At this point it seems that every normally bullish trader is bearish, but not willing to go short until they see the big institutions go short first. Can't say I blame them, as they've seen all the bears squeezed into absurdity. The bulls are probably just sitting in cash, and still in some safer long plays (assuming you can find some?).
Where does the leave us? Once again... in the eye of a storm. Yes, the market is waiting for some big news to cause a sell off, or big rally (doubtful on that though). The housing market is still in terrible shape, but it doesn't seem to matter to the government, as they have other plans. What they are... is the real question?
They will tank this market eventually, but when... that's what we all want to know. Will it be on the jobs numbers tomorrow? We did have a down day today, even though the volume was light (only 179 million on the spy). That should tell you that they are struggling to keep the market up. If they can't close it up with low volume, what's going to happen when the first thug panics and the high volume comes in? (I mean banker of course).
The dollar exploded up today, which is another clue that the market is closer then ever to a nice correction. The euro is also tanking, and the Greece debt is still a problem. Portugals' credit was downgraded today too. Everything is pointing to a sell off, as there really isn't any good news out there to report. But, the media just does their usual spin on all the news realized, making it look like roses (but it smells like bull crap too me).
I just can't find any good news to justify going higher. Going long now is like playing a game of Russian Roulette... you're only click away from death, just like the market is now. As you pass the gun around, someone is going pull the trigger, and there's going to be a real bullet in the chamber.
But for now... we must wait to see who shoots themselves first? Will it be Obama with something he says, or maybe Bernanke speaking? Or, it could be some news event... but the storm is coming soon, make no mistake about that. I can see the dark clouds in the sky now.
Red
Half the stocks in the NDX are still under accumulation. Bulls should start sweating when that number drops to 1/3 or 1/4.
Detecting some money outflow in several sectors. Foreign stocks are underperforming this rally. This may be a sign to pending market decline. But such divergence can last months. Don't load up on front month puts based on just such divergence. But the divergence signals trouble ahead, as it has done so in the past.
Tech sector remains strong.
No confirmed sell signal yet. However,ETFs investing in foreign stocks are showing weakness across the board. Underperformance is expected to continue. Hence, in Wall Street speak, 'we see better opportunities for higher returns elsewhere.'
I do think we could go higher SC. Probably in the summer months. A sell off to 1115 spx, or as low as the fake print area of 107 spy is really about all I'm expecting.
I think the really big sell off, or P3 that everyone calls it, will come late this year.
Health care selling off. Transports not confirming this latest up move. Financials showing exhaustion gapping (?maybe?).
You are looking at too short a time frame there. Kind of like people seeing HS pattern in their 1 minute chart. lol
Okay — how much of a time lag do you think is prudent? IYT set a high in Jan, same day as SPY (and did not confirm the later higher high set by DIA and $RUT), set a recent low the same day as SPY in Feb.
http://stockcharts.com/h-sc/ui?s=IYT:SPY&p=D&yr…
Here is a IYT : SPY plot over the past years. The relationship is all over the lot. On what basis do you claim SPY needs to be confirmed by IYT? IYT outperformed SPY in 08, right up to the crash. There is a confirmation that went burst in major way.
To answer your question: There is no specific time period. Each case is different. Each situation is different. What we need to do, with EVERY INDICATOR, PATTERN, TOOLS, WAVE COUNTs, and whatever esle, is to look back into the past, amd see how they had hold up under different market condition.
http://stockcharts.com/h-sc/ui?s=IYT:SPY&p=D&st…
Look at Sept 2006. IYT not confirming SPY. Yet, SPY continued to rally.
My first reply to this was eaten by Disqus, which is really unfortunate because the context in the markets were very different than now.
I do appreciate the longer term view on these correlations, and I understand the caveats — the market never cares what wave we're in or what this-or-that indicator says.
Like any trader, I'm looking for an edge. I will examine any theory or indicator that seems to work.
http://en.wikipedia.org/wiki/Dow_Theory
See item #4. Stock market averages must confirm one another, and transports are the example given.
Was Dow Theory designed to be used in a short time frame like I'm using it? I doubt it. Did it work in January, anyway? Yes. Could IYT rocket to a new high tomorrow? Sure. But … IYT was scoffing at the strong move today, and looks to be pointing downward.
Disclaimer: short via my (very small) trading account, 33% long in my retirement account.
I know what Dow theory is. But theory is just that. Examine the data and see for yourself. I already showed two cases of failure in my previous post above.
