Archive for the ‘Chart School’ Category

The Fed Is The Stock Market Is The Economy


The Fed Is The Stock Market Is The Economy

Courtesy of Lee Adler of Wall Street Examiner

I’ll draw the chart. You can draw the conclusion.

Industrial Production, The Stock Market and The Fed


A Dollar Melt Up?


A Dollar Melt Up?

Courtesy of The Nattering Naybob

  • Discussion of the effects of a potential dollar melt up or maelstrom on capital and asset markets.
  • Examination of Bitcoin as a potential conduit for Chinese capital outflows.
  • Discussion of metrics for Asian "dollar" and Euro "dollar" liquidity.
  • Examination of DXY dollar and recent divergences with equities and bond yields.


Regarding Chinese capital outflows, there are conduits that circumvent PBOC banking regs. BITCOIN's action since Jan 2015 explains who, what, why and when. Watch the measures of liquidity for those transactions, i.e. what is in demand or short on supply. To ascertain flows in the China or Asian "dollar" watch ON (overnight) SHIBORHIBOR and onshore RMB vs offshore RMB FX rates and forwards, in particular 1 year vs USD. To ascertain flows in the "petrodollar" or ED market, watch Eurodollar and 3 month Libor.



Above note, Since Oct 15 Libor has been rocketing to the upside, indicating rising intrabank lending costs.



Above note, since Oct 15 a sharp decline in the Eurodollar index. Lower price means higher future borrowing costs which have been rising steadily since mid 2014.



Above note, since Oct 15 the 10-year UST Yield increasing 25% as bonds have sold off increasing borrowing costs, another confirmation. As for FX reserves, China and others are selling USTs, but not to the extent previously thought. Rather than liquidate FX reserves, these central banks are kicking the can forward with forward dollar swaps. For those who attempted this recently, it has not ended well for their currency. Just look at the trade weighted dollar vs any currency. [Paraphrasing a wise friend]: "If the Dollar goes over 100 then sure, there's nothing stopping silver from dropping 20% as the Dollar goes to 120."



Above note, since Oct 15 the USD streaking back to visit 99 and diverging with bonds. Will it break its recent multi year high of 100? This too shall come to pass, … 99.504 and rising not for economic reasons.

Full article here >

Sellers Reverse Early Gains

Courtesy of Declan.

It was going to be too much for bulls to follow yesterday’s gains with a repeat day, but they were unable to maintain what gains they had achieved by the close of business. This translated into bearish ‘gravestone’ doji for many of the indices. If true, then be wary of weakness off the open, as this may not reverse after the first half-hour of trading (an intraday reversal point).

The S&P has the ‘bear trap’ to work with, and unless the 2,019 swing low is breached the ‘bear trap’ remains valid. Volume climbed to register as distribution, and the 200-day MA was tagged as resistance. However, relative performance remains good.

The Nasdaq actually managed a small gain, but it too finished with a bearish ‘doji’. Unlike the S&P, the 200-day MA is playing as support, and it has 4900 support to lean on too. Bulls may get the most joy here tomorrow.

The Russell 2000 registered a small loss as it trades around its 50-day MA. Declining former channel support is available to work with. Technicals are mixed, but intermediate term stochastics [39,1] are close to testing mid-line support. Short term stochastics are not yet oversold, and it would be better to see this touch oversold levels before buyers step in.

First half of trading is likely to hold the answers. Selling is more likely to start the day, but selling which sticks into the afternoon will leave markets vulnerable to bearish ‘evening’ stars and on to September lows.

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

Bulls See The Day Out: Buying The Dip?

Courtesy of Declan.

Today was a decent day by bulls, coming in at key moving averages and closing the day with bullish engulfing patterns in major markets. This has the look of a buy-the-dip style low, but needs follow through over the next 5-7 days.

The Nasdaq found buyers just above 4,900 and the 50-day MA. Buying volume was a little light, but that might be enough to lull shorts into a false sense of security.  The relative performance of the index continued to shift towards Large Caps and away from Tech, which may be a worry if the rally doesn’t kick on.

The S&P recovered 2,045, creating in the process a possible ‘bear trap’. The index also saw a healthy uptick in relative performance against both Small Caps and Tech.  While the broader success of the rally requires participation from all markets, buyers of Large Caps stocks won’t be complaining. A reversal of ‘sell’ triggers in technical indicators would be welcome now.

The Russell 2000 had the clearest buying chance with the successful defense of former channel resistance turned support along with a positive of the 50-day MA. The index didn’t hog the limelight in terms of percentage gains, but today was a good day for the index.

