been broken today or the NYSE weakness is signaling the top is in place and we are getting ready for a pullback in here.

The number of new highs closed today on the NYSE was 292. In order to move our 5 DMA momentum indicator for the NYSE long bullish column we will have to establish a pace our around 100 at the initial 30 minute open. That is only 1/2 of what we needed today. So a weaker opening than today is still possible to keep the momentum moving upward. A great opening and we will be on board for another thrust up to new highs.

The opening tomorrow should be a good hint at what the day has to unfold.

10 Day High - Low recovered to put in a +4 score weakness in..

2009-12-21T20:00:00.000-05:00

.. the NYSE. You will see the NYSE show up weak in both this chart and the 52 week new highs. It is this lagging that kept today's movement from being extremely bullish. The NYSE bars put in nice recovery over the last three days but the strength did not match the strength of 5 days ago on the NYSE and therefore that index gets a neutral score while the RUT and NDAQ each get a +2 score.

We need to see some follow through there otherwise we are just still chopping around in this consolidation zone.

40 DMA % Index scores a +6 - Very Bullish

2009-12-21T19:29:00.000-05:00

Again we have turned from neutral to very bullish. All three indices are moving to new highs and remain above their 20 DMA. The RUT has caught up with the NYSE in sentiment showing a 68% of stocks trading above their 40 DMA. The NASDAQ composite is lagging behind, perhaps a push tomorrow will drive it upwards.

Week Behind and Ahead..

2009-12-20T19:05:00.001-05:00

Back from Bangor-Maine where I spend some great quality family time with my extended set of relatives and my mom. It was fantastic to get together. They are a hardy lot that live in the north country.

Now back to work.

The week closed mixed with the DOW down -1.36% and the Russell closing up 1.67%, the small caps showing relative strength is a good sign.

A look at the Charts:

The 10 Day High-Low chart has again swung to neutral from the previous days bearish state. The markets are getting very difficult to predict. Instead on nice swings of momentum change the charts are looking like they are in fibulation and need a break-out one way or another to get some type of rhythm back in the price action. Somebody bring out the paddles or call the market dead..

The 40 DMA % Index chart still is making a positive climb showing underlying strength in a broad base still exits. It scores a +6 today from yesterday's neutral scoring.

The 52 Week new highs recovered from the Thursday selloff with the Nasdaq composite and the Russell 2000 able to turn a one day bearish signal back to bullish. The NYSE did not have enough strength to do so. Monday's open will have to be quite strong to keep the momentum going and to get the NYSE join the stronger indices.

Watch for an opening 30 minute new high of around 200. Anything less will indicate a high probability that the NYSE 52 Week new high will stay bearish into the close. Above 200 tells us that the bulls have regained the momentum. Any sell offs in that case should be bought.

Overall the three charts score a +10 which is on the bullish side but they are swinging everyday here between bullish and bearish. I would like to see it put together a streak in here.

The week will bring lighter volume as the markets wind down for a Christmas weekend. Short term scalp and swing while we wait for the markets to decide on a definitive direction from what is turning into a two month consolidation.

News Next Week:

Looking ahead at economic news for the week. At midnight Sunday the Bank of Japan issues its monthly report and news positive or negative could impact the dollar overnight. The bulls need China, Japan and Eurozone to set the markets on the right course for Monday's open.

US news over the week starts on Tuesday with the revised GDP numbers for the 4th quarter. Expectations are that we will stick with the 2.8% number that was recently revised down from 3.2%. Also on Tuesday at 10am EST the Existing Home Sales Numbers are released. These should have a direct intraday effect on the market. At the same time the Richmond Manufacturing Index will be released and there is a high expectation of a +4 on the reading but recently these numbers have been disappointing. That is something to watch.

Moving to Wednesday at 8:30 am we get core PCE price Index, personal spending and income. At 9:55 am the Michigan Consumer Sentiment Index and at 10am New Home sales will be released. The Crude inventories are out at 10:30 am on the same day.

Christmas Eve the news continues at 8:30 am with Durable Goods and initial jobless claims at 8:30 and the Natural Gas Storage numbers at 10:30 am.

10 Day High - Low.. a little stronger and today's score is...

2009-12-17T19:45:00.000-05:00

.. 0 which is neutral. We moved from a -6 to a 0 with all three indices gaining points on having a higher raw index value, but that value was not greater on any of the indices than 5 days ago, so the moving averages all score a -1 for a total of -3 which added to the +3 for increasing bar strength yields a 0.

If the NYSE can show up for a follow through day than this indicator will start to turn to the bull side.

Morning Warm up....

2009-12-17T08:36:00.001-05:00

The world did not play nice last night while we slept. In Asia while Australia was marginally in the green the Hong Kong closed down a solid 1% and Japan erased what was a nice 1% gain to fall apart in the closing hour to close red. Not a strong showing from Asia.

Currently Europe is awash in a sea of red. The major indices the FTSE in the UK is hovering close to the -1% area, the DAX about 1/2 of that at .56% negative which pretty much defines the range.

Econ numbers overnight were not terrible except for the retail numbers out of Great Britain at 4:00 am this morning showing a -.30% increase in retail where they had expected a growth of .5%, that is almost at 1% swing to the negative side. Clearly now there is some softening in the "first to emerge" nations of Europe. That puts a string of numbers together from Great Britain, Germany and France that have been consistently falling outside the range of expectations and recovery. The question is are they leading us now or is it the other way around.

