New Highs For Techs

by Chart School - March 11th, 2010 10:49 am

Stock Market Commentary: New Highs for Tech and Small Caps

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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Test Post 1234

by Chart School - March 8th, 2010 11:29 am

S&P 500 Rebound Continues to Defy Trends

Courtesy of Trader Mark at Fund My Mutual Fund

There used to be a saying that markets fall much faster than they rise. Like many things the past year, historical trends such as that truism have been blown out of the water.

The S&P 500 is now up 7% in 3 weeks (the Russell 2000 is doing even better) and continues to steamroll anyone who stands in its way. The 8% correction in late January to mid February? Similary, it took 3 weeks. (Click to enlarge)

Our "ups" now happen as quickly as our "downs"… and yet again (a broken record) with little volume to show for it on the upswing. You can see that on the bars at the bottom of the chart, the only days the liquidity flood can be contained (selloffs) are on heavy volume days. Almost all lighter volume days mean sideways or upside action.

The beat goes on; another V-shaped, light volume rally to mimic those of 2009. Anyone using traditional technical analysis (use of volume) continues to look the fool.

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Never Have So Many Stocks Been So Stretched Above Their 200ma.

by Chart School - September 17th, 2009 2:02 pm

More on the subject of overbought stocksm by Rob Hanna at Quantifiable Edges. H/t to The Pragmatic Capitalist.

My question: are conditions comparable between now and the four other instances of spiking overbought readings that Rob charts below? - Ilene

Never Have So Many Stocks Been So Stretched Above Their 200ma.

Courtesy of Rob’s Quantifiable Edges

Near the end of August I discussed that some of the breadth measures tracked by Worden were near all-time highs. This situation corrected itself as the market embarked on a brief selloff. Tonight two of their indicators actually registered their highest readings ever. These are T2109 and T21111 which track the number of stocks 1 and 2 standard deviations above their 200-day moving averages. Below is a long-term chart of T21111 with full history of the indicator going back to 1986.

I marked on the chart the 4 other instances that came close to the current reading. What you may notice is that these spikes were generally brief. Every case was followed by at least a mild selloff that worked off the severely overbought conditions. In no case did the extreme spike mark the end to the bull market that created it. It’s dangerous to read too much into only 4 instances, but a short-term pullback does seem reasonable. The current reading does not suggest a long-term top, though.

Tags: overbought spikes, Quantifiable Edges, Stock Market

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Dr. Strangebear

by Chart School - September 17th, 2009 2:21 am

Here are a few quick posts by Tim Knight at Slope of Hope. - Ilene

Dr. Strangebear

Or……..how I learned to stopped worrying and love the bull.

I bought a very large position in SSO earlier today for a couple of reasons:

I don’t get my jollies out of losing money;
The OPEX week clearly has import;
I was impressed and convinced by Fujisan’s post last night, calling for - if memory serves - a push to 1086 by Friday.

I am having fewer and fewer compunctions about buying select stocks. That is evident from my watch lists.

One cause for concern for the bulls remains…………..volume! Just take a look at the volume graph; it’s simply pathetic.

When Does the V Exhaust?

It is generally true that prices climb higher at a far slower rate than they drop. This rally, however, has been a remarkable exception. The push higher has been explosive, and it has pushed higher with just about the same timetable and force as the drop itself.

The question, of course, is: when (if ever) will it end?

There are as many opinions as there are traders, but a few general camps would be, using the example of the Russell 2000 above:

It has another 10% to go, and it will happen quickly. That would be painful for the bears, but I would hasten to point out that, at that level, the Russell would have completely retraced to the neckline of a head and shoulders pattern spanning three years whose beauty would make bears (if there are any left by then) weep tears of joy.
It’s done climbing and will start falling. This has been uttered so many times by so many parties (including, I admit, a few times by me) that it’s not even worth considering anymore. The entire, "OK, now………….errr………OK, NOW!………..oh, wait…………….errr, NOW!" gets really, really old.
We’re in a major new bull market and it’s simply going to keep pushing its way through to progressively higher prices.

For the bears out there who would like some encouraging news, the semiconductor index - which is a helpful bellweather - is looking like it is approaching a huge area of resistance. This is why I bought SSG yesterday.

Snark and Despair All the Rage

Wow, and I thought emotions were running hot last week. Things are spiraling out of control.

I am getting emails from people that are quitting trading. That has never happened to me - not in five years of doing this - that people are out-and-out…

Tags: bears, Bulls, market rally, SOX

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Dave’s Daily

by Chart School - September 16th, 2009 11:35 pm

Dave Fry’s MARKET COMMENT

September 16, 2009

“Last thing I remember I was running for the door
I had to find the passage back to the place I was before
‘Relax,’ said the night man, ‘We are programmed to receive
You can check out any time you like but you can never leave’.”

Hotel California
The Eagles

Since we sold some stuff two days ago it’s natural we want to find the place we were before. But, as I read somewhere else today maybe this is the Hotel California Economy and stock market. Let’s just say bulls put the pedal to it today squeezing any shorts and prepping for quad-witching beginning tomorrow and ending Friday. Things can get weird around this period and volume increases. Generally, it’s a good time to stay away but not so far this week for bulls.

Volume increased today and breadth was positive but not spectacularly so.

