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Moving Averages: Month-End Update

Courtesy of Doug Short.

Valid until the market close on October 31, 2014

The S&P 500 closed September with a monthly loss of 1.55%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling “Invested”.

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I’ve also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:

Backtesting Moving Averages

Monthly Close Signals Over the past few years I’ve used Excel to track the performance of various moving-average timing strategies. But now I use the backtesting tools available on the ETFReplay.com website. Anyone who is interested in market timing with ETFs should have a look at this website. Here are the two tools I most frequently use:

Background on Moving Averages

Buying and selling based on a moving average of monthly closes can be an effective strategy for managing the risk of severe loss from major bear markets. In essence, when the monthly close of the index is above the moving average value, you hold the index. When the index closes below, you move to cash. The disadvantage is that it never gets you out at the top or back in at the bottom. Also, it can produce the occasional whipsaw (short-term buy or sell signal), such as we’ve occasionally experienced over the past year.

Nevertheless, a chart of the S&P 500 monthly closes since 1995 shows that a 10- or 12-month simple moving average (SMA) strategy would have insured participation in most of the upside price movement while dramatically reducing losses.

The 10-month exponential moving average (EMA) is a slight variant on the simple moving average. This version mathematically increases the weighting of newer data in the 10-month sequence. Since 1995 it has produced fewer whipsaws than the equivalent simple moving average, although it was a month slower to signal a sell after these two market tops.

A look back at the 10-…
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S&P 500 Snapshot: Down 1.55% for September, But Up 0.62% for Q3

Courtesy of Doug Short.

The S&P 500 ended the third quarter with a day of fairly average price volatility. Today’s 0.82% intraday range from its 0.37% high to its -0.45% low is at the 55th percentile of the 188 market days in 2014. The loss for the day was -0.28%, giving us a -1.55% decline for the month, but the quarter ended with a modest gain of 0.62%.

The yield on the 10-year Note closed at 2.52%, up 2 bps from yesterday’s close and up 17 bps from the August close.

Here is a daily chart of the index. Thirteen of the 21 market days in September were declines, but the index is up 6.70% year-to-date.

On the monthly chart we can see that the price remains above its 10-month moving average.

A Perspective on Drawdowns

The chart below incorporates a percent-off-high calculation to illustrate the drawdowns greater than 5% since the trough in 2009.

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For a longer-term perspective, here is a pair of charts based on daily closes starting with the all-time high prior to the Great Recession.

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Click to View
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Small Caps take the brunt of selling

Courtesy of Declan.

The aversion to risk continued with Small Caps edging a break below the July swing low on a loss of nearly 1.5%. However, the larger trading range is intact until 1,090 is lost. The 200-day MA is also nearby to lend support. As for today’s action, more selling is favored for tomorrow, although action in other indices isn’t pointing so bearish.


The S&P finished with a more neutral candlestick, although it again failed to recover 1,987 and the 50-day MA. However, relative performance against the Russell 2000 took another big step higher.

The Nasdaq experienced extensive distribution selling, but it hasn’t yet closed below 4,485. However, it did edge a close below 4,498. If the index is able to rally above the 50-day MA tomorrow it might offer another long opportunity (using the lows of a ‘bear trap’ as a stop).

The semiconductor index ended with an inside day and a chance for a step down move towards the marked convergence bounce zone.

For tomorrow, bears probably have an edge, particularly for the Russell 2000. It has been a long time since any index has ventured to, or below, its 200-day MA; but the Russell 2000 looks like it will be the index to do so (in the coming weeks).

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





"Deflationary" Ball Game?

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Well October is almost here and it’s time for the baseball post season to start today. Speaking of baseball, is a “New Deflationary Ball Game” starting in a variety of assets?

This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.

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The U.S. Dollar (upper left) is pushing above a 9-year resistance line recently. At the same time the TR commodity index, Gold, & Silver are each breaking a support line that has been in place for over a decade. Crude is attempting to break a 5-year support line at this time.

Are we seeing the beginning of a whole new price game for these key global assets?