Overnight Dollar Index Gains over 1%

The DXY gained over 1% from a 4pm close yesterday until the early morning hours. The reason for the huge daily gain lies in the continuing unwinding of the dollar carry trade. It appears to be related to the Fed meeting although I have not read exactly what has triggered the sudden momentum increase but the direction is definitely toward a stronger dollar. I talked in the weekend update video a little about the dollar.

We have our own numbers to work through at 8:30am which is the Jobless Claims. Fed-X released some encouraging numbers this morning lending more evidence that the US economy is bouncing from its bottom. It has plenty of stimulus now so let's see how hot it can ignite.

The futures trade only one way now, counter to the DXY. The DXY is up 1% the futures are down 1%. At some point, at least if the bulls want to take it to the next level, those shackles need to be broken. The futures down 1% today premarket open will be tough on our indicators and will zap buyers strength to take us to new highs.

We will wait for the 8:30 news to fix the market open and then wait until 10am to see how the market reacts to the gap.

See you in the Markets!

-RLT

Bullish / Bearish Overview

2009-12-16T21:42:00.001-05:00

Adding from the 3 charts below we score today a 12 out of 18 which continues to be bullish, but it is slightly weaker than yesterday +16 score. It bares watching, a weak start could mean another 3% type pullback for a run at the end of the year into the first week in January for new highs.

There appears to be no Asia news tonight so we will have to see if China can get out of its funk and Japan can follow through yesterday's strength, perhaps that can feed into Europe. Great Britain is reporting retail sales numbers in the morning. Strength in the number could slow the dollar's gains and keep the US futures up, but we have our own set of numbers to contend with including the pre-market initial jobless claims scheduled at 8:30. A 460K to 475K number should be just right to keep us even keeled into the opening.

A flat open would be good for the bulls. What the bulls don't want is a gap down open since this will zap so much of the built-in momentum already in this market.

If you are in the trading room we will keep you updated. If you are following us on twitter (RedlionTrader, Tomandprisha) you will get some delayed updates.

If you want to visit us in the trading room doing our live trades use this link: http://bit.ly/5h5sk1
we do market update at 9:15 pre-open for our daily game-plan and regular updates all day long.

We are attempting to fill our remaining seats and I think there may be only about 5 left now before the end of the year. You can read more about our special at the http://ttthedge.com website.

Bullish / Bearish Overview

2009-12-16T21:42:00.000-05:00

A flat open would be good for the bulls. What the bulls don't want is a gap down open since this will zap so much of the built-in momentum already in this market.

If you are in the trading room we will keep you updated. If you are following us on twitter (RedlionTrader, Tomandprisha) you will get some delayed updates.

If you want to visit us in the trading room doing our live trades use this link: http://bit.ly/5h5sk1
we do market update at 9:15 pre-open for our daily game-plan and regular updates all day long.

We are attempting to fill our remaining seats and I think there may be only about 5 left now before the end of the year. You can read more about our special at the http://ttthedge.com website.

52 Week New Highs.. Bullish +4 score

2009-12-16T21:15:00.000-05:00

The 52 week new highs for the NYSE, NAZ, and RUT today combined together for a score of +4 which is bullish and the same as yesterday's score, although the weakness rotated from the NYSE to the RUT. The NAZ has now put in a solid 3 day run of 52 week new highs. The hurdle bars for tomorrow are moderately high so the market is going to have to show some umph into to keep this indicator in the bullish mood. A rough start tomorrow, such as a poor unemployment claims number could put the kabash on our run.

40 DMA % Index still showing very bullish..

2009-12-16T20:37:00.000-05:00

The number of stocks trading above the 40 DMA went up today in all three of our tracking indices despite the sell-off into the close. That keeps this index into the very bullish camp.

It look to me that the stragglers out there are moving up as the index price action is not advancing as fast as the breadth would indicate it should be.

10 Day High - Low turns from bullish to slightly bullish

2009-12-16T20:10:00.001-05:00

The 10 Day High-Low moved from a strong bullish trend to a slightly bullish trend today with weakening bars in the NAZ (middle) and the RUT. I am really surprised at the RUT performance on this chart as it appeared to be the strength today yet today's 10 day highs are lower that yesterday. The introduced weakness is a concern that we may be topping in here. This tight trading range is very difficult to figure out. I will do a mid-day run tomorrow and see if we are getting any RUT improvement.

NYSE Fires a buy, NAZ and RUT Tomorrow? on our 10 day High - Low

2009-12-15T07:18:00.001-05:00

There was much strength in the market on Monday, particularly in the NYSE. You can see on the chart how the NYSE's last bar is green. This indicates that both the moving average is moving higher and the current bar is greater than the previous bar. While the RUT and NAZ had larger bars, they were not strong enough to effect their moving averages to positive but did manage to move them from Friday's bearish mode to neutral today.

Overnight the markets were weak in Asia. China was down about .8% and Japan did a little better than that but still closed red. In Germany, the ZEW sentiment survey was released. This is a survey of German analyst ("smart money") and their feeling on the future strength of the economy. The raw ZEW report is actually interesting. The number for Germany was within expectations but the analyst view for the all of Europe shows increasing weakness over last month's survey. The French CPI numbers came in lower than expected and this weakened the Euro at 2:45 am this morning adding to the tumble of the futures.

