Archive for the ‘Chart School’ Category

Bulls Make Presence Felt

Courtesy of Declan.

It was a better day for bulls as markets registered an accumulation day with respectable gains. However, only one index, the Dow, made a test of resistance (200-MA on hourly) and was initially rebuffed.

The S&P registered nearly a 2% gain. The 20-day MA looks to be the next area of resistance as today marked a sharp break of declining resistance.

The Nasdaq kicked in a rally without having tested the August low. If this rally can mount a challenge of 4,900 (and break it), it will have the makings of a good Santa rally.

Likewise, the Russell 2000 has kicked a rally just a shade above potential channel support.

The other index to watch is the Semiconductor Index. It’s shaping a good reversal with today’s close nestled against declining resistance. The ‘bull trap’ won’t be negated until 631 is broken, but holding above 600 into next week would probably be enough to see a challenge and break of this level.

With ISM data tomorrow, and jobs data on Friday, there is plenty of potential hiccups or boosts to shape action before the weekend. Long term buyers will be looking for value while shorts will be reluctant to attack until a major resistance level is challenged.

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

Modest Losses on Lighter Volume

Courtesy of Declan.

It wasn’t a day of carnage as yesterday, and with support coming into play for certain indices there is a chance bulls might be able to mount something here. Volume was down on yesterday, another sign sellers could be exhausting themselves out.

The Russell 2000, having exceeded its August, could be the first to mount a recovery. Keep an eye on relative performance to the S&P; an uptick here could be the cue for a rally back to channel resistance – a decent return.  Alternatively, fish with GTC buy orders down at channel support.

The S&P closed with a spinning top just above August’s swing low.  While technicals are in poor shape, price action may be able to offer more. Key will be holding 1,867.

The Nasdaq hasn’t yet pushed down towards the August low. Shorts will probably be looking to milk the last of this decline as the risk of a short covering surge for Large and Small Caps indices increases.

NYSE Breadth may also be forming a bullish divergence, although for this to be successful breadth will need to tick up soon.

Nasdaq breadth is close to a repeat of the 2011 bottom. Just Bullish Percents and Percentage of Stocks Above 200-day MA to confirm.

Long Term buyers can be looking to add to their positions as there is plenty of value across Large and Small Cap stocks. Short term, things are turning more neutral after bears had comfortably held control.

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

U.S. Stocks Facing Their Biggest Test In 8 Years?


U.S. Stocks Facing Their Biggest Test In 8 Years?

Courtesy of Dana Lyons


Broad-based Value Line Composite testing mega-critical level.

The Value Line Geometric Composite (VLG) is an unweighted average of roughly 1700 U.S. stocks. This makes it, in our view, the most accurate index in instructing investors of the true state of the U.S. stock “market”. And since studies have shown that some 70%-80% of stocks go the way of the market, the VLG is our main focus among all the indexes. That is why on August 28, we highlighted the significance of the area in the mid-430′s on the VLG chart where the index held during the late August mini-crash.

To reiterate the significance of the mid-430′s level, it marks a confluence of Fibonacci Retracement levels drawn from the important lows since 2009 to the April high. Specifically, we find these 3 levels all within close proximity:

  • The 23.6% Fibonacci Retracement of the 2009-2015 Rally ~436
  • The 38.2% Fibonacci Retracement of the 2011-2015 Rally ~436
  • The 61.8% Fibonacci Retracement of the Rally from the 2013 Breakout Point to the April High ~433
  • Additionally, the 1000-day simple moving average (approximately, the 200-week moving average) lies at 435.

We have mentioned before that we have increased confidence in the validity of a chart level when multiple analyses line up nearby there. That is certainly the case here. Furthermore, our confidence is heightened when the level is tested – and it holds – as the Value Line Composite did in late August, bottoming at 439 on August 25. That validates the level as important as prices have shown they “respect” the level. Furthermore, as we stated in the August 28 post:

It also presents us with a line in the sand, should the index eventually go on to “test” the 430′s level (a development that would not at all surprise us). We have a reference point to generally orient us bullishly should the level hold or quickly recover a break – and bearishly should the level fail.

That brings us to today’s Chart Of The Day and post. The mid-430′s level…
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The Anatomy Of A Retesting Of The Low

Courtesy of Eric Bush at Gavekal Capital

The S&P 500 is now only about 1% off its 8/25 low. Have the market internals deteriorated as much as the headline price index has? Lets take a quick tour through our chart library to find out.

On 8/25, 17% of US stocks were trading below its 200-day moving average. As of yesterday, this series has dropped back to 19% after increasing to 33% on 9/17. Unfortunately, we haven’t seen a trend shift in momentum yet. Through yesterday, 33% of US stocks had its 50-day moving average trading above its 200-day moving average. On 8/25, 51% of stocks had its 50-day moving average trading above its 200-day moving average


Large declines in stocks are ticking up again but still below the 8/25 level. The number of stocks with a one-day 5% decline was 83 yesterday. On 8/25, there were 150 US stocks that declined by at least 5%. It’s hard to imagine that we went through a period in 2008 where we regularly were seeing 200-500 US stocks decline by 5% in a day.


The median stock performance over the past year is unchanged. Over the past 200-day, the median stock performance YTD is -8%. This is the same level as it was on 8/25 and is the worst YTD performance since 2009.



83% of US stocks are at least in a correction over the past 200 days. On 8/25, this spiked to 90%. The number of US stocks in a bear market has increased. 48% of US stocks are now in a bear market over the past 200 days compared to 43% on 8/25. While this has been painful for investors, far fewer stocks are in bear market today than were in a bear market in 2011 and 2008.

JPEG 6 - Copy


Finally, in a positive sign the number of stocks making new 200-day lows remains below the 8/25 high. On 8/25, 39% of US stocks were making new 200-day lows while “only” 31% made new 200-day lows yesterday. This will be an important internal indicator to keep an eye on as new highs in 200-day lows tend to mark the emotional peak in a market downturn. For example, on 8/8/2011…
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RTT browsing latest..

Courtesy of Read the Ticker.

rtt-browsing-latestPlease review a collection of WWW browsing results.

Date Found: Friday, 21 August 2015, 02:33:51 PM

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Comment: Dan Zanger Aug 12 2015, sees a very week market

Date Found: Saturday, 22 August 2015, 08:25:28 PM

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Comment: re balancing the SP500

Date Found: Wednesday, 26 August 2015, 02:32:30 PM

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Comment: Jim Sinclair-Silver Will Be Gold On Steroids In Coming Rally

Date Found: Thursday, 27 August 2015, 02:39:40 AM

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Comment: Smoke and Mirrors of Corporate Buybacks Behind the Market Crash

Date Found: Thursday, 27 August 2015, 03:01:24 PM

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Comment: VIX and bottoms!

Date Found: Thursday, 27 August 2015, 03:26:14 PM

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Comment: SP500 falls 10% in 4 days…that is a PANIC not a correction. Leverage blow up! Wait till supply dries up before accumulating.

Date Found: Friday, 28 August 2015, 02:28:36 AM

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Comment: NON Sub prime..$550 bn energy sector debt! worth…not much! POP…CRACKLE…POP

Date Found: Friday, 28 August 2015, 03:04:41 PM

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Comment: China has been selling US paper, to help support its stock market one assumes, support China is priority over supporting USA.

Date Found: Friday, 28 August 2015, 03:24:41 PM

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Comment: Take note of Jan 2000 red dot!

Date Found: Saturday, 29 August 2015, 04:21:00 AM

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Comment: Saudi sells down reserves to cover loss in crude revenues, China sells down reserves to cover loss in…
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Distribution Selling Takes Chunk Out of Markets

Courtesy of Declan.

No doubt who controlled market action today, and Bears weren’t stopping at August lows either. The Russell 2000 experienced the biggest hit, undercutting the August low. Next up is the October 2014 low.

In percentage terms, the Nasdaq took the largest hit. However, it remains some distance from the August low. Shorts may look to chase this down as other indices extend beyond August lows, but a recovery in other indices could set up a decent short covering rally.

The S&P finished with a MACD trigger strong ‘sell’ and is only a few points from lows. The rate of today’s selling suggests August lows won’t be much of a block. Although pre-market action may offer more of a guide; an open below the August low could be a cue for a rally.