It is still early in this process. Should the US$ keep pushing higher, these other assets could find themselves a good percentage below current prices.

I have shared for the past two years that Silvers downside target that I am interested in comes into play around the $15 zone, which is fast approaching.

Kimble Charting Solutions
For information, send an email to services@kimblechartingsolutions.com.





Consumer Confidence Drops

Courtesy of Doug Short.

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through September 18. The headline number of 86.0 was a surprising decline over the revised August final reading of 93.4, an upward revision from 92.4. Today’s number was well below the Investing.com forecast of 92.5. The current level is a four-month-low.

Here is an excerpt from the Conference Board press release.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in September after four consecutive months of improvement. A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers’ assessment of present-day conditions. Looking ahead, consumers were less confident about the short-term outlook for the economy and labor market, and somewhat mixed regarding their future earnings potential. All told, consumers expect economic growth to ease in the months ahead.”

Consumers assessed current conditions less favorably in September compared to a month ago. Their view of business conditions was virtually unchanged: those saying conditions are “good” fell minutely, from 23.5 to 23.4 percent, while those claiming business conditions are “bad” held constant at 21.3 percent. Consumers’ appraisal of the job market declined more appreciably, with the proportion stating jobs are “plentiful” falling from 17.6 percent to 15.1 percent. Those claiming jobs are “hard to get” was barely changed, at 30.1 percent versus 30.0 percent in August.

Consumers’ optimism about the short-term outlook declined considerably in September. The percentage of consumers expecting business conditions to improve over the next six months fell from 20.8 percent to 18.6 percent, while those expecting business conditions to worsen rose from 9.9 percent to 12.0 percent. Consumers’ outlook for the labor market likewise took a downturn. Those anticipating more jobs in the months ahead fell from 17.8 percent to 15.2 percent, while those anticipating fewer jobs rose from 15.2 percent to 17.8 percent. The proportion of consumers expecting growth in their incomes rose in September to 16.8 percent, compared to 15.5 percent in August. However, the proportion

Putting the Latest Number in Context

Let’s take a step back and put Lynn Franco’s interpretation in a larger perspective. The…
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Exclusive Today! Richard Bernstein Live on Playing the Bond Market

Courtesy of Doug Short.

Members of APViewpoint can attend today’s upcoming live webinar/Q&A session with Richard Bernstein. Not a member of this free, secure, online advisor-only community from Advisor Perspectives? Sign up today!


Beyond Smart Beta: Global Opportunities in Equities and Bonds

Tuesday, September 30, 2014
4:15pm EST

Smart beta is a hot topic among advisors these days, but smarter beta management is far more important, according to Richard Bernstein Advisors CEO and former Merrill Lynch Chief Investment Strategist Rich Bernstein. In this webinar, he’ll present his views of the global equity and fixed income markets, and offer insights into the importance of beta management when constructing portfolios that seek to help investors meet longer term goals with a focus on risk management.


This event will offer plenty of time for Q&A. If you’re an APViewpoint member, sign up by logging in to APViewpoint and clicking on “APVIEWPOINT EVENTS” on the home page.

If you’re not an APViewpoint member, you can attend the event by joining APViewpoint today.

Note from dshort: Highly recommended!





Friday’s Bullish Picture Holds Despite Mild Selling

Courtesy of Declan.

Friday’s buying volume was disappointing, but indices held on in the face of today’s distribution. Today’s lows mark the new support level for stops, although moving averages are also playing as a broad brush of support.

The S&P finished with a doji on its 50-day MA.  Technicals remain mixed with a bearish slant in MACD, On-Balance-Volume, and ADX, but with momentum on the bullish side.  The index is tied below 1,987 resistance, but is positioned for a challenge of this level tomorrow.

The Nasdaq opened at the ‘bear trap’, but was able to rally to keep shorts on the wrong side of the trade (along with a close above 50-day MA).

The Russell 2000 trades near August swing low levels. It will soon find itself up against minor channel resistance established in September, although resistance at converged moving averages would seem a more natural stumbling block for an advance.

Meanwhile, the Dow played to a squeeze between 17,121 and the 50-day MA: intraday traders can have fun between these levels, but longer term players would be best to wait for a comprehensive break of one.

The one index to break the bearish action of the day was the Semiconductor Index. It closed with a bullish engulfing pattern (on a previous bullish day). With the 50-day MA nearby to offer support – which has managed to do twice so far in September – it could soon be mounting a challenge on the recent ‘bull trap’.

Bears were unable to capitalize on morning weakness, which suggests bulls are well placed to add some more points on the board.  ’Bull Traps’ are the real challenge, but it will take a few more days of buying before indices get there.

—-

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is a preview of the monthly moving averages I track after the close of the last business day of the month. All three S&P 500 strategies are now signaling “invested” — unchanged from last month. Two of the five of the Ivy Portfolio ETFs, the PowerShares DB Commodity Index Tracking (DBC and the Vanguard FTSE All-World ex-US ETF (VEU), are signal cash “cash”, with VEU as this month’s addition.

If a position is less than 2% from a signal, it is highlighted in yellow.


Month-End Preview Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, for followers of a moving average strategy, the general practice is to make buy/sell decisions on the signals for each specific investment, not based on a broad index. Even if you’re investing in a fund that tracks the S&P 500 (e.g., Vanguard’s VFINX or the SPY ETF) the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment, which is not factored into the index closes.

The Ivy Portfolio

The second of the three adjacent tables previews the 10-month SMA timing signals for the five asset classes highlighted in The Ivy Portfolio.

I’ve also included (third table) the 12-month SMA timing signals for the Ivy ETFs in response to the many requests I’ve received to include this slightly longer timeframe.


After the end-of-month market close, I’ll update the monthly moving average feature with charts to illustrate.

The bottom line, as I’ve pointed out earlier, is that these moving-average signals have a good track record for long-term gains while avoiding major losses. They’re not fool-proof, but they essentially dodged the 2007-2009 bear and have captured significant gains since the initial buy signals after the March 2009 low.





Weekly Gasoline Price Update: Unchanged

Courtesy of Doug Short.

It’s time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny, Regular and Premium were both unchanged. Regular and Premium are both up 16 cents from their interim lows during the second week of last November.

According to GasBuddy.com, only one state (Hawaii) has Regular above $4.00 per gallon, unchanged from last week, and no states are averaging above $3.90. South Carolina has the cheapest Regular at $3.08.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here’s a visual answer.

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The next chart is a weekly chart overlay of West Texas Intermediate Crude, Brent Crude and unleaded gasoline end-of-day spot prices (GASO). WTIC closed today at 94.32, up from 90.67 this time last week.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

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The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

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Click for a larger image

Here are some additional commentaries related to gasoline prices:





Friday’s Bullish Picture Holds Despite Mild Selling

Courtesy of Declan.

Friday’s buying volume was disappointing, but indices held on in the face of today’s distribution. Today’s lows mark the new support level for stops, although moving averages are also playing as a broad brush of support.

The S&P finished with a doji on its 50-day MA.  Technicals remain mixed with a bearish slant in MACD, On-Balance-Volume, and ADX, but with momentum on the bullish side.  The index is tied below 1,987 resistance, but is positioned for a challenge of this level tomorrow.

The Nasdaq opened at the ‘bear trap’, but was able to rally to keep shorts on the wrong side of the trade (along with a close above 50-day MA).

The Russell 2000 trades near August swing low levels. It will soon find itself up against minor channel resistance established in September, although resistance at converged moving averages would seem a more natural stumbling block for an advance.

Meanwhile, the Dow played to a squeeze between 17,121 and the 50-day MA: intraday traders can have fun between these levels, but longer term players would be best to wait for a comprehensive break of one.

The one index to break the bearish action of the day was the Semiconductor Index. It closed with a bullish engulfing pattern (on a previous bullish day). With the 50-day MA nearby to offer support, which has managed to do twice so far in September, it could soon be mounting a challenge on the recent ‘bull trap’.

