Posts Tagged ‘stock charts’

S&P 500: On a knife’s edge

S&P 500: On a knife’s edge

Courtesy of Prieur du Plessis, Investment Postcards from Cape Town

Last Thursday was a so-called 90% down-day for American stock markets (and many other bourses also recorded downward dynamics). A 90% down-day is defined as a day when downside volume equals 90% or more of the total upside plus downside volume and points lost equal 90% or more of the total points gained plus points lost. The historical record show that 90% down-days do not usually occur as a single incident on the bottom day of an important decline, but typically on a number of occasions throughout a major decline. As far as the very short term is concerned, 90% down-days are often followed by two- to seven-day bounces.

The stock market is on a knife’s edge at the moment as seen in the chart below, showing the long-term trend of the S&P 500 Index (green line) together with a simple 12-month rate of change (ROC) indicator (red line). Although monthly indicators are of little help when it comes to market timing, they do come in handy for defining the primary trend. An ROC line below zero depicts bear trends as experienced in 1990, 1994, 2000 to 2003, and in 2007. And 2010? With the ROC delicately perched just above the zero line, the primary trend is still bullish, but barely so.

Source: StockChart.com.

Regarding seasonality, I have done a short analysis of the historical pattern of monthly returns for the S&P 500 Index from 1950 to August 2010. The results are summarized in the graph below.

Source: Plexus Asset Management (based on data from I-Net Bridge).

As shown, the six-month period from May to October has historically been weaker than the period from November to April as seen in the average monthly return of 1.05% for the “good six months” compared with 0.25%% for the “bad six months”. Importantly, when considering individual months, September (-0.18%) and October (-0.19%) have historically been the only two negative months of the year. (A word of warning, though: one should take cognizance of seasonality but understand that it is not a stand-alone indicator and it is anybody’s guess whether a specific year will conform to the historical pattern.)

Where does this leave us at this juncture? Considering an array of indicators, we are somewhat in no-man’s land regarding whether the bull or bear will…
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Dark Horse Hedge: Market Musings

Dark Horse Hedge: Market Musings   

Courtesy of Scott Brown at Sabrient, co-author with me of The Dark Horse Hedge 

The SPX continues to trade below both the 50 and 200 day moving average (MA) but yesterday rallied to close above the once solid support level of 1040.  The market bounce off the lows of July 2 also correlated with the Dark Cross formation which occurs when the 50 Day MA crosses the 200 Day MA downward.  As we discussed in the Dark Horse Hedge, this has not traditionally held up as a good foreshadower of bearish activity.  Nonetheless, it is worth noting that it took place. 

With a low volume rally on Wednesday, and the lack of any follow through midway through Thursday, combined with the rally lacking any real quantifiable economic basis, the charts lead us to believe that Wednesday’s action was a relief rally so far.  To begin even a modest short-term uptrend, the SPX will need to hold above the July 2 close of 1023 on any downward close and then break the close of Wednesday at 1060 or close today, whichever is higher.  The 14 day RSI is slightly bearish at 41.68 and would need to cross 50 to become a bullish technical signal.  As one other confirmation of the weak technical chart, I have added the 12-26-9 MACD which is currently -17 with the bullish signal line being a break of 0. 

So in conclusion, the SPX had a earnings foreshadow or relief rally on Wednesday, with Volume below the 50-day MA.  The index itself is remains securely below both the 50 and 200 day MA which have crossed.  The confirmation by RSI and MACD lead us to believe that based on our reading of the current chart, the rally of Wednesday will have to retest 1040 and more importantly 1022 before it can move higher.  If the next down move breaks 1022 and seeks what should be technical support from Sept 2009 of 995, we are technically in a downtrend. 

free stock charts

The DDH started with a 67% SHORT tilt last Thursday which is confirmed through this chart analysis.  On Tuesday, both LONG positions were up and the 4 SHORT positions were down creating the “Perfect Storm” for that day.  DDH attempts to build a L/S portfolio with the best fundamental companies held as LONG positions and the worst fundamental companies held…
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Bulls Keep The Pressure On

Daily Market Commentary: Bulls Keep The Pressure On

Courtesy of Fallond Stock Picks 

Small Caps again took charge and dragged Tech indices with the help of the semiconductor index. Bulls used rising support to launch their attack as the Russell 2000 added another percentage point. Supporting technicals made modest gains but are mapping bearish divergences with lower highs – but bulls won’t be complaining too much.