For tomorrow, loo for a bright start, particularly if premarket starts a little soft. Shorts will try to reverse the gains, so it will be up to bulls to press the advantage gained today.

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

War Is Bullish: Stocks, Oil Surge Off Paris Panic Lows After Dismal Economic Data

Courtesy of ZeroHedge. View original post here.

Stocks End Green – The Terrorists Lose!!

This just seemed appropriate… (WARNING – Highly NSFW!!)

Because if one thing says Buy Stocks – it's ISIS showing just how ineffective Western governments and intelligence is in the new normal, raising uncertainty, an unprecedented 5th recession in 5 years in Japan and dismal US Empire manufacturing data…

Cash indices perfectly bottom-ticked as Europe closed…

The Dow and S&P recovered all of Friday's losses…

Of course the real reason for the rally is 'Gartman'!

Dow Futures are up over 400 points from the opening lows…

SUNE Sucked…

And Clovis was crapped on…

*  *  *

"123" was really all that mattered to the machines in charge of the manipulation…

But it was crude that really ran the show…

VIX was clubbed like a baby seal… with all sorts of noisy tails…biggest drop in 4 weeks

VXX dropped over 10% – the biggest single-day drop since October 2013!!!!

Sell Vol when the terrorists strike…

Credit markets continue to get crushed (with loans back at 5 year lows)…

Treasury yields were not as excited as stocks… 10Y ended the day unchanged…

Decoupling from stocks once again…

Perhaps this is why… (near record net spec shorts)

The USDollar rallied notably on EUR weakness… (1.06 handle)

Commodities were very mixed with copper and PMs drifting lower as the dollar strengthened…

Most notably crude again as algos could not help themselves…

As Copper plunged to fresh lows not seen since April 2009 – down 9 days in a row!

Charts: Bloomberg

Bonus Chart: SKEW (tail risk) is once again blowing out but VIX (normal risk) is relatively fearful perhaps signaling another abrupt drop in stocks is due…

Weekly Market Summary


Weekly Market Summary

Courtesy of 

Summary: After rising 6 weeks in a row, equities fell hard this week. SPY has returned to the bottom of its former trading range. NDX, which is leading, closed an important open gap that should now provide initial support. So far, no foul for either. A number of studies suggest an upside edge in the short term.

Overall, however, risk is rising, as the market now has a potentially bearish technical pattern that it didn't have in August.

* * *

A bad week for the US markets: SPY and DJIA fell by 3.6%. NDX led equities to the downside, losing 4.4%. Oil was the biggest loser, dropping 8%.

Treasuries gained, but not by much. TLT was up 0.5%.

(After the cash markets closed on Friday, a terrorist attack in Paris left 130 dead and more than 100 seriously wounded. The index futures fell 1%. Eddy Elfbein has looked at the affect these disasters have on the stock market; in short, there is no lasting impact. Read his post here).

There appear to be several good reasons to expect prices to move higher, perhaps not on Monday, but during the course of the next several days.

More generally, however, risk is rising. The probability of the indices falling directly into a bear market in August was low. Bull markets weaken before rolling over: the first fall of 10% after a long run higher doesn't lead to a bear market (arrows); bear markets start from the retest of the prior high that fails (vertical lines). That retest happened last week. That the indices fell hard this week was not a good sign.



We don't know if this will lead to further weakness and confirm a failed retest of the high. The point is the market has a potentially bearish technical pattern that it didn't have in August. We used that fact to aggressively buy the August and September plummets. Risk is now higher and greater caution is warranted.

The set up for this week was for the indices to retrace some of their recent gains.…
continue reading

Sellers Stick Around For Another Day

Courtesy of Declan.

Another day of selling took markets further away from their highs and into more well defined profit taking. Near term, there should be a rally to mount a  retest of October highs, and how this rally behaves will determine if this is a pullback or just a relief rally.

The index to guide this differential will be the Russell 2000. Friday saw a finish on former declining resistance trendline, turned support. Technicals are weakening, and another couple of days like Friday would be enough to shift this net bearish techincally. As it stands, the current sell off could still be viewed as a bullish pull back and Monday is nicely set up for a rally.

The S&P hasn’t quite made it back to declining trendline which is also near support of the 50-day MA. Friday’s selling ranked as distribution, the second day of such selling in a row. The S&P was attempting a relative recovery against the Russell 2000, but lost ground on Friday’s action. For Monday. watch for a intraday spike back to the 50-day MA, it might offer bulls a chance to fish for an entry opportunity.

