Thursday, May 28, 2009
Wednesday, May 27, 2009
Equities vs Bonds
In financial markets, there are two essential asset groups the big money moves between: Bonds and Equities. Whichever offers less risk attracts inflow.
One of the intermediate term indicators I follow is 19 day RSI of NDX/TLT ratio. When this ratio exceeds 70, equities usually top out for at least short term, mostly intermediate term as money moves from equities to bonds. We have this situation at this juncture. The opposite happens when this ratio is oversold.
One of the intermediate term indicators I follow is 19 day RSI of NDX/TLT ratio. When this ratio exceeds 70, equities usually top out for at least short term, mostly intermediate term as money moves from equities to bonds. We have this situation at this juncture. The opposite happens when this ratio is oversold.
Tuesday, May 26, 2009
Congestion continues...
Continuing congestion is still giving the both sides hard time but the intermediate term writing has been put on the wall a while ago.
Beat goes on
As long as the market is contained by those trend structures, distribution will eventually prevail and the current congestion will give a way to the new IT downtrend.
Tops are process, this process may take some time, the longer it takes, the stronger and longer the sell off will be. If I have to take a wild guess, this action may continue until 200DMA on SPX converges to the price close enough while the index is contained by the corresponding IT and LT trends.
However if you are a ST player, I suggest you to keep the following two charts in mind for the next day or two. They are showing extreme readings that usually coincided with ST, sometimes IT tops.
ISEE equities-only closed at 199
CBOE P/C ratio closed at 0.54 while 10DMA of OEX P/C has been flashing an intermediate term sell as posted before
Daily PCs:
10DMA of dailies:
Beat goes on
As long as the market is contained by those trend structures, distribution will eventually prevail and the current congestion will give a way to the new IT downtrend.
Tops are process, this process may take some time, the longer it takes, the stronger and longer the sell off will be. If I have to take a wild guess, this action may continue until 200DMA on SPX converges to the price close enough while the index is contained by the corresponding IT and LT trends.
However if you are a ST player, I suggest you to keep the following two charts in mind for the next day or two. They are showing extreme readings that usually coincided with ST, sometimes IT tops.
ISEE equities-only closed at 199
CBOE P/C ratio closed at 0.54 while 10DMA of OEX P/C has been flashing an intermediate term sell as posted before
Daily PCs:
10DMA of dailies:
Big contract btw 901-904
has just been shorted wildly. Don't know how it may affect the index at this point but from the past observations, we may see some reversal quickly.
Banks and Financials
Today's gap down was quite predictable according to the trend structures on XLF. Not only the first 60 day-120min chart but the second weekly chart also implies intermediate term sell off as it gaped below the TL on weekly.
XLF 2 year/weekly
XLF 2 months/120min
XLF 2 year/weekly
XLF 2 months/120min
Sunday, May 24, 2009
Boomerang effect
Coming weeks will be important for the long term. I do not mean to tell you about the expected events or developments like possible bankruptcy of some states, recurring liquidity problem of banks, credit card or commercial real estate default related problems. Certainly no one can predict when they exactly happen.
I will talk about what I see on the charts and try to give my perspective. As Atilla mentioned several times in the last few weeks, major US indices and sectors along with several emerging market indices have achieved their intermediate term targets projected by LT xTrend studies.
Among those indices, there is one that I always follow closely; VIX. As you may recall I had bought VIX 30 calls when VIX was trading below 30, testing lifetime rising xTrends last week. The reaction was powerful, the calls doubled quickly.
It was interesting to observe the fact that despite SPX rallied and VIX dropped further, those calls didn't loose much value, indicated that implied volatility spiked across the market.
This was the last piece in the puzzle after several weeks of topping action. I believe we are on the verge of a broad sell off which should contain lagging commodity stocks as well.
I will talk about what I see on the charts and try to give my perspective. As Atilla mentioned several times in the last few weeks, major US indices and sectors along with several emerging market indices have achieved their intermediate term targets projected by LT xTrend studies.
Among those indices, there is one that I always follow closely; VIX. As you may recall I had bought VIX 30 calls when VIX was trading below 30, testing lifetime rising xTrends last week. The reaction was powerful, the calls doubled quickly.
It was interesting to observe the fact that despite SPX rallied and VIX dropped further, those calls didn't loose much value, indicated that implied volatility spiked across the market.
This was the last piece in the puzzle after several weeks of topping action. I believe we are on the verge of a broad sell off which should contain lagging commodity stocks as well.