We have a slew of our own data out this morning:

We would expect the PPI to be a little "hot" because of oil which has since pulled back . A higher than expected number should be forgiven as far as the markets go, but it could drive the dollar to further strength. Assuming there are no large outliers in today's numbers and based on yesterdays strength we should see either a follow through day today or a NR7 consolidation day.

But we would have to continue to break the bonds that tie the market to the dollar. Today's price action will tell us a lot about this market. If data falls in line I am interested in buy this weakness in here.

Happy Trading today.

Hope to see you in the trading room

http://ttthedge.acrobat.com/traders

The Market Found Strength today in the 52 Week New Highs.. particularly the NYSE..

2009-12-14T21:08:00.000-05:00

All three indices today made both higher bars and turned their 5 day moving averages positive. This is a sign of building strength. The NYSE made a higher new 52-week-highs value today (311)then the previous new high from 6 days before (see how the magenta bar slopes up.. if we draw a bar on the NYSE index it would be sloping down) but the NYSE index did not make a new highs today. That is a bullish divergence and adds strength to the charts for the bulls case.

I think we can begin to build the case for the start of a thrust. My worrisome indicator is the Zweig which did not start from over bought as most thrusts do.

Weekly Post.. It a video!.. Happy Holidays

2009-12-12T20:56:00.001-05:00

Wanted to try again doing a video to go over the charts using different software this time.. Enjoy..

Check out our trading website at http://ttthedge.com or visit us starting Sunday night at http://ttthedge.acrobat.com/Traders

10 Day High - Low for NYSE, NAZ, RUT showing mixed signs..

2009-12-12T12:26:00.001-05:00

.. The NYSE improved its day to day strength on the 10 Day High - Low, but the NAZ and R2K weakened in here. This indicator for the markets now post a -4 (up from Thursday -6) due to the NYSE strength. Notice on the last Buy/Sell cycle that the NYSE flashed buy before the rest of the market, Monday would have to be a follow through day for the NYSE and it is also the beginning of OPEX week so we will definitely be watching this chart on Monday.

52 Week New Highs is neutral with a score of ..

2009-12-10T20:15:00.000-05:00

.. 0. Just like the 10 Day High - Low chart in the previous post, the 52 Week New Highs set higher bars than yesterday, but not strong enough to move the 5 day moving average back to the upward direction. The net score is therefore a 0. When added to the previous scores of 0 and +2 our overall score tonight is +2. Last night we were at -6, so that is a bullish improvement with momentum heading up.

There is much that can fail in here as the weakness in the RUT in particular today was disappointing as far as follow through strength.

40 DMA % Index.. Goes from +6 to +2.. slightly bullish..

2009-12-10T19:15:00.000-05:00

Despite the strength in the price action today there were some breadth issues to worry about. The poorer performance of the RUT and NAQ left our 40 DMA % Index indicators weaker on those two indices but the NYSE's price action keep the group still this side of the bull bear line.

Zweig... Same old.. day 28 of settling in neutral.

2009-12-10T18:42:00.001-05:00

Nothing to say here that hasn't been said over the last 28 days.. Hey isn't that a movie 28 Days?

Zweig.. 27 Days now and counting..

2009-12-09T18:30:00.000-05:00

.. it just languishes here.. there is no movement or break toward the upside or the downside. I did do some looking last night and found out that the indicator often spends a large amount of time in this neutral area. It appears that there is a higher probability of moving into oversold when breaking out than overbought. So there is a downward bias to this languishing.

52 Week new highs puts in a score of -6 today which..

2009-12-09T18:00:00.000-05:00

.. is bearish, along with the 10 Day High - Low chart which put in the same -6 score. Our 40 DMA % Index remains strong in here though with a +6 score adding together we get a -6 which keeps us in a bearish mood.

Our holdout 52 Week RUT high confirmed today what the other indices were telling us, there was no interest in bidding shares up to new highs. We would expect 3 to 5 more days of weakness in here based on this indicator.

Weakness in the 10Day High - Lows points to still more to come

2009-12-09T17:25:00.000-05:00

Despite today's bullish action into the close the New 10 Day High-Low shows waning momentum from the markets. The RUT remains the strongest in here. Nothing short of a gap-up and run will be able to keep the momentum from continuing to move down over the next 3 days. All three momentum indicators are down today as are the day to day bars so today we score a -6 on this panel, which is bearish.

For tomorrow look the NYSE for a tell of up or down..

2009-12-09T16:52:00.001-05:00

Our 40 DMA % Index chart has all three indicators still running is a bullish direction with their DMA's acting with and upward bias along with the indicators. The weakest indicator is the NYSE which did however, manage to put in a positive day so all three indicators moved more positive today and are above their 20 DMA's. That puts the score on this indicators to +6 which is bullish. But you will see two more charts tonight that are scoring -6 which is bearish so the downside is still better bet.

Zweig -> Sideways for 26 days now

2009-12-08T21:35:00.000-05:00

The Zweig is now 26 days since being either overbought or oversold. although not that unusual it is the longest since the March 9th rally began and is another indication that this market is changing.