Bears were unable to capitalize on morning weakness, which suggests bulls are well placed to add some more points on the board.  ’Bull Traps’ are the real challenge, but it will take a few more days of buying before indices get there.

—-

Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more.





 

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Zero Hedge

Is the U.S. Secretly Egging On Hong Kong Protesters?

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

The mass demonstrations in Hong Kong are dramatic, indeed. And given that Hong Kong has long enjoyed a more liberal existence under British rule, protests against a more authoritarian Chinese government (at least ...



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Phil's Favorites

Here's The Best Explanation We've Seen Yet For Why Oil Crashed

Here's The Best Explanation We've Seen Yet For Why Oil Crashed

Courtesy of 

Oil crashed today, with crude oil prices dropping from around $95 to $91 in a matter of minutes.

There were various theories for why, but the most compelling one is that there seems to be a lot more production than estimated.

Morgan Stanley sent out a note this evening from analyst Adam Longson that contains this table of production numbers/estimates for key producers. The key thing is that production is on the rise almost everywhere. Check out Libya, where output for the month surged to its highest level of the year. Everyone was freaking out a...



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Chart School

Moving Averages: Month-End Update

Courtesy of Doug Short.

Valid until the market close on October 31, 2014

The S&P 500 closed September with a monthly loss of 1.55%. All three S&P 500 MAs and three of the five the Ivy Portfolio ETF MAs are signaling "Invested".

The Ivy Portfolio

The table below shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. I've also included a table of 12-month SMAs for the same ETFs for this popular alternative strategy.

For a facinating analysis of the Ivy Portfolio strategy, see this article by Adam Butler, Mike Philbrick and Rodrigo Gordillo:



more from Chart School

All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Option Review

VIX Call Spreads Trade

The CBOE Vix Index topped 17.0 and the highest level since early-August on Monday morning amid declines in U.S. equities to start the trading week. The volatility index is off its earlier highs to trade 5.0% higher on the session at 15.65 as of 11:30 am ET. Options volume on the VIX is hovering near 360,000 contracts, or just more than 50% of the average daily reading of around 660,000 contracts. Calls are far more active than put options, as evidenced by the call/put ratio up above 4.2 in morning trading, perhaps as some traders position for volatility to stick around.

Large call spreads traded on the VIX today caught our attention as one big optio...



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Sabrient

Sector Detector: Stocks fight off predictable weakness, but expect more downside

Courtesy of Sabrient Systems and Gradient Analytics

Yes, the market showed significant weakness last week for the first time in quite a while. In fact, the Dow Jones Industrial Average moved triple digits each day. But it was all quite predictable, as I suggested in last week's article, and certainly nothing to worry about. Now the market appears to be poised for a modest technical rebound, and longer term, U.S. equities should be in good shape for a year-end rally. However, I still believe more downside is in order before any new highs are challenged. Moreover, market breadth is important for a sustained bull run, so the challenge for investors will be to put together broader bullish conviction, including the small caps.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, re...



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OpTrader

Swing trading portfolio - week of September 29th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Market Shadows

Ebola vs. Us

Ebola vs. Us

By Ilene 

Ebola is spreading too quickly for Ebola-vaccine makers to conduct typical studies of safety and efficacy on experimental vaccines. Instead, vaccines will be tested for basic safety, but then deployed with protocols devised now in order to test for efficacy essentially on the field. Testing has to be expedited because the situation in West Africa gets worse every day while there are no approved vaccines or other treatments.

The chart below is from a paper in the New England Journal of Medicine showing estimates of the virus's trajectory projecting out to November 1, 2014. If current trends continue...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

The latest issue of Stock World Weekly is now available. Please sign in with your PSW user name and password. Or simply take a free trial to try out our weekly newsletter. 

...

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Promotions

Last Chance! See The 'Google-Like' Trading Algorithm 'Live' TODAY

Traders and Investors,

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Digital Currencies

Making Sense of Bitcoin

Making Sense of Bitcoin

By James Black at International Man

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes "money."

The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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