($RUT)

via StockCharts.com

The Nasdaq managed a new closing high, Thursday’s trading engulfing the narrow trading range from Wednesday. It’s nicely set up for a positive Friday.

($COMPQ)

via StockCharts.com

The semiconductor index added close to 2%, negating what was the most bearish close from the indices I track

($SOX)

via StockCharts.com

The strength in Small Caps and Tech filtered down to at least a positive finish for the S&P. But even here there is enough to suggest Friday could follow through higher

($SPX)

via StockCharts.com

Markets are nicely poised to continue higher – extended though they are. Will Amazon and Microsoft earnings be the dampner? 


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Basic Technical Patterns: The Foundation of Common Pattern Identification

Pharmboy’s latest chapter in his TA eBook – Chapter 7! - Ilene 

Links for previous chapters:

1. Understanding Market Cycles: The Art of Market Timing (Chp. 1),

2. Dow’s Theory of Markets (Chp. 2),

3 & 4. Fundamental vs. Technical Analysis and Types of Technical Trading (Chps. 3 & 4).

5. Stock Charting Basics: How to Read & Understand Stock Charts (Chp. 5 here.) 

6. Using Moving Averages for Long and Short Trades (Chp. 6)

Basic Technical Patterns: The Foundation of Common Pattern Identification

Courtesy of Pharmboy of Phil’s Stock World 

History tends to repeat itself, and trend lines, triangles, and other patterns do work in TA.  Charts show the collective opinions of all market participants for that day, month, or whatever timeframe that is used.  Charts are direct evidence of the trader’s beliefs and feelings, and each movement reflects a bit of human emotion (or at least it did before speed trading – HAL9000).  So, it should be no surprise that patterns repeat themselves over and over.

In Figure 1 below, typical up trends and down trends are shown.  These zigzag patterns are seen all the time, but why do they form?  Let’s say someone bought a stock at a certain point.  If that stock went up, but pulled back to the original purchase price, they will often think that it’s an opportunity to buy more at their original price, thus adding to their position.  This is also the same for shorts when they are able to short a stock at the same price they shorted previously. Then why do peaks form? People sell (or cover) to take profits.  Obviously, any increase in selling will pull the stock back.  Those who bought at a lower level may start buying again.  This repeats and repeats until 1) there is no more stock left for people to buy, or 2) there is too much supply and not enough buyers.  On a larger scale, this is how bull and bear markets begin and end.

Figure 1  Typical up and down trends.

The following basic chart…
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Stock Market Commentary: New Highs for Tech and Small Caps

Stock Market Commentary: New Highs for Tech and Small Caps

Courtesy of Fallond Stock Picks 

Small Caps and Tech continued their good form. Technicals continue to support the move higher for Small Caps (Russell 2000) with new highs for the MACD and +DI line. The Russell 2000 would have to give up 25 points (or 4%) just to test breakout support at 650.

The prior underperformance of the semiconductors was undone with today’s 2% gain. 

This revival helped keep the rally in the Nasdaq ticking over

But Large Caps didn’t quite live up to the gains of Tech and Small Caps

Last Friday’s breakout gap remains the most tempting pullback zone.  


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Stock Market Commentary: Modest Tech Gains

Stock Market Commentary: Modest Tech Gains

Courtesy of Fallond Stock Picks

A non-event day; techs made small gains, small and large caps posted small losses. From a technical perspective there was at least a stochastic ‘buy’ for many of the indices.


The Russell 2000 remained contained by its 50-day MA


Of the market breadth indicators, the Percentage of Nasdaq Stocks above their 50-day MA marked a bottom as it crossed its 5-day MA helped by an Ultimate Oscillator ‘buy’.


Other market breadth indicators are still some way from firming a bottom but buyers are prepared to take a look here.

 


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When The Markets Talk To Us

When The Markets Talk To Us

Pictograph of a Megaphone

Courtesy of Nicholas Santiago at InTheMoneyStock’s Rant and Rave Blog

This morning the market soared higher after the Gross Domestic Product (GDP) report by the U.S. government.  Reportedly the GDP increased 5.7 percent in the final quarter of the year.  This news was much better than economists had expected, and a rally was underway to start the day.  This was another day when the good news just kept pouring in and the media headlines looked great.  Then one might ask, why did the market reverse after making a 10:30 am high?  Please realize that the NASDAQ was trading at 2202.00 during the morning peak and is now below 2175.00, and negative on the day.