Read all of Dave’s Market Comment here. >>

Tags: Dave Fry, Dave's Daily, Market Comment, S&P

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Production and Capacity Utilization Up

by Chart School - September 16th, 2009 10:41 am

Production and Capacity Utilization Up

Courtesy of Econompic Data

Marketwatch reports:

The output of the nation’s factories, mines and utilities rose 0.8% in August. Output was also much stronger in July than first estimated, the Federal Reserve said Wednesday. The August increase was just a bit better than expected by economists surveyed by MarketWatch. Analysts had been expecting a 0.7% gain. Capacity utilization - a gauge of slack in the economy — rose to 69.6% in August from a revised 69.0% in July. There were gains across the board in August. Manufacturing expanded 0.6% in August. Excluding autos and auto parts, manufacturing rose 0.4%.

An economic rebound is definitely under way, how fast and far that rebound is remains to be seen. That said, I am impressed by the strength in output outside of the manufacturing sector. As I detailed yesterday, capacity utilization has historically had a strong relationship with employment.

In addition, the increase in capacity utilization decreases the worry over deflation (though not out of the woods yet). The relationship between capacity utilization and inflation was detailed here and we may be seeing the beginning stages of what may be a reflationary period that the broader investment community had been worried about for some time.

Source: Federal Reserve

Tags: Capacity Utilization, CPI, economic rebound

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DGDF?

by Chart School - September 16th, 2009 10:09 am

DGDF?

Courtesy of Macro Man

Is the dollar going down forever? Well, to paraphrase Benjamin Franklin, nothing is forever except death and taxes, but it certainly seems that the DGDF crowd is having their day (week? month? quarter?) in the sun.

The normative question of whether the dollar should go down "forever" is an emotive one; Macro Man is generally sceptical of such arguments, particularly in the current context when the US current acccount deficit (usual source of DGDF $ bearishness) is eminently reasonable by the standards of the past decade or so. Moreover, a number of the currencies that have performed best against the buck recently (here’s lookin’ at you, NZD and ZAR!) haven’t exactly been paragons of balance of payment virtue themselves.

However, while market focus is usually (and justifiably) on the flow of currency movements (i.e., portfolio flow versus the US need to finance an ongoing c/a deficit), it seems as if the current bout of dollar weakness may have more to do with a stock adjustment…i.e., Asian and Middles East CBs reducing the share of dollars in the reserve bounties that they’ve accumulated over the past year or so.

Throw in a step-shift in the perceived equilibrium level of USD/JPY, thanks to DPJ laissez-faire, add a dash of flow recycling from Asian CBs standing in the way of overdue currency appreciation (so what else is new?) , and throw in a pinch of dollar-negative seasonality, and these are the things of which market trends are made.

EUR/USD has broken up to new highs for the year, courtesy of both public and private-sector flow. Near-term resistance lies at last December’s high of 1.4719 and the Sep ‘08 high of 1.4866; above those levels, there’s quite a bit of fresh air.

The breakout was confirmed, or indeed foreshadowed, by therally in precious metals a few weeks ago. Gold is not far below its nominal high of 1032 (though obviously well below its real high), but there appears to be more near-term upside in silver, which has broken and held the key $16 level.

There are still a few holes in the DGDF story, however, particularly if it’s one predicated on a cyclical rebound. Base metals have been taken to the smelter recently (boom, boom), whereas one might reasonably expect the rising tide of a broad-based DGDF-deval to lift all boats…even those made of base metals. The chart of aluminum is indicative of the complex.

Similarly, oil (as measured by…

Tags: Dollar, EUR/USD

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Dave’s Daily

by Chart School - September 15th, 2009 10:39 pm

Dave’s Daily Market Comment

September 15, 2009

NO SPEED BUMPS IN SIGHT?

This rally has only modest volume (although more today) and positive major news remains thin but always “better than expected” (Retail Sales and Empire State Mfg Survey). But, hey, Bernanke postulates that the recession is “likely over”. Now, who the hell knew that?!! Geithner was more equivocal in his comments saying a “true recovery still has a ways to go”. Well, okay, let’s just say things are better than before.

Volume increased on an up day for a change but some of this is misleading given one glance at the late day trading on the 5 minute SPY chart. Breadth however was positive but not overwhelmingly so.

Read all of Dave’s Daily here.>>

Tags: Dave's Daily, Market Comment

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MarketClub Alerts broken down and analyzed!

by Chart School - September 15th, 2009 3:51 pm

MarketClub Alerts broken down and analyzed!

Our friend Brad at Market Club is excited about a new notification tool, called "Alerts." It’s an email alert system that makes it easy to stay on top of their Trade Triangles system, as well as 18 other breakout patterns. Brad just sent me a video that explains how it all works. Just click here.

p.s. To check out the latest chart analyses at Market Club, click here. There are videos on Gold, the Nasdaq, the S&P 500 and various technical analysis methods unique to the Market Club.

Tags: Gold, market club, Nasdaq, S&P 500, videos

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Short Interest At Lowest Levels In Over 2 Years

by Chart School - September 15th, 2009 1:48 pm

Short Interest At Lowest Levels In Over 2 Years

Courtesy of Market Folly (and Bespoke)

Thanks to the fine folks over at Bespoke as always for flagging this data. We now see that short interest in the S&P 1500 is at the lowest levels since February 2007, sitting currently at 6.6%. Take it for what it’s worth: