Archive for the ‘Chart School’ Category

Selling Pummels Markets

Courtesy of Declan.

The third day of selling pushed markets deeper into oversold territory and potential long term ‘buy’ territory. In my ‘bottom’ tracker, the S&P is priced in the 90% zone (i.e. only 10% of historic prices relative to the 200-day MA have been worse), while the Nasdaq and Russell 2000 is in the 85% zone. It has been 4 years since markets have been this oversold.



The S&P made a picture perfect tag of the 10%, 200-day Envelope. Although with trading restrictions in place at market open it would have been difficult to get a fill at this price. But now is a time to be shopping for value in individual stocks





The Nasdaq closed the breakdown gap in intraday trading, but the weaker finish left this in neutral territory.




The Russell 2000 came close to a tag of the 10% 200-day MA envelope. It too looks to be offering value for those willing to take the risk.




The carnage continued elsewhere. The Semiconductor Index experienced a wide range day, but didn’t lose as much ground as lead indices. Has a trade worthy bottom arrived?




Or will the VXN push another weak month for September.




Short term traders will likely continue to have it rough, but long term buyers may find some valuables amongst the rubble.



You’ve now read my opinion, next read Douglas’ and Jani’s.







Jesse Livermore quotes to remind you in times like these

Courtesy of Read the Ticker.


jesse-livermore-quotes-to-remind-you-in-times-like-theseThe man who made and lost, many times has a few words to remind you.

Quotes…

..”One of the most helpful things that anybody can learn is to give up trying to catch the last eighth – or the first. These two are the most expensive eighths in the world. They have cost stock traders, taken together, enough millions of dollars to build a concrete highway across the continent.”..

…“After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!”…

..“The desire for constant action irrespective of underlying conditions is responsible for many losses on Wall Street, even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”..

..”Tape reading was an important part of the game; so was beginning at the right time; so was sticking to your position. But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities.”…

..”Every once in a while you must go to cash, take a break, takes a vacation. Do not try to play the market all the time. It cannot be done, too tough on the emotions.”..

Jesse Livermore

COMMENT: The market has fallen hard and fast. The leverage has done damage you can not see, it will take some months before the supply dries up. Buyers time to take a vacation, come back in Nov 2015. Any bounce may be a great short. Those with RTT Plus service can follow our RTT Market Timer to help guide you back in to the market. Just like all the other pullbacks over the last 30 years.

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote…

..“In a narrow market, when prices are not getting anywhere to speak of but move within a narrow range, there is no sense in trying to anticipate what the next big


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Near Term Oversold, S&P and Russell 2000 in “Accumulate” Zone

Courtesy of Declan.

Friday’s action washed out bulls and likely scared off any buy-the-dip players.  Longstanding trading ranges from 2015 were decisively breached on heavy volume. However, selling has reached a point where there is good chance of a rebound on Monday. Both the Russell 2000 and S&P reached the “Accumulate” marker, where long-term buyers can chase value in the market. The last time this scenario played for the S&P was November 2011, although it was October 2014 for the Russell 2000.



The S&P tagged the 5% envelope band of 200-day MA, an area which will give bulls a chance to mount a snap back rally to the 200-day MA, and a place where long term buyers can look to buy value in the market.





The Russell 2000 was one of the better indices on Friday. There was a sharp jump in relative performance against Large Caps and Tech indices., which combined with the “Accumulate” trigger, could offer a longer term (bull) trade. Of the indices, it finished Friday with a ‘doji’; one of the few able to finish the day near where it started.




There was no such respite for the Nasdaq. And having only recently breached the 200-day MA it’s not in an “Accumulate” zone either. While it will likely benefit from any spill over buying (should this happen on Monday), there may be another leg of selling still to be had here.




Nasdaq breadth metrics haven’t entirely reached a bottom zone. The Percentage of Nasdaq Stocks above the 50-day MA finally reached a zone often associated with a trade-worthy bottom, but the Percentage of Nasdaq Stocks above the 200-day MA, Summation Index, and Bullish Percents still have room to run before they get there.




And the Semiconductor Index remains in free-fall.




Volatility traders finally have something to celebrate. This Monthly chart suggests this only the start of the selling.




While there is a good chance for a bounce on Monday, few will expect this rally to last. Those with patience may be rewarded, but watching the day-to-day changes will probably strike fear into many!



You’ve now read my opinion, next read Douglas’ and Jani’s.







What the public does not see

Courtesy of Read the Ticker.


what-the-public-does-not-seeThe public end up being lamb chops, as Mr Market does every thing it can to trick you.



The stock market is designed to take your money, not make you money.





Click for popup. Clear your browser cache if image is not showing.

SPY


Just a reminder…..





Fish




NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



..”Money cannot consistently be made trading every day or every week during the year”..



Jesse Livermore Trading Rule







..”The stock market is filled with individuals who know the price of everything, but the value of nothing”..



Philip Fisher





..”The first rule is not to lose. The second rule is not to forget the first rule”



Warren Buffett





..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell”..



John Templeton





..”Money couldn’t buy friends, but you got a better class of enemy”..



Spike Milligan











Was The Most Important Line In The Equity Market Just Broken?

Courtesy of Dana Lyons

The post-2009 UP trendline in the broad Value Line Geometric Composite was violated today.

Most technicians and chartists have what they consider their important levels on a chart. Whether it is a prior low or high, a moving average, a trendline, etc. These are levels that, if violated, mark a significant change in character for that particular price series – or at least it marks a significant change in its interpretation. While our firm is generally more interested in analyzing more comprehensive measures pertaining to the market’s structure rather than a single price point on one specific chart, there are a few undeniably important levels in our view. And perhaps the most important price point in the entire equity market was broken today.

When we consider what, to us, constitutes a significant chart level on a market-wide basis, it must be characterized by two things. First, it has to be an index or security of substantial influence. And second, the price level should preferably be of consequence on at least a cyclical (i.e., years) basis. Well, probably the single most beneficial force in the global financial markets for some time now has been the steady uptrend in the U.S. equity market. Other equity markets around the world have waxed and waned and other asset classes have varied between average (fixed income) and abominable (commodities). But U.S. stocks have been the rock – fortunately too as it is the largest stock market in the world.

And the most important barometer of the U.S. stock market, in our view, may not be the general consensus pick. In fact, many market participants likely have never even heard of it. The Value Line Geometric Composite (VLGC) is an index comprised of approximately 1700 stocks. It is also equally-weighted. Therefore, we feel it provides a better picture into the health of the broad U.S. stock market than a more mainstream pick like the S&P 500, for example. And despite the fact that there are no VLGC products actually trading anymore, it still adheres very well to most chart analyses.

That being the case, today’s break of the VLGC’s post-2009 UP trendline is one of those select price developments that we deem to be important to the macro market – and maybe…
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Buyers Report Absence

Courtesy of Declan.

No denying who took control today. Buyers will have their work cut out if they are going to regain it. Today’s dominant red candlestick will likely see some come back tomorrow, but eating back all of today’s losses will be more difficult.



The S&P lost over 2%, knocking out 2,045 support and returning all technicals into the red. Volume climbed as distribution. The 200-day MA is now the line on the sand for bulls. The loss is significant and will not be easily recovered.





The Nasdaq fell back to its 200-day MA. It finished close enough to this moving  average to suggest bulls will mount a defense here first. Other indices may not be so lucky.




The Nasdaq 100 finished bang on the 200-day MA, so buyers may find some joy for a quick intraday rebound tomorrow. Certainly, it’s the best placed of today’s finishers.




What’s not looking so healthy is the Semiconductor Index. It has dropped out of its bullish wedge and is in panic sell mode. Long term investors may seek value in this sector, but trying to pick a bottom is not something likely to bring success.




Of the lead indices, the Russell 2000 suffered the biggest loss on the day. Today’s finish left it a long way from its 200-day MA.  Small Caps are leading the charge down and it’s hard to see bulls getting it back in any meaningful way anytime soon. A break of declining resistance is the minimum to reverse the rot.




For tomorrow, short term traders will probably look to trade a bounce, but they are unlikely to hold over the weekend.



You’ve now read my opinion, next read Douglas’ and Jani’s.







“Drought” Surrounding Last Stock Market High Is “Something To Worry About”

 

Drought Surrounding Last Stock Market High May Be A Warning

Courtesy of Dana Lyons

image

50-day “droughts” before and after a 52-week high in the Dow Jones Industrial Average have marked several major tops.

It has now been 64 days since the last 52-week high in the Dow Jones Industrial Average (DJIA) on May 19. While that may seem like an eternity in the context of the past 2.5 years, it’s not at all unusual in the grand scheme of things. However, what did have us thinking “hmmm” is the fact that there was also an extended period of time – 53 days to be exact – prior to the DJIA’s high on May 18 when the index was unable to score a new high. As it turns out, such droughts prior to and subsequent to a DJIA 52-week high have been unusual. And, as it turns out, such occurrences have often come at inauspicious times in the market cycle.

Specifically, we looked at times when the Dow Jones Industrial Average made 1 or more new 52-week highs within a 7-day span – but no other 52-week highs during the 50 days preceding or following that 7-day span. As it turns out, the current instance is one of 11 unique examples going back to 1960.

image

A glance at the dates (dots) on the chart tell you that several of the occurrences came near tops in the DJIA of some significance, including the last 2 cyclical tops. These are the months encompassing all unique signals since 1960:

  • January 1960: Intermediate-term top, held for 14 months
  • May 1967
  • August 1972: Preceded cyclical top by 4 months, which held for 10 years
  • July 1976: See next line
  • September 1976: Cyclical top, held for 5 years
  • February 1980
  • October 1988
  • January 1990: Intermediate-term top, temporarily surpassed during the summer but otherwise held for 13 months
  • May 2001: Cyclical top, held for 5 years
  • October 2007: Cyclical top, held for 5.5 years
  • May 2015: ?

As you can see, while the record is not unanimously bad, it certainly does…
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How Asset Classes Have Responded To The First Rate Hike

 

How Asset Classes Have Responded To The First Rate Hike

Courtesy of , The Fat Pitch

Summary: How have different asset classes in the past responded when the FOMC has raised rates for the first time? Commodities were the best performing asset; they boomed.  The dollar sold off. Equities usually rallied into the decision, then sold off, and then rallied again. Treasury yields rose. The total return for high yield bonds was usually positive.

* * *

On September 17, the FOMC will meet. And expectations are that the Fed will enact a 25bp rise in rates. This would be the first change in rates since December 2008, and the first rise in rates since June 2006 (here).

The question for investors is: how might various assets classes react? To answer, we can look at how they have reacted in the past.

Before looking at the data, consider this: a rate increase means that the economy is improving enough that employment and inflation are considered to be well on the path to being healthy. You would expect, therefore, that stocks would do well if the Fed felt comfortable raising rates. An improving economy also implies demand for commodities and lower default rates, meaning that commodity prices are rising and high yield bonds are at least stable.

And in fact, this is what usually happens when the Fed raises rates for the first time: stocks and commodities rise and high yield bonds have a positive return over the next year (the average length of time rates rose). The chart below covers the period after the first rate hikes in 1983, 1986, 1988, 1994, 1999 and 2004 (data from Allianz).
 

None of these assets was a winner each time: stocks rose in 5 out of 6 cases; commodities rose in 4 of 5; ex-US equities in 3 of 4; treasuries and high yield bonds in 4 of 6.

In all 6 cases, US equities rose in the 3 months ahead of the first rate hike (on the right side of the chart above). Note that $SPX sold off by at least 5% in the months after the


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Scrappy Day

Courtesy of Declan.

Tough day at the office with sellers having all of the fun until the Fed meeting minutes jacked up prices, only for sellers to return into the close.



For the S&P, each test of the 200-day MA weakens it, and we are probably getting close to the point we get a decent push down, and a move outside of the longstanding trading range which has plagued this market throughout 2015. Even a modest 10% correction off highs would set it to drop below psychological 2000. Should such a move occur it should be welcomed like refreshing rain on a muggy day. The market needs direction.




The Nasdaq dropped below 5,038, but 4,950 is key support – which is also close to where the 200-day MA is.  Still plenty of places for buyers to step in, and this is not looking as vulnerable as the S&P.




The key disappointment for Tech was the loss of support from what had looked to have been a bullish wedge in the Semiconductor Index.  Technicals are again all net negative.




The Russell 2000 had flagged its intent yesterday when it experienced a 0.80% loss and reversal off its 200-day MA. Today wasn’t much better, but it did at least hold 1,200.




Action in markets, Large Caps in particular, is not attractive for those looking to build long term positions.  Without those buyers it’s hard to see markets having the momentum to push markets out of these ranges. A solid 10-15% drop from highs would probably bring these buyers in. Keep an eye on the relationship of the indices to its 200-day MA, this is tracked in the tables below, this is another point when value buyers could emerge.



You’ve now read my opinion, next read Douglas’ and Jani’s.







Markets Retain Majority of Gains

Courtesy of Declan.

Not a day for big dramatics, but markets did well to hold on to Monday’s gains. Selling volume was lighter than yesterday, so today wasn’t seen as an opportunity to sell into strength.  The one index which was perhaps a little problematic for bulls was the Russell 2000.



Here, the index lost nearly 1% as the 200-day MA stayed as resistance. This is he second time sellers have attacked this moving average. If bulls were to have a broader concern, then this index is the canary in the mine. Market leadership comes from Small Caps, and action in this index isn’t great. Bulls may look to the weak MACD ‘buy’ as a sign of something better, but 1,189 will need to hold as support.





The S&P only experienced a small loss, and held breakout support.  The 200-day MA is a key moving average to defend, as lose this and both Large and Small Caps Indices will be below this moving average, leaving Tech indices ploughing a lonely furrow.




The Nasdaq is trading in a no-mans land between 5,038 and 5,096. It’s also a long way from the 200-day MA. This index will be looking to the S&P and Russell 2000 for leads.




For tomorrow, look for bulls to stick close to 200-day MAs.  The biggest work to do will be in the Russell 2000. Even if there are gains, converged resistance will still need to be overcome.



You’ve now read my opinion, next read Douglas’ and Jani’s.







 
 
 

Zero Hedge

Circling The Drain....

Courtesy of ZeroHedge. View original post here.

Submitted by dazzak.

CIRCLING THE DRAIN:

So last weeks turmoil is seemingly not over yet…..Was it simply a storm in a teacup brought on by another one of those market tantrums that erupt every now and again to keep everyone on their toes and eventually evaporate? Or was it a significant tremor giving pre warning of a major earthquake to follow?

WAX ON WAX OFF;

Historically September and October are not very good months for stocks and there are fundamental arguments for both sides.

The fact is that there is a lot more to worry about than to be confident of. 

There are clearly real concerns both internally and externally that the China's growth rate is running at closer to 5% than 7%, Brazil and Russia are in recession,&...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Americans' confidence in the economy has plunged to an 11-month low (Business Insider)

Americans' confidence in the economy continues to slide.

Who Crashed China's Stock Market? (The Atlantic)

China’s stock markets continue to stumble, despite the massive stimulus that the government has unleashed to prop them up. The Shanghai benchmark index fell by 1.23 percent Tuesday, after closing down slightly Monday. The index has fallen by nearly 40 percent from its mid-June peak.

...



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Phil's Favorites

6 reasons the FOMC is unlikely to move in September

 

6 reasons the FOMC is unlikely to move in September

Courtesy of Sober Look

The majority of economists still expect the Federal Reserve to begin the long-awaited liftoff next month.



However is this dovish FOMC truly prepared to "pull the trigger" this time? Here are some reasons the central bank is likely to delay the first hike.

1. While the Fed officially talks about not being focused on the currency markets, the recent dollar rally should give them some food for thought. The global "currency wars" have sent the trade-weighted US dollar to the highest levels in over a decade. This will conti...



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Chart School

Distribution Selling Returns

Courtesy of Declan.

After the late recovery last week, sellers again made markets their home. Sizable losses were accompanied with higher volume distribution, although volume was down on earlier panic.  Another pass at August lows looks likely.

The S&P is again heading to the 10% 200-day MA envelope. Relative performance is shifting away from Large Caps to more speculative indices, which is bullish in a rising market, but in a falling market suggests a lack of sanctuary.


The Nasdaq is also in the early stages of a retest of the August low. Technicals are weak, although stochastics crept above the bullish mid-line, but not enough to suggest ...

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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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Kimble Charting Solutions

Nikkei (Japan) topped last 5 times it was here, its back again!

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Could a price zone that started impacting the Nikkei 30-years ago still impact it again today? Well it looks like it is!

The Nikkei found the 21,000 level, line (1), to be support several times between 1987 and 1992. Once this support broke it then switched from a support to a resistance level.

As you can see several times from 1992 to 2000 the Nikkei ran into this resistance zone and failed to solidly break above it, leading to a top numerous times. The last time it hit this resistance zone was back in 2000. After failing to break above resistance then, it ...



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OpTrader

Swing trading portfolio - week of August 31st, 2015

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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Sabrient

Sector Detector: Finally, market capitulation gives bulls a real test of conviction, plus perhaps a buying opportunity

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

Courtesy of Sabrient Systems and Gradient Analytics

The dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. The end result is a long overdue capitulation event that has left no market segment unscathed in its mass carnage. The historically long technical consolidation finally came to the point of having to break one way or the other, and it decided to break hard to the downside, actually testing the lows from last ...



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ValueWalk

Some Hedge Funds "Hedged" During Stock Market Sell Off, Others Not As Risk Focused

By Mark Melin. Originally published at ValueWalk.

With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.

Stock market sell off surprises some while others were prepared and are hedged prospering

While so...



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Digital Currencies

Bitcoin Battered After "Governance Coup"

Courtesy of ZeroHedge. View original post here.

Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - is due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built on with some believing ...



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Pharmboy

Baxter's Spinoff

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

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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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!




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About Phil:

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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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