Often when a "buy the rumor, sell the news" type event takes place it is usually because price is already built into the market.  However, today many leading technology stocks have rolled over intra day even as they are at major daily chart support levels.  Leading stocks such as Apple Computer (NASDAQ:AAPL) have reversed to the negative side by selling off more than eight points intra day from today’s early session highs to the recent intra day low. Sandisk Corp (NASDAQ:SNDK) is another leading stock that is getting punished today by traders and investors.  However, this stock gapped lower and has continued to sell off into its daily 50 moving average at 25.80 which should be some short term support.  Microsoft Corp (NASDAQ:MSFT) is another stock that supposedly had very good earnings and was trading higher to start the day.  This stock gapped up higher at the open by trading at 29.90.  Since that opening print the stock has sold off and reversed to the negative side.

What is this telling us when good stocks can’t hold their gains after good news?  Often it tells us that conditions have changed.  The market has obviously priced in the good expectations from earnings and even the economic data.  It is prudent to remember that the market is similar to a pendulum.  Often the markets swing to one side too far, and then to the other side too far, and rarely finds that common middle ground or equilibrium point.

With that being sad one should always realize that you can’t fight the tape and the market is always right.  Therefore, price action is king and…
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EOD Count Oct 12 with a Bunch of Charts and Count Options

EOD Count Oct 12 with a Bunch of Charts and Count Options

Courtesy of Binve at Market Thoughts and Analysis

Here are the leading options as I see them. Again, there are no slam-dunk winners here and still several ways to count this rally.

First is my preferred count:

Pros: Listed here (Alternate Count Possibility - now the preferred count)
Cons: Wave 1 is now much longer than is proportional to the size of the A wave it will be part of in this count (I believe the long term wedge trendlines are *extremely important* and will be mostly respected until the final finishing wave where we might get an overthrow).

Alternate Count 1 – Columbia’s Option

Pros: Very elegant. Look at the trendlines for this count in his post (Week-end thoughts, A Fresh Prospective!!!)
Cons: None. I really like this count. And am really thinking about making it my preferred. Col’s trendline observation is the most insightful analysis yet I have seen on this rally.

Alternate Count 2 – Large Ending Diagonal

Pros: I think a huge wedge *wants* to end with a diagonal (Alternate Count (Very Speculative))
Cons: That is one big freaking wedge. It is way out of proportion with the rest of the waves in the rally

So did today’s action give any clues?

Like I mention above, **if** the move today is a Minute degree Wave 1 completion (as opposed to a A wave or a completed C), this has a few implications.

1. This will be the start of a very large rally, and will likely take us past the 7-month wedgelines.
2. I believe the wedgelines are *extremely important* will be respected, with only minor excursions, until the final move. If we get a significant break to the downside, I believe P2 will be over. If we get a significant break to the upside, then that will be the final rally before P2 is over.

I, of course, may be completely wrong. But this is a key assumption I am making.

So before jumping into some counts, lets look at Weekly and Daily charts.




Here are…
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Basic Trading 101

Click here for a FREE, 90-day trail subscription to our PSW Report!

Basic Trading 101

Courtesy of Allan

For me, trading is not a hobby, not a game of chance not some intellectual odyssey filled with clashing egos and chest pounding pissing contests. No, for me, trading is a way to make a living, doing something I love and am good at. So my approach is a little different then some of you may be used to.

Yet every so often a communication from one you impacts me with frustration and dismay. By now I would think that if you have been with me for six months, or a year, or longer, you would be making money trading, using some ideas and techniques that I have described over the months and years of writing AllAllan. But I hear something else from these communications, I hear that many of you are not getting it.

Today I am going to present to you three ways to trade using the simplest of strategies based on end of day prices and a minimal of necessary hardware or software. I am going to use an unleveraged ETF and remove all of my more sophisticated (read: expensive) tools, using only Market Club Triangles and 3 Line Break Point charts, both very similar in their construction and entirely objective in their application.

You can trade this going forward on XLF and probably not need anything else to be successful month to month, quarter to quarter and year to year. But it is my hope you will instead, glean from this the very basic premise of a simple rule-based system that can be applied and tweaked to any number of tradables, a simple trend following trading system from which anything is possible if you only have the discipline and desire to make it work.
 

XLF – Market Club Triangles -Daily Chart
 

market club charts
Their are actually two systems shown on the chart:

(1) Enter trades on appearance of WEEKLY TRIANGLES and exit on appearance of reversing DAILY TRIANGLES. If flat, RE-ENTER on appearance of DAILY TRIANGLE in direction of most recent WEEKLY TRIANGLE;

(2) ENTER/EXIT on appearance of WEEKLY TRIANGLES (disregard DAILY TRIANGLES).


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Zero Hedge

Greek Austerity And Economic Religion

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

There are many things going on in the Greece vs Institutions+Germany negotiations, and many more on the fringe of the talks, with opinions being vented left and right, not least of all in the media, often driven more by a particular agenda than by facts or know-how.

What most fail to acknowledge is to what extent the position of the creditor institutions is powered by economic religion, and that is a shame, because it makes it very difficult for the average reader and viewer to understand what happens, and why.

Greek...



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Phil's Favorites

Introducing the Zero Labor Factory (90% Free Actually); Robots at Chili's, Applebees, Panera

Courtesy of Mish.

In the strive for zero labor factories we are nearly there. Is 90% good enough?

China Daily reports Manufacturing Hub Starts Work on First Zero-Labor Factory.
A manufacturing hub in South China's Guangdong province has begun constructing the city's first zero-labor factory, a signal that the local authorities are bringing into effect its "robot assembling line" strategy.

Dongguan-based private company Everwin Precision Technology Ltd is pushing toward putting 1,000 robots in use in its first phase of the zero-labor project, China National Radio reported. It said the company has already put first 100 robots on the assembly line.

"The 'zero-labor factory' does not mean we will not employ any humans, but what it means is that we will sc...



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Chart School

STTG Market Recap May 28, 2015

Courtesy of Blain.

After 2 volatile days, a return to more calm on Thursday as the S&P 500 fell 0.13% and the NASDAQ 0.17%.  The daily Greek drama continues; IMF Managing Director Christine Lagare told a German newspaper that a Greek exit from the euro zone was possible but that this would probably not herald the end of the euro currency.  On Wednesday, both U.S. and European equities rallied after Greece said it had stated crafting a “staff level agreement” with its international bailout supervisors. However, European officials rebuked the claims on Thursday, saying there was some way to go before any agreement could be drawn up and that they were surprised by the upbeat sentiment from Greece.

Indexes look much the same as we entered the week.

...



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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

Dow Jones- 4th tightest trading range in 115 years is about to end!

Courtesy of Chris Kimble.

The tug of war between the bulls and bears has created an unusual situation this year, a historically tight trading range! The chart below reflects that the Dow Jones has traded within a 6.68% high to low trading range this year. That is the 4th tightest trading range through May, in the past 115 years.

CLICK ON CHART TO ENLARGE

The inset table to the right looks at future performance of the Dow following narrow trading ranges through May. As you can see, most of the time the market has ended the year to the upside. Will it be different this time?

The chart below shares that the S&P 500 i...



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Sabrient

Sector Detector: Stocks provide a tepid breakout as Fed greases the skids. So now what?

Courtesy of Sabrient Systems and Gradient Analytics

Early last week, stocks broke out, with the S&P 500 setting a new high with blue skies overhead. But then the market basically flat-lined for the rest of the week as bulls just couldn’t gather the fuel and conviction to take prices higher. In fact, the technical picture now has turned a bit defensive, at least for the short term, thus joining what has been a neutral-to-defensive tilt to our fundamentals-based Outlook rankings.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the t...



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OpTrader

Swing trading portfolio - week of May 24th, 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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Pharmboy

Big Pharma's Business Model is Changing

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

Understanding the new normal of a business model is key to the success of any company.  The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place.  Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.

Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants.  This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales.  However, in the c...



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Digital Currencies

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

 

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

By 

Excerpt:

Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.

On Monday, the Nasdaq (NDAQ) stock exchange said it would ...



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Market Shadows

Kimble Charts: US Dollar

Which way from here?

Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching. 

 

Phil writes:  If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher.  Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8.  So, if anything, I think the pressure should be up, not down.  

 

UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...



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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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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.

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