The Nasdaq also registered a distribution day. Friday saw a loss of the 200-day MA with just the 50-day MA left to lend support before there is move back to declining trendline. The Nasdaq had been outperforming the S&P, but last week saw a shift away from this index and towards Large Cap indices. This may lead to further underperformance for the coming week.

Nasdaq breadth is mixed. The Nasdaq Summation Index reversed off declining resistance, but other breadth metrics aren’t as conclusive.  The worry is in the Percentage of Nasdaq Stock Above the 50-day MA, which broke declining resistance but subsequently dropped below this line in a ‘bull trap’ style move.

Monday will be about pre-market, and how – if sellers maintain control – how 50-day MAs and/or declining support play as demand. If markets open close to where they finished on Friday, then watch the first half-hour of action; losses could offer a buying opportunity at 10;00am with reversals common at this time.  A strong pre-market will make it difficult for bulls to get involved unless there is a sell off in the first half hour of trading.

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

Dow Transports Cycle warning

Courtesy of Read the Ticker.

dow-transports-cycle-warningTime to review the very successful Dow Transports Cycle.

Another down cycle is due in 2016, most likely after a further period of consoildation. The FED talk of a rate hike is spooking the markets, it will also be the fact that most money managers have green on the screen they wish to turn it into cash, rather than try and live through another scary down cycle.

The cycle below has worked well and has been great for trading for 12 long years. Place your bets!

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


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

Investing Quote…

…”Mathematics is the only exact science. All power under heaven and on earth is given to the man who masters the simple science of mathematics.”…

William D Gann

..”It’s easier to fool people, than to convince them they have been fooled”..

Mark Twain

..“How many millionaires do you know who have become wealthy by investing in savings accounts?”..

Robert G Allen

..“I buy on the assumption they could close the market the next day and not reopen it for five years” and “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.”..

Warren Buffet

..”Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it”..

Warren Buffett

Bad Breadth


Bad Breadth

Courtesy of Joshua Brown, The Reformed Broker

Here’s the thing – breadth is sometimes important and sometimes not.

You can have a negative divergence, where the S&P 500 rallies toward a new high but the amount of stocks rallying with it lags or “does not confirm”. And then you can watch as the divergence resolves to the upside and all the people pointing to it (from the sideline) don’t know what hit them as the price index (the only one that pays) breaks out and away.

There are lots of ways to measure breadth. Some popular ones are:

  • new highs vs new lows
  • daily or cumulative advance/decline lines
  • percentage of stocks above a given moving average

We’ll focus on that last one today.

In my chart, you’ll see S&P 500 price in the top pane, with measures of breadth in the two panes below:


If you were only looking at the percentage of stocks above their 50-day moving average during the recent October rally, the bulls would appear to have quite a bit to hang their hats on. This number hit a high above 80% during the final week of October and start of November.

If you had been looking at the percentage of stocks above their 200-day moving average, however, you’d be looking at a very different picture. With the S&P 500 within 1% of new highs this month, only 50% of its constituent components were above this longer-term trendline. Technicians would look at this metric and note anon-confirmation.

The good news is that the percentage of S&P 500 stocks above the 200-day has improved from the market lows in August and September. The bad news is its nowhere near where it was during the May peak in price, even though we’re almost there again.

In the short-term, breadth during the recent rally has been outstanding, with lots of stocks participating in the run up. On a longer-term time frame, however, it’s looking more like a bounce than a new leg for the bull market.

Of course, I’m over-generalizing here and there are other considerations. For example, the biggest stocks within the S&P 500 are probably more important to…
continue reading

Small Caps Hardest Hit

Courtesy of Declan.

There was no doubt who gained control of markets today. The S&P cut clean through the 200-day MA and is on course to test former resistance turned support. This latter level will soon coincide with the 50-day MA. Relative performance has pushed ahead of the Russell 2000.

The Russell 2000 collapsed back to its 50-day MA in what was the biggest loss on the day. The next retest level is the October low.  Today’s losses were accompanied by a ‘sell’ trigger in the MACD and a bearish cross between +DI/-DI.  Today’s losses also saw a return to weakness in the relative performance of the index to the Nasdaq and S&P. This is an ugly picture for bulls and long term share holders.

The Nasdaq took relatively mild losses and is above its 200-day MA. Selling volume was also light. The index holds on to ‘sell’ triggers in On-Balance-Volume and the MACD. The next few days are looking like they will be a battle between Small and Large Caps, with Tech indices flying below the radar.

Shorts will be wanting weakness in Small and Large Caps to twist the knife for longs caught by the ‘bull trap’ in the Nasdaq 100.

Today was the first day to hurt bulls, or at least buyers who bought the September lows and looking for an opportunity to get out. Profit Taking is likely to continue.