Tomorrow may offer bulls a chance to finally push a squeeze. A short covering rally will be quick and sharp. Look to 50-day MAs as an upside target for a bounce.

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

Wild End to Session

Courtesy of Declan.

It was a day of two extremes: bulls took the early advantage, but bears struck hard in the last couple of hours of trading.

The S&P rallied as far as its 50-day MA before bears pressured, ending with some shorts profit taking to return some of the losses. \The S&P is enjoying a sharp relative advantage against the Russell 2000, but the ‘spinning top’ candlestick is a 50:50 play.

The Nasdaq returned with all net bearish technicals along with distribution. The MACD and Stochastics offered fresh ‘sell’ triggers. Friday’s trading marked a bearish engulfing pattern, which often leads to follow through selling. There was also a relative performance loss for the Nasdaq against the S&P.

The Russell 2000 has been underperforming lead indices since early September, and this underperformance has left it working a fast-track retest of August lows. Bulls may look to attack this index first if further losses are delivered.

One of the better performers was the Semiconductor Index. It still has a long way to go to get out of its funk, but Friday was not the worst.

Market breadth is also reversing after an early bounce from oversold conditions. Will this create a bullish divergence relative to the Nasdaq? For this to happen, August lows would need to be taken out in the Parent Nasdaq, but comparable lows in breadth indices hold (or are best not challenged).

For Monday, watch pre-market for leads. A higher open may encourage sellers to make a second run. A lower open may offer a case for sellers exhaustion and set up a temporary – but trade worthy – bounce.

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

Margin Debt Drops: Healthy Pullback, Or Budding Headwind?

Courtesy of Dana Lyons

Pullback in Margin Debt is healthy… unless it signifies the start of a larger decline.

In our post yesterday on household stock investment, we discussed what we call “background indicators”. These various investment metrics describe the longer-term conditions in the marketplace, but are not catalysts themselves. Thus, we consider them to be measures of potential risk should a catalyst come along to trigger a decline. In that case, the potential risk begins to manifest itself in actual risk. Considering it is near its all-time highs, we consider household stock investment to carry significant potential risk. Another background indicator signaling the same is NYSE margin debt.

Margin debt refers to the amount of money borrowed for the purposes of leveraging a stock position. The higher the level of margin debt, the more leverage in the system – and the greater the amount of potential risk. As of April this year, NYSE margin debt was at an all-time high at more than $500 billion. Over the past few months, the level has moderated a bit. After August’s market rout, margin debt sat at $473 billion, down 6.7% from the highs.


So is this a healthy pullback in potential risk? Or is it a beginning of a larger trend whereby more potential risk will become actualized risk? There is no way to know for sure, however, there have been a few similar declines in margin debt in the past 15 years. Specifically, since 1999, NYSE margin debt has seen a drawdown from its high of at least 6.7% on 4 other occasions

  • April 2000
  • August 2007
  • May 2010
  • August 2011

Obviously the first two instances saw the pullback morph into substantial, longer-term retrenchments, coinciding with cyclical bear markets in stocks. The other two occurrences, while coinciding with painful stock market pullbacks at the time, did not lead to a longer retrenchment in margin debt. And, in fact,by the time we knew what margin debt had done in May 2010 and August 2011, the correction in stocks was almost over.

There are obvious similarities between the 2010 and 2011 instances with our current situation, especially 2011. So it is entirely possible that the current market pullback has almost run…
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SP500 Gann Angle Update

Courtesy of Read the Ticker.

sp500-gann-angle-updateAfter the SP500 smashed through the supporting 1×1 Gann Angle, where are we now?

The SPY is in between the two strong Gann Angles. Whip saw can be expected. A break down through support could be scary.

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SPY Gann

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…

..“Stocks, like atoms, are really centers of energies.Therefore they are controlled mathematically”….”There is no chance in nature because mathematical principles of the highest order lie at the foundation of all things”..

William D Gann

..”The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”..

George Soros

..”If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks”..

John (Jack) Bogle

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

Philip Fisher

…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”…

Martin Zweig (The inspiration behind a number of Martin Zweig’s methods came, from Jesse Livermore).

