Look at the volume supporting the sliding price of silver:
http://stockcharts.com/h-sc/ui?s=slv&p=D&b=5&g=0&id=p71498691869
Silver will allow some diversification of sorts when gold bottoms out. Although my plays will not be GLD and SLV, but DGP and AGQ, ddouble long funds for the metals.
For now I am in DZZ and looking at ZSL, double shorts ETFs for Gold and silver, respectively.
Thursday, December 10, 2009
Don't miss Gold's retracement
Gold seems to be setting up another great buy at a lower price:
http://stockcharts.com/h-sc/ui?s=gld&p=D&b=5&g=0&id=p71498691869
Notice the high volume supporting the price drop. The 104 breakout level is one sweet target. See the weekly chart too:
http://stockcharts.com/h-sc/ui?s=GLD&p=W&b=5&g=0&id=p31631643819
Notice on that one how after it wen over 100 in early '08, it came back to the breakout level of 68, then began its run to 120 from there.
http://stockcharts.com/h-sc/ui?s=gld&p=D&b=5&g=0&id=p71498691869
Notice the high volume supporting the price drop. The 104 breakout level is one sweet target. See the weekly chart too:
http://stockcharts.com/h-sc/ui?s=GLD&p=W&b=5&g=0&id=p31631643819
Notice on that one how after it wen over 100 in early '08, it came back to the breakout level of 68, then began its run to 120 from there.
Up on low volume Wed...
But more importantly, we are again near the bottom of the SPX trading range formed over the past 4 weeks.
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p71498691869
Do we bounce up again or fall through the floor?
The COMP is at the bottom trend line of its uptrend in an analogous situation:
http://stockcharts.com/h-sc/ui?s=comp&p=D&yr=0&mn=3&dy=0&id=p71498691869
The Dow is in a completely similar spot to both!
http://stockcharts.com/h-sc/ui?s=djia&p=D&yr=0&mn=3&dy=0&id=p71498691869
http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p71498691869
Do we bounce up again or fall through the floor?
The COMP is at the bottom trend line of its uptrend in an analogous situation:
http://stockcharts.com/h-sc/ui?s=comp&p=D&yr=0&mn=3&dy=0&id=p71498691869
The Dow is in a completely similar spot to both!
http://stockcharts.com/h-sc/ui?s=djia&p=D&yr=0&mn=3&dy=0&id=p71498691869
Monday, December 7, 2009
Futures down, Europe down, etc.
The markets look poised for follow-through (down) this morning. Fun fun fun.
Here is a good page for currency charts:
http://www.cnbc.com/id/24419463
See the listing at the upper left.
And here is Stockcharts.com monthly newsletter. A great place to learn some new tricks.
http://blogs.stockcharts.com/chartwatchers/
Here is a good page for currency charts:
http://www.cnbc.com/id/24419463
See the listing at the upper left.
And here is Stockcharts.com monthly newsletter. A great place to learn some new tricks.
http://blogs.stockcharts.com/chartwatchers/
Saturday, December 5, 2009
Friday, December 4, 2009
An Interesting Friday
It was quite an interesting Friday with high volume taking the SPX, Dow, and COMP to a HHHV+, but then dropping back. The inability for these indices to close over their respective prior highs is another sign that these prices are weak and likely to break down. In discussions O'B said that today's action was a failure despite the higher closes. Prices certainly did not respond to high volume with increased prices.
The traders used the jobs data as an excuse to drive up prices in the morning. But as O'B said, if jobs are coming back then interest rates will have to go up (up from the emergency-low-level they are not at). If that happens, the US Dollar will strengthen and the stock market will respond in-kind, by dropping.
He discussed the dollar-market correlation as a relationship that date back at least 10 years:
The point here, of course is that when the Dollar goes up the stock market goes down. Only once was there a de-coupling in 2004-5 (red line) as the market went sideways for over a year. This is not a highly quantitative correlation. For example when the Dow went from 6600 to 10500, up 59% on this last run, the Dollar index, which is a value of the Dollar vs. a basket of other currencies, went down just 19%, 89 to 75. I suspect this has to do with some currencies being in sync with ours and some not. The point is, there is an solid action-reaction in place and small movements in the Dollar can trigger big market moves.
Gold began what must be a correction Friday, dropping from 1212 to 1148/oz or 3.7%.
Using GLD to represent the volume, you can see that this is a major move:
GLD as a fund now owns a huge amount of physical gold. When the price drops, they have to sell gold. They are a huge owner so when the price drops, say 3% that is a lot of gold that has to be sold from their stores; O'B described how this selling will beget more selling and how this can build on itself.
These prior Fibonacci retracements for gold suggest at least a 0.382 pullback will occur:
Applying that to the last up-leg, a 0.382 pullback will be to just about 1000/oz, where a great buying opportunity could occur again.
However, gold has been know to have much more vicious pullbacks and, as shown by the 2008 pullback, greater than 0.618, care needs to be exercised when determining a buy price. Catch it right and the gain could be another 300 to 500/oz. Get in too early and that sort of gain could be only 100-200.
Ed Young, O'B commodity expert, suggested that in the long term, improvement in the economy will result in a reversion to the norm. He noted that people will get stuck on the dollar-market relationship but longer term an improving economy will put downward pressure on treasury bond prices and so cause interest rates to go up and thus support the Dollar. At the same time, a better economy will provide top-line (sales) growth that will pressure the stock market up. What a nice explanation of that cycle. O'B does not agree with this. Young says that he may be right and the current relationship can persist for a long time too.
Larry Pesavento articulated the idea that today shuold have been a day of high price increases, given the high volume. He mentioned that the Transports and Utilities borke out with higher prices>
Transports looks good overall:
http://stockcharts.com/h-sc/ui?s=iyt&p=D&b=5&g=0&id=p51735345377
But the utilities also had a large failure:
http://stockcharts.com/h-sc/ui?s=ixlu&p=D&b=5&g=0&id=p51735345377
Larry suggested that a follow-through should occur early in the week.
He discussed Gold's drop below 1170 (close at 1162) as a major break in support.
He likes the cycle timing of Monday as a bellwether day.
Tom mentioned AAPL's drop today implying that it is an indicator of lower prices in that stock but also in the market where it has been a leader in the recent uptrend. Its companion in tech, GOOG has not yet broken but notice how volume has droppeed during the last upleg:
http://stockcharts.com/h-sc/ui?s=goog&p=D&b=5&g=0&id=p71498691869
The traders used the jobs data as an excuse to drive up prices in the morning. But as O'B said, if jobs are coming back then interest rates will have to go up (up from the emergency-low-level they are not at). If that happens, the US Dollar will strengthen and the stock market will respond in-kind, by dropping.
He discussed the dollar-market correlation as a relationship that date back at least 10 years:
The point here, of course is that when the Dollar goes up the stock market goes down. Only once was there a de-coupling in 2004-5 (red line) as the market went sideways for over a year. This is not a highly quantitative correlation. For example when the Dow went from 6600 to 10500, up 59% on this last run, the Dollar index, which is a value of the Dollar vs. a basket of other currencies, went down just 19%, 89 to 75. I suspect this has to do with some currencies being in sync with ours and some not. The point is, there is an solid action-reaction in place and small movements in the Dollar can trigger big market moves.
Gold began what must be a correction Friday, dropping from 1212 to 1148/oz or 3.7%.
Using GLD to represent the volume, you can see that this is a major move:
http://stockcharts.com/h-sc/ui?s=GLD&p=D&b=5&g=0&id=p48794117067
GLD as a fund now owns a huge amount of physical gold. When the price drops, they have to sell gold. They are a huge owner so when the price drops, say 3% that is a lot of gold that has to be sold from their stores; O'B described how this selling will beget more selling and how this can build on itself.
These prior Fibonacci retracements for gold suggest at least a 0.382 pullback will occur:
Applying that to the last up-leg, a 0.382 pullback will be to just about 1000/oz, where a great buying opportunity could occur again.
However, gold has been know to have much more vicious pullbacks and, as shown by the 2008 pullback, greater than 0.618, care needs to be exercised when determining a buy price. Catch it right and the gain could be another 300 to 500/oz. Get in too early and that sort of gain could be only 100-200.
Ed Young, O'B commodity expert, suggested that in the long term, improvement in the economy will result in a reversion to the norm. He noted that people will get stuck on the dollar-market relationship but longer term an improving economy will put downward pressure on treasury bond prices and so cause interest rates to go up and thus support the Dollar. At the same time, a better economy will provide top-line (sales) growth that will pressure the stock market up. What a nice explanation of that cycle. O'B does not agree with this. Young says that he may be right and the current relationship can persist for a long time too.