Friday, May 22, 2009
Thursday, May 21, 2009
Wednesday, May 20, 2009
IF
ES is currently down about 4, perhaps couple more ES points will be enough to open SPY below the green channel tomorrow. Can they save the sucker this time?
Last time futures started falling towards the channel bottom overnight, they ramp it on Indian market news later in the morning. I cant see any excuse left do you?
IF SPY opens below that channel, it will trigger some selling from the get go. Those who were asking for volume... we also got some volume today, which came on the downside.
Last time futures started falling towards the channel bottom overnight, they ramp it on Indian market news later in the morning. I cant see any excuse left do you?
IF SPY opens below that channel, it will trigger some selling from the get go. Those who were asking for volume... we also got some volume today, which came on the downside.
Tragedy Train ...
I have been posting long and intermediate term charts for the last two weeks indicating limited upside for US financial markets. Today SPX closed at where it was two weeks ago, confirming the consistency the intermediate term studies I posted.
From my experience, one day, this topping action will end with an unexpected action and this trading range will resolve to the downside as charts suggest. In other words, the markets will do the obvious in the most unobvious way in a quick fashion. That time the bull train will already be moving down the hill, too fast to jump off. They will call it profit taking or healthy pullback or any other excuse just like how they called the initial rally off the lows "short squueze" in March.
My humble opinion, one should make an exit plan now and trade accordingly because the market may not be around here for the usual post-holiday sellers to unload on first degree suckers.
From my experience, one day, this topping action will end with an unexpected action and this trading range will resolve to the downside as charts suggest. In other words, the markets will do the obvious in the most unobvious way in a quick fashion. That time the bull train will already be moving down the hill, too fast to jump off. They will call it profit taking or healthy pullback or any other excuse just like how they called the initial rally off the lows "short squueze" in March.
My humble opinion, one should make an exit plan now and trade accordingly because the market may not be around here for the usual post-holiday sellers to unload on first degree suckers.
Number of the stocks above 200 day MA...
The most important moving averages in technical analysis are 50 day and 200 day MAs.
For intermediate term market moves, 50DMA is considered an important support/resistance where institutional activity intensify in the direction of the intermediate term trend.
But 200DMA defines bull and bear markets. It is considered a bear market if 200DMA is declining and prices are below it. Conversely, it is considered a bull market if 200DMA is rising and prices are above it.
Now think about the following indicator. This indicator shows the number of the stocks above 200DMA. IF you too consider this indicator as a descriptive of bull / bear markets, how would you expect it to move during a bull or a bear market?
The answer is exactly what you see on the following chart. This indicator moves between specific ranges based on the market type. If it is a bull market, the range is approximately 700-1600 as observed between Apr 2003 - Oct 2007. If it is a bear market, then range appears to be lower like 200-1200 as observed during the burst of internet bubble and the current bear market.
The indicator is currently near the top of its bear market range.
The above intermediate term chart doesn't mean market should drop today or tomorrow immediately. There may be more consolidation around the current levels or little higher but the upside is very limited.
In fact the following indicator, 10DMA of OEX P/C ratio, which spotted huge tops starting with the bull market high is approaching the spot again. We may need one or two weeks to get there.
NDX/VXN ratio chart showing a test of the neckline is just another evidence for the overall weakness in NDX
For intermediate term market moves, 50DMA is considered an important support/resistance where institutional activity intensify in the direction of the intermediate term trend.
But 200DMA defines bull and bear markets. It is considered a bear market if 200DMA is declining and prices are below it. Conversely, it is considered a bull market if 200DMA is rising and prices are above it.
Now think about the following indicator. This indicator shows the number of the stocks above 200DMA. IF you too consider this indicator as a descriptive of bull / bear markets, how would you expect it to move during a bull or a bear market?
The answer is exactly what you see on the following chart. This indicator moves between specific ranges based on the market type. If it is a bull market, the range is approximately 700-1600 as observed between Apr 2003 - Oct 2007. If it is a bear market, then range appears to be lower like 200-1200 as observed during the burst of internet bubble and the current bear market.
The indicator is currently near the top of its bear market range.
The above intermediate term chart doesn't mean market should drop today or tomorrow immediately. There may be more consolidation around the current levels or little higher but the upside is very limited.
In fact the following indicator, 10DMA of OEX P/C ratio, which spotted huge tops starting with the bull market high is approaching the spot again. We may need one or two weeks to get there.
NDX/VXN ratio chart showing a test of the neckline is just another evidence for the overall weakness in NDX
Tuesday, May 19, 2009
Monday, May 18, 2009
CPT and Me
The fundamental characteristic difference between Crash Prevention Team and me is simple. I manage and wait till the other side runs out of ammo... Unlike PPT, CPT is impatient, uneducated and fool. They think they can manipulate major trend shifts by gunning shorts in small time frames but the market knows what coming in next quarters. They are wasting tax-payer's hard earned money by helping stupid eager incompetent fat cats getting fat, by preventing the market forces, discounting mechanism of the efficient markets to do their work. The end will be horrendous.
Last night, futures rallied after brief breakdown and cash market opened within the channel I was expecting to be broken today... this caused more quant squeeze... the longer this process takes, the stronger the sell off will be.
Last night, futures rallied after brief breakdown and cash market opened within the channel I was expecting to be broken today... this caused more quant squeeze... the longer this process takes, the stronger the sell off will be.
Sunday, May 17, 2009
Mary had a little lamb ...
Monthly charts of VIX and SPX, showing back-test of lifetime xTLs broken back in October 2008.
ES daily showing a target around 790
ES daily showing a target around 790
Friday, May 15, 2009
And the story goes on ...
Please refer to the previous post for the explanations of the following charts.
Long and Intermediate Term Charts : Sunday, May 10, 2009
Mother Goose... : Thursday, May 7, 2009
Long and Intermediate Term Charts : Sunday, May 10, 2009
Mother Goose... : Thursday, May 7, 2009
Thursday, May 14, 2009
Wednesday, May 13, 2009
Important going forward....
This is a very important sign of desperation and I wish all readers to think about these brief lines repeatedly.
-----------------------------
Obama administration to expand housing plan
Obama officials to expand housing aid to help borrowers who don't qualify for other assistance...
* Alan Zibel, AP Real Estate Writer
* On Thursday May 14, 2009, 12:10 am EDT
WASHINGTON (AP) -- The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don't qualify for other assistance.
For the rest of the article:
Obama administration to expand housing plan
.
.
-----------------------------
Obama administration to expand housing plan
Obama officials to expand housing aid to help borrowers who don't qualify for other assistance...
* Alan Zibel, AP Real Estate Writer
* On Thursday May 14, 2009, 12:10 am EDT
WASHINGTON (AP) -- The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don't qualify for other assistance.
For the rest of the article:
Obama administration to expand housing plan
.
.
They been buying calls since SPX 920
They been buying calls since SPX 920, odds favor there is not going to be a short term bottom till they start buying puts...
Tomorrow's open is very important as SPX along with many ETF and large caps closed near important pivots defined by multiweek trends.
Tomorrow's open is very important as SPX along with many ETF and large caps closed near important pivots defined by multiweek trends.
Covered POT @ 100.90
Don't want to hold too many position overnight... Otherwise the stock is headed to 85 or lower over the intermediate term.
Tuesday, May 12, 2009
Onun artik arabasi yok...
I have a feeling there is gonna be some fireworks after the close...
But like I said, this is a small one in the ocean, there are 10s of other big ones in the line that will make this one look like a picnic...
But like I said, this is a small one in the ocean, there are 10s of other big ones in the line that will make this one look like a picnic...
Sunday, May 10, 2009
Long and Intermediate Term Charts
Following are the updated versions of the charts I posted last week... Including modified "P" index. Please refer to the original posts for the explanations.
Experts say GM bankruptcy almost inevitable
PS: I will post a few charts along with my thoughts about the next financial tsunami coming from the debt defaults, commercial real estate and credit card front which will force even the most bloated and government-supported bank to test march lows... From xTrends perspective, it will be important to understand the fundamental differences between the coming sell off and a bull market correction. In other words, momos and suckers are essentially now well trained to buy the dips while trend structures suggest the market will likely sell off like the way it rallied off the march lows. Non-stop bleeding...
Experts say GM bankruptcy almost inevitable
PS: I will post a few charts along with my thoughts about the next financial tsunami coming from the debt defaults, commercial real estate and credit card front which will force even the most bloated and government-supported bank to test march lows... From xTrends perspective, it will be important to understand the fundamental differences between the coming sell off and a bull market correction. In other words, momos and suckers are essentially now well trained to buy the dips while trend structures suggest the market will likely sell off like the way it rallied off the march lows. Non-stop bleeding...
Thursday, May 7, 2009
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