New Home Sales at Interim High of 552K


New Home Sales at Interim High of 552K

Courtesy of Doug Short

This morning's release of the August New Home Sales from the Census Bureau at 552,000 surprised general expectations, and the previous month was revised upward by 15K. The forecast was for 515K. This new interim high has not been seen since the recession began in 2008.

Here is the opening from the report:

Sales of new single-family houses in August 2015 were at a seasonally adjusted annual rate of 552,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.7 percent (±16.2%)* above the revised July rate of 522,000 and is 21.6 percent (±18.7%) above the August 2014 estimate of 454,000.[Full Report]

For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here.

New Home Sales

Over this time frame we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005.

The Population-Adjusted Reality

Now let's examine the data with a simple population adjustment. The Census Bureau's mid-monthpopulation estimates show a 71% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

Population Adjusted

New single-family home sales are about 7% below the 1963 start of this data series. The population-adjusted version is 45% below the first 1963 sales and at a level similar to the lows we saw during the double-dip recession in the early 1980s, a time when 30-year mortgage rates peaked above 18%. Today's 30-year rate is around 4%.

For additional perspectives on residential real estate, here is the complete list of our monthly updates:



Phil's Favorites

Putin: The empty veil of 'democracy'


Putin: The empty veil of ‘democracy’ Courtesy of  

Cross-published on Counterpunch

In his Orwellian September 28, 2015 speech to the United Nations, President Obama said that if democracy had existed in Syria, there never would have been a revolt against Assad. By that, he meant ISIL. Where there is democracy, he said, there is no violence or revolution.

This was his threat to promote revolution, coups and violence against any country not deemed a “democracy.” In making this hardly-veiled threat, he red...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Bond Funds Have Been Borrowing to Boost Returns (Bloomberg)

For more than two decade, Bill Gross did the seemingly impossible, according to Bill Gross.

Drug that rose 5,000% hasn't come down in price (CNN)

Remember the drug used by cancer and AIDS patients that skyrocketed from $13.50 to $750 a pill? Well, the price has yet to come back to earth.

The company still has not cut the price below $750 even thoug...

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Zero Hedge

The Deep State: Source Of All Negativity

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Doug Casey via,

I’d like to address some aspects of the Greater Depression in this essay.

I’m here to tell you that the inevitable became reality in 2008. We’ve had an interlude over the last few years financed by trillions of new currency units.

However, the economic clock on the wall is reading the same time as it was in 2007, and the Black Horsemen of your worst financial nightmares are about to again crash through the doors and end the party. And this time, they won’t be riding children’s ponies, but armored Percherons.


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Kimble Charting Solutions

Free Premium Trail Offer & Free Webinar Viewing Available Now!

Courtesy of Chris Kimble.


Ryan Detrick and I produced a webinar this week, covering some new indicators we created, which we shared publicly for the first time.

We also shared two new Buy & Hold indicators we created, as well as two short-term trades, that look goo...

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Chart School

Bulls Keep Buying Into The Close

Courtesy of Declan.

Good stuff for bulls as resistance levels get ticked off on the advance. There breathing room for many indices and a chance for consolidation. Nit pickers could point to light volume, but it would be hard for buyers to be coming in here given the sequence of gains.

The Nasdaq 100 still remains tagged to resistance. Can it break tomorrow or will sellers make an appearance. All I know is yet another short trade of mine is stopped out. I should add, I haven't touched my investment account. I would be looking to buy if I had the funds available.

The S&P made a decisive push past its 50-day MA. Next resistance is up at 2,044. Tech...

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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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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...

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Sector Detector: Searching for solid support in the face of global headwinds

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

Courtesy of Sabrient Systems and Gradient Analytics

Uncertainty about the health of the global economy led investors to flee U.S. equities during Q3, primarily driven by worries about China's growth prospects and the Federal Reserve’s decision to not raise rates. Sure, there are plenty of real and perceived headwinds, but on balance it seems that a recession here at home is not in the cards. And when you consider sentiment and the technical picture, it appears that a continuation of Friday’s bounce is in store. The question remains as to whether the seasonally strong Q4 will be able to propel the bulls through levels of resistance that have built up.

In this weekly update, I give my view o...

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Swing trading portfolio - week of October 5th, 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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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. 


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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 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!

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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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