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


Zero Hedge

US Services Economy Surges To 7-Month Highs (As Manufacturing Hits 2 Year Low)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Following US Manufacturing PMI's tumble to two year lows, amid slowing new orders and employment, Markit reports that US Services PMI rose to 56.5 - its highest since April. Amid a solid increase in job creation (low-paying compared to the job weakness in manufacturing) and improvement in business growth, the divergence between Services & Manufacturing is at its highest since Q3 2013 which presaged a complete collapse in Services.

Does 2013 ring any bells?

Commenting on the flash PMI data, Chris Williamson, chief...

more from Tyler

Phil's Favorites

Black and Blue Friday Coming Up

Courtesy of Mish.

Tomorrow is Thanksgiving. Black and Blue Friday will follow, putting U.S. Consumers and Stores in Face Off Over Discounts.
A Reuters/Ipsos survey found more people planned to cut holiday spending than increase in every category surveyed: clothing, jewelry, electronics, food and toys, and that 46 percent felt they could wait longer in the season to buy because of faster shipping.

Appliances, entertainment items, infant products and hardware showed narrowing discounts, MarketTrak reported, while promotions for apparel, toys and electronics were getting bigger.

Kurt Jetta, head of retail industry researcher TABS Group, found the discounts underwhelming....

more from Ilene

Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Barclays bets on stock boom as world money growth soars (The Telegraph)

Barclays has advised clients to jump into world stock markets with both feet, citing the fastest growth in the global money supply in over thirty years and an accelerating recovery in China .

Ian Scott, the bank’s global equity strategist, said the sheer force of liquidity will overwhelm the first interest rate rises by the US Federal Reserve, expected to kick off next month.

The reason Pfizer doesn't have to care what politicians say about its $160 billion merger&nbs...

more from Paul

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...

more from David

Chart School

2-0 Bulls

Courtesy of Declan.

A second day for bulls to shine despite modest end-of-day gains. Some indices did better than others. The Russell 2000 was the key performer. It finished with a MACD trigger 'buy' and looks ready to outperform the Nasdaq 100.  This is an important development for bulls looking for more from other indices. A move to challenge - then break - its 200-day MA, would convert August-November action into a healthy basing action.

The Nasdaq registered higher volume accumulation as a brief sojourn below the 20-day MA was reversed. It's nicely set up for a push to new swing highs.


more from Chart School

Kimble Charting Solutions

S&P 500 – Dangerous for bull case, if prices turn weak here!

Courtesy of Chris Kimble.


The S&P 500 remains inside of a rising channel that has been in place since 2010. The 5-year trend is up.

The 5-month trend is a different story, at this time.

Over the past 5-months, the S&P 500 has created a series of “falling weekly closing highs,” which is represented by line (1) above.

The S&P is testing this falling resistance line at (2) above.

If weakness takes place at (2) above, at falling resistance, it would be concerning price action for the bullish case!


more from Kimble C.S.


Sector Detector: Bulls wrest back control of market direction, despite global adversity

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

Courtesy of Sabrient Systems and Gradient Analytics

Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year. As a result, the key issues dominating the front page and election chatter have moved from the economy and jobs to national security and a real war (rather than police ...

more from Sabrient


Swing trading portfolio - week of November 23rd, 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 ...

more from OpTrader

Digital Currencies

Bitcoin's Computing Network is More Powerful than 525 Googles and 10,000 Banks!

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

I've decided to build our startup - Veritaseum, a peer-to-peer financial services platform, directly on top of the Bitcoin Blockchain. Many queried why I would voluntarily give up a lucrative advisory and consulting business to chase virtual coins in cyberspace. That's exactly why I decided to do it. That level of misunderstanding of what is essentially the second coming of the Internet gave me a fundamental advantage over those who had deeper connections, more capital and more firepower. I was the first mover advantage holder.

You see, Bitcoin is not about coins, currency or price pops. It is a massive computing net...

more from Bitcoin


PSW is more than just stock talk!


We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

more from Promotions


Whitney Tilson On LL, EXACT, And Martin Shkreli


Whitney Tilson On LL, EXACT, And Martin Shkreli

Courtesy of Value Walk

1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:

  • The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
  • I think this is the beginning of the end for the company.
  • My price target for the stock a year from now is $3, so I shorted more yes...

more from ValueWalk


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 ...

more from Pharmboy

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. 


more from M.T.M.

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 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.

Thank you for you time!

FeedTheBull - Top Stock market and Finance Sites

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...

Learn more About Phil >>

As Seen On:

About Ilene:

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.

Market Shadows >>