52 Week High Indicators: EOD NYSE, NAQ move to negative, RUT stays Neutral...

2009-12-08T21:05:00.000-05:00

We are rounding the corner here on the way down. The RUT was the strength today although all three put in lower new highs. It would take a strong open tomorrow to pull these back up. Usually we would get a couple more up days in these cycles so a two day stutter here is not out of the question, but again it will take some world wide help overnight to turn the ship back around.. for now it looks like down..

10 Day High - Low .. all 3 are now off the buy and are heading to sell..

2009-12-08T20:30:00.000-05:00

The momentum is now officially gone in the 10 Day High-Low. This mornings opening pretty much took care of that. We should new drift lower before regaining upward momentum. This indicator however could use an extra day here. You can see in the middle of November where it skipped a beat for a couple of days before resuming some upward momentum.

Tomorrow's selling is key.

40 DMA % Index - end of day is neutral in here

2009-12-08T20:01:00.001-05:00

Our 40 DMA %'s did not cross over their 20 day moving average putting this signals into a score of 0 or neutral. Look how strong the RUT and NQ are compared to the NYSE which is currently correcting harder than the others (but it is at 58% of stocks over their 40 DMA compared with the NAQ and RUT whcih are 44.90 and 49.95 respectively.

40 DMA % Index - Mid Day - Stronger than I would have expected

2009-12-08T12:03:00.001-05:00

While the NYSE clearly shows weakness compared to yesterday, the NAZ and RUT are showing some surprising strength in there. The NYSE one minute ticks are currently in an uptrend, while the other breadth indicators have moved from bullish to bearish based on the weak opening.

The strength today is in the RUT while weakness is in the DOW which was in a need for a good correction.

The ES 1096 area is today's demarcation line.

Germany is deciding our direction today..

2009-12-08T08:20:00.001-05:00

Germany over the last few day has produced some fairly weak and disappointing economic numbers. It's month over month factory order numbers showed a decline of -2.4% and when charted shows a steady decline from the summer top.

This certainly sets-up worries of a second dip here and tell us that the economy in the Euro zone are perhaps not as strong as originally thought.

Last night, or for us east-coast Americans at 6:00 am NYSE time, the German industrial production month over month numbers came out confirming yesterday's weak factory orders. The expected number was already a weaker number with a predicted expansion of only 1% in factory production. The number came in not has an expansionary number but contraction, a cold -1.8%.

Germany and France were the first to declare to be out of the recession, now the question is are they falling back in or is this just a stutter during the recovery with America now pulling up the rear and we will all lift here soon? We need to watch our own numbers

One thing it does mean, no interest rates hikes in Europe yet and if America does continue its recovery it will do so with a stronger dollar. Stronger dollar equals lower oil, gold, stocks.. at least in the short term until the shackles of co-dependence are broken.

Zweig still hanging in Neutral Area..

2009-12-07T20:31:00.001-05:00

Something has to give here.. All we can do is scalp during the day for a few cents while we wait for either the bulls to take control or for the bears to dominate.

The other of my breadth indicators are setting up to really test this market tomorrow. With a strong open the Zweig might setup and go overbought.

40 DMA % Index - Getting stronger every day.. particularly the RUT..

2009-12-07T17:31:00.000-05:00

.. While today was a little sideways compared to Friday the direction is still clearly above it's moving average and heading into the strength, although a single bad day can dunk this baby below the water line in a hurry. We will watch intraday tomorrow. Unlike the 52 Week Highs and 10 Day High-Lows which put in mixed bullish signals, the 40 DMA % Index is all bull on all three indices (NYSE, NAQ RUT).

10 Day High - Low - Tomorrow will be prove it or lose it..

2009-12-07T17:00:00.002-05:00

The way the charts are setting up, today was weaker than Friday but still strong enough to maintain the momentum. Tomorrow however the data needs to be much stronger so we need to come out of the chute with new-highs-a-blazing.

There is no econ news out to help, maybe a merger? maybe Europe or Asia? This market needs a stepping stool in here to justify the bullishness in the underlying breadth. Where is the price follow-through? Perhaps a knock back down and reentrenchment is what is needed here. Stay tuned tomorrow in the room to keep track intraday.

52 Week New Highs - Closing Status

2009-12-07T16:11:00.001-05:00

Our new highs, all three made their hurdle bars to keep the momentum pointing to long but all three also failed to extend a higher bar than the previous day. That puts the long on notice and tomorrow's hurdle bars are quite high so we may be reaching a top here of the New High momentum.

I will post the hurdle numbers tomorrow morning for the first 30 minute goal.

New 52 Week Highs Targets for the Day

2009-12-07T09:13:00.001-05:00

The New 52 week highs (NYSE, NAZ, RUT) all closed on Friday with higher bars. Today's target numbers to keep the upward momentum are fairly low, tomorrow begins the tough momentum proving days. For the NYSE I have a end-of-day (EOD) target of 61, that means about 30 in the first half hour. NQ is 48 for EOD or around 24 in the first hour and the RUT EOD target is 18 or about 9 in the first hour). I will try and tweet when these are passed since RedsData feed on twitter is down.

Or you can trade live with out at http://bit.ly/TradingRoom

State of the Ticks Last Friday.. looking for follow through

2009-12-07T09:04:00.001-05:00

We closed Friday with a slight bias and momentum building on the buy side. This mornings weaker open will be a test to see if those late Friday buyers were correct or not. Watch the ticks today to see how they set up.