Larry Pesavento articulated the idea that today shuold have been a day of high price increases, given the high volume. He mentioned that the Transports and Utilities borke out with higher prices>
Transports looks good overall:
http://stockcharts.com/h-sc/ui?s=iyt&p=D&b=5&g=0&id=p51735345377
But the utilities also had a large failure:
http://stockcharts.com/h-sc/ui?s=ixlu&p=D&b=5&g=0&id=p51735345377
Larry suggested that a follow-through should occur early in the week.
He discussed Gold's drop below 1170 (close at 1162) as a major break in support.
He likes the cycle timing of Monday as a bellwether day.
Tom mentioned AAPL's drop today implying that it is an indicator of lower prices in that stock but also in the market where it has been a leader in the recent uptrend. Its companion in tech, GOOG has not yet broken but notice how volume has droppeed during the last upleg:
http://stockcharts.com/h-sc/ui?s=goog&p=D&b=5&g=0&id=p71498691869
The Santa Claus Rally Phenomenon
The Santa Claus Rally Circumstances
Part I: The Setup
December is typically an up-month for equity markets. Now, that does not mean you can just plow money into anything and it will go up.
The TTTS helps you to discriminate among stocks once you have identified a particular stock group with upside potential. The Santa Claus Rally often creates new groups of stocks that will simply do well or poorly in the December time period. And it can be as simple as this:
1) Stocks that have been increasing in value during the calendar year will be bought by funds to make it look like they have a lot of “winners” in their portfolios.
2) Stocks that have been decreasing in value during the calendar year will be sold by funds to make it look like they have no “losers” in their portfolios.
What do “funds” have to do with it? They are the major holders in the stock market. What they do drives stock prices to a great extent. Like it or not, we individual traders are just the fleas on an elephant. Using price-volume correlation as our major tool, we go watch carefully where the elephant goes so we do not lose our major source of information!
Look at the December SPX charts below. There is nothing special about many of them, although they do tend to finish “up” from the December 1st price for the vast majority of years since 1999. Note too, that an early December dip often occurs before takeoff.
The SPX trend so far for December 2007 is Up about 1%. Santa has only showed up half the time in the new century!
So, the first step of this game is easy. QED. Then, you identify the strongest sectors for the year and then the strongest stocks in that “group” and implement a selection and trading strategy a la TTTS.
See Part II for the next step. Note the years for the Dec charts below:
Part I: The Setup
December is typically an up-month for equity markets. Now, that does not mean you can just plow money into anything and it will go up.
The TTTS helps you to discriminate among stocks once you have identified a particular stock group with upside potential. The Santa Claus Rally often creates new groups of stocks that will simply do well or poorly in the December time period. And it can be as simple as this:
1) Stocks that have been increasing in value during the calendar year will be bought by funds to make it look like they have a lot of “winners” in their portfolios.
2) Stocks that have been decreasing in value during the calendar year will be sold by funds to make it look like they have no “losers” in their portfolios.
What do “funds” have to do with it? They are the major holders in the stock market. What they do drives stock prices to a great extent. Like it or not, we individual traders are just the fleas on an elephant. Using price-volume correlation as our major tool, we go watch carefully where the elephant goes so we do not lose our major source of information!
Look at the December SPX charts below. There is nothing special about many of them, although they do tend to finish “up” from the December 1st price for the vast majority of years since 1999. Note too, that an early December dip often occurs before takeoff.
The SPX trend so far for December 2007 is Up about 1%. Santa has only showed up half the time in the new century!
So, the first step of this game is easy. QED. Then, you identify the strongest sectors for the year and then the strongest stocks in that “group” and implement a selection and trading strategy a la TTTS.
See Part II for the next step. Note the years for the Dec charts below:
Thursday, December 3, 2009
High Downside Volume
Today qualified for a High Volume Off a Top in the TTTS which generally leads to a subsequent, significant price decrease. The price drop almost all happened in the last hour of trading, also a bearish signal -- pros tend to trade on the close. That drop was supported by big volume on all 3 of the indices ETF's: DIA, QQQQ and SPY.
The market continues to signal its weakness while holding its high price level without a significant fundamental basis.
The market continues to signal its weakness while holding its high price level without a significant fundamental basis.
Thurs' Weakness
The SPX and Dow are in the midst of a second price-failure day in a row today, not a good sign for bulls, although a HHHV+ (a TTTS benchmark that will eventually prompt a return for a test of that high -- although it could be 3 years away) looks likely for each.
The COMP is pushing into its recent high with much lower volume.
The COMP is pushing into its recent high with much lower volume.
Monday, November 30, 2009
ABCs down in formation
Look for ABCs trending down in many stocks with today's little bump up:
http://stockcharts.com/h-sc/ui?s=QLD&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=DIA&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=OIH&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=WFC&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=QQQQ&p=D&b=5&g=0&id=p51735345377
13 Dow stocks in clear ABCs down:
http://stockcharts.com/h-sc/ui?s=aig&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=dd&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=hon&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=hpq&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=ibm&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=jnj&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=ko&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=msft&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=pfe&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=pg&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=utx&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=wmt&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=xom&p=D&b=5&g=0&id=p51735345377
And a firm candle top (Hanging Man) by Gold:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=QLD&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=DIA&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=OIH&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=WFC&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=QQQQ&p=D&b=5&g=0&id=p51735345377
13 Dow stocks in clear ABCs down:
http://stockcharts.com/h-sc/ui?s=aig&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=dd&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=hon&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=hpq&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=ibm&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=jnj&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=ko&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=msft&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=pfe&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=pg&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=utx&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=wmt&p=D&b=5&g=0&id=p51735345377
http://stockcharts.com/h-sc/ui?s=xom&p=D&b=5&g=0&id=p51735345377
And a firm candle top (Hanging Man) by Gold:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&b=5&g=0&id=p51735345377
Stochastics SPX Signal
The chart above gives a sell/short signal: The lower oscillator, Full Stochastics, has the short term (heavy) line crossing under the longer term line AND both are under the 80 (over bought level).
Futures are up...
Futures have been trying to come out of the box stronger this Mon morning, but their prices are eroding here at 6AM. The big boys get in around 7AM and that is typically the time to check for a change.
There will be a major effort to close out the month with high prices today. And that will leave a high closeout for the year just a short month away. It will be a test of how much strength the bears have to keep this unstable market elevated. That will surely be the strategy. But the longer they can convince the public that this is real, the better they will have it on the short side when it finally fails catastrophically.
The foreign markets are up significantly this morning, But it looks like a counter-trend bounce for the HSI:
And a failure (could not hold its price increase) for the DAX:
The NIKKEI, of course has already broken apart, dropping from 10,500 to 9,200 thru Oct & Nov:
There will be a major effort to close out the month with high prices today. And that will leave a high closeout for the year just a short month away. It will be a test of how much strength the bears have to keep this unstable market elevated. That will surely be the strategy. But the longer they can convince the public that this is real, the better they will have it on the short side when it finally fails catastrophically.
The foreign markets are up significantly this morning, But it looks like a counter-trend bounce for the HSI:
And a failure (could not hold its price increase) for the DAX:
The NIKKEI, of course has already broken apart, dropping from 10,500 to 9,200 thru Oct & Nov:
Sunday, November 29, 2009
401k management for low-experience people
To Ramona, who I met last weekend and who is interests in just reining in losses from a 401k, here are a couple of tricks that will keep you knowledgeable about market conditions. First, a little Technical Analysis goes a long way:
1) For background, study to provide you some understanding of how working with market data can be successful, see
http://stockcharts.com/school/doku.php?id=chart_school:overview:technical_analysis
2) One simple, very significant technical tool promoted by Al Thomas, follows the “200-Day Moving Average”. Whenever that moving average starts to trend downward, it has been a major sell signal that has lasted for several years, until it turned back up. Bottom line, buying more when the 200-day MA is trending down is a bad idea. That goes for individual stocks as well as for market indices
1) For background, study to provide you some understanding of how working with market data can be successful, see
http://stockcharts.com/school/doku.php?id=chart_school:overview:technical_analysis
2) One simple, very significant technical tool promoted by Al Thomas, follows the “200-Day Moving Average”. Whenever that moving average starts to trend downward, it has been a major sell signal that has lasted for several years, until it turned back up. Bottom line, buying more when the 200-day MA is trending down is a bad idea. That goes for individual stocks as well as for market indices
A good read on Gold and the US Dollar
As futures remain in the dumpster again this evening, going into Monday morning:
Here is a lucid description of what is happening and why volume analysis has been not functioning well lately. The arguments made here for the Dollar and Gold also hold for the stock market itself anas well as for its relationship to that currency and commodity.
http://www.kitco.com/ind/nadler/nov272009.html
An analysis of weekly candles for the U.S. indices suggests no significant bearish signals:
Weekly Volume _ 11/27/2009 _ _
_ Actual _ Normalized Prior Week
SPX _ 10.445 _ 14.76 _ 17.26
$NYTV _ 654.83 _ 925.30 _ 1142
SPY _ 521.849 _ 737.40 _ 857.2
_ _ _
COMP _ 6.069 _ 8.58 _ 10.15
QQQQ _ 251 _ 354.67 _ 455
_ _ _
DJIA _ 2.367 _ 3.34 _ 3.58
DIA _ 39.1 _ 55.25 _ 48.2
Weekly Candles 11/27/2009 _ Volume _ Comparison Quality
_ Candle/Fm _ _ _ Volume
SPX _ Inside Candle _ DnLV+ _ PHLV- _
$NYTV _ Inside Candle _ DnLV+ _ PHLV- _
SPY _ Spinning Top _ HHLV- _ PHLV- _
_ _ _ _
COMP _ Spinning Top _ DnLV+ _ LLLV+ _
QQQQ _ Spinning Top _ DnLV+ _ LLLV+ _ DLV+
_ _ _ _
DJIA _ Spinning Top _ DnLV+ _ HHLV- _ HMLV--
DIA _ Spinning Top _ HHHV+ _ HHHV+ _ HMLV--
Candles for last week were fairly unimpressive as either bearish or bullish. Price movement was largely Down on Lower Volume, a relatively bullish pattern. In contrast, the S&P 500 and NYSE Volume could be interpreted as pushing their high with much lower volume, a very bearish disclosure due to the extreme volume contrast. The only other bearish signal came from the Dow and DIA where the weekly candles went to Higher Highs with Lower Volume, although that pattern has certainly not been one that has paid off much lately.
Here is a lucid description of what is happening and why volume analysis has been not functioning well lately. The arguments made here for the Dollar and Gold also hold for the stock market itself anas well as for its relationship to that currency and commodity.
http://www.kitco.com/ind/nadler/nov272009.html
An analysis of weekly candles for the U.S. indices suggests no significant bearish signals:
Weekly Volume _ 11/27/2009 _ _
_ Actual _ Normalized Prior Week
SPX _ 10.445 _ 14.76 _ 17.26
$NYTV _ 654.83 _ 925.30 _ 1142
SPY _ 521.849 _ 737.40 _ 857.2
_ _ _
COMP _ 6.069 _ 8.58 _ 10.15
QQQQ _ 251 _ 354.67 _ 455
_ _ _
DJIA _ 2.367 _ 3.34 _ 3.58
DIA _ 39.1 _ 55.25 _ 48.2
Weekly Candles 11/27/2009 _ Volume _ Comparison Quality
_ Candle/Fm _ _ _ Volume
SPX _ Inside Candle _ DnLV+ _ PHLV- _
$NYTV _ Inside Candle _ DnLV+ _ PHLV- _
SPY _ Spinning Top _ HHLV- _ PHLV- _
_ _ _ _
COMP _ Spinning Top _ DnLV+ _ LLLV+ _
QQQQ _ Spinning Top _ DnLV+ _ LLLV+ _ DLV+
_ _ _ _
DJIA _ Spinning Top _ DnLV+ _ HHLV- _ HMLV--
DIA _ Spinning Top _ HHHV+ _ HHHV+ _ HMLV--
Candles for last week were fairly unimpressive as either bearish or bullish. Price movement was largely Down on Lower Volume, a relatively bullish pattern. In contrast, the S&P 500 and NYSE Volume could be interpreted as pushing their high with much lower volume, a very bearish disclosure due to the extreme volume contrast. The only other bearish signal came from the Dow and DIA where the weekly candles went to Higher Highs with Lower Volume, although that pattern has certainly not been one that has paid off much lately.
Subscribe to:
Posts (Atom)