Natural Gas.. The last great American bargain

2009-12-05T17:29:00.001-05:00

I am struck by how low the price of natural gas is. The price is a victim of oversupply with under-demand and is a lesson about the economics of commodities. Here is a chart to show you the NG contract price action over over the last 10 years. The 2005 peak was the result of the hurricane Katrina year where natural gas production was shut down and we quickly learned that there was very little in the way of natural gas workaround and distribution. The peak in 2008 was sympathy for the oil peak.

Here is the same time span for the CL futures or oil.

Excepting for the peak in the 05 pricing in natural gas, they mirror each other pretty closely. Currently natural gas is underperforming oil as it is hit by a double whammy of over-supply and decreasing demand.

The 05 and 08 peaks increased the pressure for discovery and infrastructure improvements for the production of natural gas. The 05 peak was a supply issue caused by the “too many eggs in one basket” problem. Too much of our natural gas infrastructure was located in the hurricane target zone. Once shut down after a record breaking hurricane season in there were no real contingency plans, hence a shortage that could not be filled no matter the spot price of the product. Unlike oil, which has a gigantic international distribution system via tankers, natural gas which is mostly home grown and distributed via pipelines. There are very few LNG tanker or ports setup to accept them. The shortfall for oil after Hurricane Katrina was quickly supplied with tankers turned for quick profits toward the fill spouts at America’s ports.

The solution for natural gas post Katrina was to beef up supply and re-distribute infrastructure weak points. The ‘08 spike produced even more investment into natural gas exploration and distribution.

Then the recession and a plunge in demand while supply was going up and hence record low prices for natural gas.

Natural gas is a local product and is not bid up as a result of the following dollar. We can not export natural gas to China or India, it is consumed where it is produced, right here in North America.

We now have what is currently a BTU arbitrage.

The purpose of energy products is to exploit their BTU content (energy). We do that by combusting the product to produce steam for electricity, heat for our houses or to drive the engines in our cars, trucks, planes and trains. So which is the most $ efficient. (this is not a green, global warming article.. it is a compassion of fossil fuel choices).

Looking at the current price and the BTU content of each and comparing on a BTU to BTU basis produces the following chart:

Chart of BTU per dollar comparison of OIL vs.. Natural Gas vs.. Coal vs.. Electricity.

(pricing as of December 4th, 2009)

Using Oil as the norm for the comparison it turns out that natural gas, when compared to oil on a BTU to BTU basis, is almost 3 times cheaper. Coal (a little impracticable for cars) is 6 times cheaper! Even electricity is cheaper than oil. (The cost of electricity is averaged across hydro, nuclear, natural gas, coal.. very little oil is used in the production of electricity).

If you want to profit from this arbitrage, switch your house over to natural gas if you have the option and convert your cars to natural gas. Our cities are already doing this for their public transportation. Switching to natural gas has the added benefit of being cleaner for the environment (there is very little sulfur and other bad stuff in natural gas) and best of it is American made (along with Canada).

Hint: Use the NG contract as a tell on the American economy as the recovery strengthens so should the demand and the price should start to rise.

-RLT

How does the DOW perform after the unemployment peak

2009-12-05T11:40:00.001-05:00

I did some research this Saturday morning on how the DOW performs after we hit an unemployment peak. This research assumes that November was the unemployment peak, which it certainly may not have been, we will not know for a few months. (It looks to me that 3 months will give us a pretty good idea). Friday’s data was pretty good with previous job loss numbers revised down, work week up and temp employment up.

I had written a piece a few weeks back about called “8 Months = Max time between Market Bottom and Improving Unemployment” in which I stated that 8 months was about the maximum amount of time that a bull run out of a recession can extend without evidence that unemployment was improving. Friday’s number puts us on that time table and if they prove next month to be improved yet again should continue this bull market.

So now, assuming that we have hit peak what is the performance on average from here out? I did this little table extracting by hand data from the charts:

Those are some pretty nice returns. The DOW targets on the bottom are forecasts based on the standard deviations of the data and give a range of high – low and average for the DOW from unemployment peak to three, six and one year out.

So the question is.. are we at the peak? I hope so for American workers but only time will tell.

-RLT

52 Week highs keep piling in..

2009-12-04T17:10:00.000-05:00

..our 52 week highs have put in an impressive 5 day run here, wish the price action was following. For this market, these runs have reached their peak at 7 or 8 bars in so we should be close here to turning for a correction...

Zweig is capturing this market perfectly..

2009-12-04T16:41:00.000-05:00

.. it is just chopping around in this neutral zone as confused as the rest of us on whether or not this market is going up or down. Unable to get into oversold or overbought. I am anxious to see how this resolves as this is the only indicator of the ones I closely follow that is not screaming BULL! My weighting for this indicator might change as the market resolves its current in-decision.

10 Day Hi-Lo ..EOD.. The NAZ and RUT showed afternoon improvement but..

2009-12-04T16:40:00.000-05:00

.. the NYSE is now 3 days flat. It was still enough to improve the 5 DMA giving us a + 5 on the charts.

40 DMA % Index .. End of day closing had a little setback ...

2009-12-04T16:10:00.001-05:00

..during the mid-day report but still ended on the bull side of the now clearly up-sloping 20DMA. It would be nice to put in some pull-away type performances here.

The strength was the NAZ and RUT which show nice recoveries from yesterday. The NYSE is a little less aggressive off the 20 DMA.

40 DMA % Index - Mid Day.. Strengthening over y'day and..

2009-12-04T14:10:00.000-05:00

... the moving average is moving up. The underlying market continues to improve but these weak hands that are not so sure sell off every time we make that new hand. Numerous Nellie's in the market one of these time we won't sell off and we can continue on a smoother upward move..

10 Day Hi-Lo - Mid Day still hanging strong despite..

2009-12-04T13:40:00.001-05:00

.. today's weak toping action. Someday we will hold our highs or sell off. The market is teaching us to sell new highs and buy the close over the last few days. The early morning bullish pressure is what sets up the strength of my indicators. The New Highs spike, the 10 day high-low spikes setting up bullish looking charts, then the A/D lines deteriorate leaving other indicators like the Zweig looking weak. This will work our soon..

40 DMA % Index Still on the bull-side of the line but..

2009-12-03T20:23:00.001-05:00

barely after that afternoon bull stampede where even all the bulls evidently wanted out of the markets. This index on my mid-day post was happy as good be.. and then Tom, my trading partner in our trading room around 3:00 pm said something like "I think the correction has begun, going short".. and it was like someone pulled the drain as I watched the ES meltdown.

Tom has been calling for a sell since 2pm on Dec 1st. After a little draw-down and sweating out what was some mounting strength he now been able to cash in on his short call as the markets have close over 1% lower from that call and the momentum is still heading in his favor.

Looking at the mid day post to this one you can see what that lat day sell-off did. It left us barely above our moving average and certainly does not five us conviction of a momentum buy here.

Tomorrow hedges on the Jobs Report and the reaction to it. Can we stay in bull area or do we fall off the edge here?

Zweig.. Fails to confirm thrust.. all hope lost?

2009-12-03T16:59:00.001-05:00

We have been watching all week as the 52 week highs indictors were saying "buy" and the 10 day high-low indicator was confirming underlying strength in addition the Russell was starting to gain ground and the 40% DMA index climbed back up out of the bear zone things were looking pretty bullish. We did get at 2.5% rally for the nimble but two days in a row of no follow through price action and today's late day sell-off have kept that pesty Zweig in this neutral zone of noise. The missing ingredient (besides the financials) has been the failure of the A/D lines to build up any momentum.

A breakout from here will be difficult. We did not loose all the underlying breadth however so there will be most likely some push back from the bulls unless everyone wants to get out at the same time.

The jobless numbers tomorrow seem to be pre-doomed. A good number (lower %) will strengthen the dollar and we know what that does to the market. A weaker number (high % unemployment) will weaken the recovery story putting the forecasted earnings in question.

I will be playing it close and quick until an obvious trend re-develops in the markets in this sideways choppy market.

52 Week New Highs - NYSE has already passed y'day..

2009-12-03T14:15:00.000-05:00

The NYSE continues to put on higher new highs.. the NAZ and RUT have to put in a closing sprint here to put in the same strength here.

10 Day High - Low Mid-day - Continues to confirm the long side..

2009-12-03T13:50:00.001-05:00

but it would be better if we could get today's bars up and over the previous day's.. we will watch for a potential rally into the afternoon, or some underneath broadening strength in the A/D lines to see if we can continue the bullish upside sentiment.

40 DMA % Index continues to improve in here..

2009-12-03T13:33:00.001-05:00

There continues to be improvement in the number of stocks above their 40 DMA. Earlier this am the NYSE (Top orange) had a lower value than yesterday, that has improved during lunch an now all are in the improvement camp.

Mid-Day Zweig Update - 12/3 - Where's the beef?

2009-12-03T11:35:00.001-05:00

Our rally continues but one of the concerning breadth indicators the Zweig continues to fail in it confirmation. The A/D performance is just been choppy failing to send the Zweig into its overbought status, a sign of missing market breadth. We haven't had one of those all out days here with a closing 9:1 type A/D line that show real bullish sentiment. It is apparent in the price action too as each new high is followed by a period of consolidation instead of follow through.

We may break out here, in which case the A/D lines should improve and get our overbought Zweig or we could just exhaust. Either case the A/D lines need to show improvement from here on out to make me a believer in better things to come (1121).

52 Week New Highs for 12/2 - All three firing buy signals.

2009-12-02T17:05:00.000-05:00

This usually means a four day thrust is to occur here. It is unusual to have it fire when we are making new market highs.. Did me make a shallow correction in here? We have a positive tick, the Zweig closed strong.. There is underlying breadth momentum here.. news awaits tomorrow however so form you opinions after the news and reaction.

NYSE Ticks close in an uptrend..

2009-12-02T16:34:00.001-05:00

The tick correction I was looking for in the AM finished at around 12:15 and then began a slow and steady climb for the rest of the afternoon. That is bullish for tomorrows open but there is much news overnight and in the morning and news a l w a y s trumps indicators, just know that the underling tick trend is bullish.

52 Week New Highs - All 3 are showing buy

2009-12-02T15:00:00.000-05:00

Even though this a day long accumulative indicator, already mid-day Wednesday they have all made enough new highs to issue a buy signal. All three (NYSE, NAZ, RUT in that order top to bottom) are now on their 4th day of higher highs. Again caution here.. we are at market highs and very unusual to issue buys with out a decent correction.

10 day High - Low - Buy signals across the board..

2009-12-02T14:35:00.000-05:00

It is unusual to get buy signals at new highs.. I need to do some more research but the indicators based on the last 4 days of breadth strength are signaling more upside here.

40 % DMA Index - The smile is coming back..

2009-12-02T13:57:00.000-05:00

All three indices (the NYSE, NASDAQ and RUT2000) showing improvement over the last three days and pulling there moving averages back up into the bull's direction.

We are oscillating here so a bad day could reverse all the gain.

Expecting morning weakness as the Ticks need to sell off a little here

2009-12-02T08:12:00.001-05:00

Much news this AM so hard to call before the news and reaction arrives but I would expect the current down trend in the ticks to finish this AM. We would have to see if there is strength to rally this afternoon after I run my mid-day charts.

Any gap up I will most likely sell on the first sign of weakness.

10 Day H-L - Gave us a good 1 day Buy Signal.. Now it issues a sell

2009-12-01T22:30:00.000-05:00

I published a mid-day post on this indicator along with my feelings about the quality of the data and the increase of noise. It might be worth the read if you didn't already read it.

It is interesting how it issued a good one day buy signal and now it is back to red. Both the 2k and the SP500 are close to issuing a buy. Tomorrow I am expecting a weaker open based on the trend setup in the NYSE ticks today. In order to push this indicator up into the buy zone, assuming a weaker open, the day will have to build up strength.

If we do get any morning strength I will be anxious for the mid-day running of this indicator.

Watch my tweets or better yet join me in the trading room for live update. http://ttthedge.com

40 % DMA index - Turns more positive crossing into the buy area..

2009-12-01T21:30:00.001-05:00

We are just chopping along in here as this index is just crossing back and forth above and below the trigger moving averages. We are waiting for a trend to setup like on a lot of the other breadth indicators.

NYSE 52 Week New highs building strength - tomorrow hurdle = 92

2009-12-01T21:30:00.000-05:00

The NYSE 52 week new highs hurdled their goal of 192 today to maintain yesterday's buy signal. Tomorrow's hurdle is a lesser 92. I am expecting a weaker open tomorrow as the NYSE ticks are in a downtrend that should continue under they dip below their overbought area.

92 is not a forgone conclusion depending on tomorrow's weakness. We will watch the futures and see if China and Japan can continue their rallies and push the Euro zone along too.

Zweig Daily - Can we break the cycle and do 3 in a row?

2009-12-01T20:53:00.001-05:00

For the last 10 days we have just been drifting around here in the neutral zone on the Zweig, unable to sell off and unable to rally.

We have put two days of improving Zweig values together. We have not been able to make the 3 in a row for the past 10 days. So we are scheduled to go down, an upward day would break the pattern and convince us that some of the other breadth indicators that have 'drifted' into the buy zone are legitimate.

10 Day High - Low Mid-Day - Messy

2009-12-01T14:11:00.001-05:00

We talked in the chat room today about how difficult it is to "see" this market. This chart shows in a picture what I mean.

Reading charts, at least for an engineer, is attempting to extract some-type of signal from noise. You can see easily on the SP500010DayH-L chart pane (the bottom pane) how from Oct 15th until the 27th the bars made a fairly consistent lower-low pattern and then reversed that pattern going up to a high around the 9th of November. That is an easy signal to extract. If you bought when the moving average turned up you earned a good return.

Now look at how the bars have set up since the 16th, they are all over the place.. ie.. there is not much of a signal. So we need to be very skeptical about any information we derive from a chart like this.

I often speak in terms of driving when talking to others about the trading the stock market and to my engineering friends about why it is very difficult (impossible?) to design a mechanical trading system that works in all conditions.

Some days we are on that open road and the car is in overdrive and all we have to do is keep it on the road straight. Most days however we are on a winding curvy road not sure what is around the corner and we can only trade what is right in front of us.

Since I am unable to see 3 days ahead because of the noise in the breadth data (fog) I am forced to scalp and trade the short-term indicators like the ticks in order to make my living.

So I am sitting in cash ducking in and out of the markets avoiding all the other drivers that are lost in the fog too.

Driving a car is a very complex task and it takes lots of years to internalize all the information that is coming at you. The weather, the road surface, the surrounding drivers, the time of day, the type of car you are driving... and that is why there are no computers driving cars yet. The markets are a great parallel and that is why it is very difficult (impossible?) to get a computer to mechanically trade for you. To be a successful trader you need to recognize the slow down signs ahead.

Don't forget to dim your high beams and turn on your fog lights.

See you in the markets (hopefully)

- RLT

Tulipmania - Tulip bulb bubble and lessons for a modern time

2009-12-01T09:03:00.000-05:00

It all began in 1593 when a Dutch importer Conrad Guestner carried back from Constantinople the first tulip bulb from what is now present day Turkey. The exotic flowers became an instant hit and within a few years has established themselves as a status symbol amongst the Dutch elite. The desire and need to have tulip bulbs eventually spread to neighboring Germany as well.

Cross pollination and genetic manipulation amongst the growing number of Dutch tulip bulb farmers began creating rare strains that became competitive prizes, much like fine wines are today. At one point a harmless virus attacked the tulip bulbs and created new and even more pleasing mutations. These "fiery" mutated tulips were harder to grow and posses making them the absolute "must have" variants for the exclusive crowd.

Eventually the desire for tulip bulbs work its way into the middle class and now a true high volume commodity market for tulip bulbs existed but the supply was still under pacing the demand and prices were still soaring. Speculators joined in and began a futures market much like today modern futures market allowing buyer and seller to secure bulbs at future dates. This speculation increased the pricing still further more as people began selling their land in order to take advantage of price escalation in the forming tulip bubble.

In a single month in the midst of the bubble the price of bulbs grew 2000%. That was a return that no a lot of people could resist. At its height some bulbs were worth more than a house. Most of the bulbs being traded now were never going to be planted but simply represented a potential worth.

Like all bubbles the tulip bubble burst and many were left desolate with just a bag full of tulips. The lessons from the tulip bubble are repeated over and over again in financial markets. The study of the tulipmania should be required for all consumers so that they can learn to relate and recognize the many bubbles they see during their lifetime. Whether they be small bubbles like the Tickle Me Elmo Christmas bubble or the great housing bubble of 2000. They always end badly.

Charles Mackay wrote a complete account of the tulip bulb bubble "Tulipmania - Desciption of the Tulip Bulb Bubble". Although written in the mid 1800's it is a great read today. Read, digest and learn the psychology around bubbles.

NYSE 52 Week New high closed with a Buy Signal yesterday.. Needs to hold today

2009-12-01T08:45:00.001-05:00

If we can hold this morning's gap, we should since there is no econ news before 10am this morning, the 52 week new highs indicator should spike right at the open. All those stocks that are close will be pushed up into new yearly territory. Today's hurdle bars, the bar being replaced in the moving average, are all quite high today for each index. The NYSE moving average moved yesterday from 109 to 110. That is a small improvement, but any improvement is a potential buy signal. The 10 Day High - Low on the SPx also issued a buy signal at the close yesterday.

Based on the indicators closings I took a small SPY position just to honor the indicators. It was not big enough to totally hedge my TZA position I was also holding to honor the RUT indicator which is still on the sell side.

Today's gap will most likely consolidate all the indicators into the buy zone. It is hard to believe that we are going to get a thrust up form here but that looks like what might be setting up. The 52 week new highs will be a good tell today.

The NYSE's hurdle bar today is 192. We must close today with more than 192 NYSE issues making new 52 week highs in order to strengthen and confirm the NYSE buy signal. Statistically that means we need to be between 100 and 120 by 10am this morning. Watch in the room or follow my data tweets http://twitter.com/redsdata for a 30 minute update on the new highs today.

Or better yet, join us live in our trading room at http://ttthedge.com

- RLT

Mid-Day 10 day High - Lows - SPx flashing a Buy!

2009-11-30T13:07:00.001-05:00

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.

Mid-day 11/30 40% DMA Index

2009-11-30T12:59:00.001-05:00

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

Weekly Update

2009-11-29T17:21:00.001-05:00

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.

NYSE 52 Week New Highs – Almost Neutral from a sell?!

2009-11-28T16:18:00.001-05:00

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 A/D for the week

2009-11-28T16:15:00.000-05:00

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.

10 Day High – Low

2009-11-28T16:11:00.000-05:00

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.

40 DMA % Index – Turning a smile into a frown

2009-11-28T15:30:00.000-05:00

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..

Weekend Charts coming out soon one at a time today..

2009-11-28T14:26:00.002-05:00

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

Still Correcting.. NAZ 52 Week New Highs fired a buy signal today

2009-11-25T21:35:00.001-05:00

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.

NYSE 52 Week New Highs

2009-11-25T13:31:00.001-05:00

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.

10 Day High – Low still in Neutral to Sell

2009-11-25T13:20:00.001-05:00

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.

Why I am starting to get Bullish in here.. 40 DMA % Index

2009-11-25T13:13:00.001-05:00

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.

Tonight’s Breadth Indicators remain Bearish to Neutral

2009-11-24T22:27:00.001-05:00

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.

40 DMA % Index

2009-11-24T13:40:00.000-05:00

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.

10 DAY high – Low midday (11/24/2009)

2009-11-24T13:37:00.001-05:00

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

Zweig mid-day update (11/24/2009)

2009-11-24T13:36:00.001-05:00

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.

10 Day High – Low % – 11/23/2009

2009-11-23T19:48:00.000-05:00

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.

40 DMA % Index (11/23/2009)

2009-11-23T18:43:00.000-05:00

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.

ZWEIG – 11/23/2009

2009-11-23T17:37:00.000-05:00

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.

NYSE 52 Week New High – 11/23/09

2009-11-23T16:32:00.001-05:00

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.

10 Day High - Low

2009-11-22T20:28:00.000-05:00

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.

40 DMA % Index

2009-11-22T19:14:00.000-05:00

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.

Zweig

2009-11-22T17:41:00.000-05:00

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.

NYSE 52 Week New Highs

2009-11-22T16:29:00.001-05:00

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.

Soft words in real data – How to decode market information $$

2009-11-22T09:37:00.001-05:00

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

Animated Unemployment – Sad but amazing..

2009-11-21T17:47:00.001-05:00

Click on image to go to website to play..

42 Days since a New $RUT high.. is it over?

2009-11-21T17:25:00.001-05:00

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

8 Months = Max time between Market Bottom and improving Unemployment

2009-11-21T11:52:00.001-05:00

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.

Unemployment Rate Of Change. Scary.

2009-11-21T10:53:00.001-05:00

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]