Your examples are excellent, and clearly show why Dow Theory is just a theory.
Great post Red. I have to disagree on you with one point though. What this market needs to sell off is a stream of truly good news, not just the bad news that is spun into good by the msm. It would be great for the NFP number to come out and just destroy estimates. The ultimate sell the news event. Until then the bears as a collective are just a bunch of pussies that need to get their shiznit together.
Yeah, the bears are wiped out right now. It's up to the bulls to start selling first. Maybe you're right, and good news is the answer?
Leo:
I really think the market will slowly drift higher or trade in a narrow range for the foreseeable future. The Street is trying to lure retail investors back into the market by making “buy and hold” work again. That's why I really think we are in “2004” right now and we have a couple of years of a relatively lull market in a flat-to-higher trend.
Maybe, but I still think we will sell off some first. Could be down to the 107.38-107.82 fake print area, or maybe only the 1115 spx area.
I will agree with you that the summer months will most likely put in a higher high. But before that can happen, they need more fuel… and that's bears. Without and bears to squeeze, which they don't have any left right now, they can't push too much higher.
You can see that they are running out of steam. With the light volume yesterday, they should have closed positive, not negative. They are struggling right now to keep the tape up. That's really why I think a sell off will happen first, before any move higher.
Leo:
I agree with you a (light) sell-off may be needed first before the market can push higher again. Personally, I think a drop to SPX 1115 is likely but not lower. We'll see.
No one in the market is bullish other than Crammer and Uncle Ben's printing press….
I guess just one printing press is enough to take this market to 15000….
Till then all the people with logic wisdom intelligence can suffer in their intellectual glut and hand over their money to cronies of Uncle Ben…
Everyone thinks this will be a slight correction again with a push higher after that. That's what makes me think it will continue down. However, I am no longer stupid and will cover my positions when I get the opportunity.
Carl’s morning call:
June S&P E-mini Futures: Today's range estimate is 1165 – 1176. I think a move to 1200 is underway.
1161 -1168.75 actual yesterday (7.75 points)
1170.75 (last night's high)
1165-1176 estimate for today (11 points)
1170 currently, so estimate is -5.00 to +6.00 from here (neutral)
Carl has posted a blank message.
Perhaps he is speechless.
I certainly am. $RUT is looking weak, compared to financials.
I think Carl tried to say he was long one unit of /ES.
I'm thinking $RUT goes up, in spite of everything.
Take a look here:
http://www.etf-corner.com/markets/
Nice charts.
IWM has been rising that line up for a while, and can ride it up a few more weeks or months. No sign yet that it won't do that.
Here's what I see:
http://www.screencast.com/users/dreadwin/folder…
Dread, Still in DRV?
Yes. 🙁
I'm proud of you! If it doesn't turn around in the next couple of days you can get out but meanwhile, you have to give it a chance. I think it will be the best trade you ever took in the end.
At the time I wrote that, DRV was at 8.05 ish. Luckily for me, it went up about 5.5% since.
Dreadwin,
Nice chart 🙂
I agree that the chart clearly says $RUT is going to go down. No question about that.
All the folks likely to go short, short here like mad.
$RUT goes up (the unseen hand).
Shorts cover, driving $RUT up.
Feeling anti-government today.
Dreadwin, really like your charts so thanks again. Your chart fits well with the $NYMO and the aroon indicator (springheel jack has showed this before) and I have never seen the $NYMO fail. We shall see.
I Bought some TZA at $6.74. Selling it at $6.69.
That's my trading plan.
No idea what I will do if it goes up.
Carl broke his silence. No trade though.
Just to say he sees /ES dropping to the 1165-1168 area before marching higher.
1175 now, so that's a 7-10 point drop from here.
AAPL down on relatively big QQQQ up day. Interesting. Keeping the faith.
Carl is now Long one unit at 1167.25
the trade winds are beginning to blow harder
those of you who have been around this rodeo for the 00' high, 02' low, 07' high, 09' low know how to identify the perfect storm
we're getting close to our quota of liquidated speculative capital
$SPX was rejected @ it's containment pt. this morning
$VIX has not made new lows since last Friday when it hit it's terminal de-leverage pt. of 16.26
the AAPL orchard is getting ready to harvest the crops that were planted back in 1/09' as it has reached it's quota
I'll run the numbers this weekend but the continued upward trend this week is going to put the $SPX somewhere in the top 10 percentile probability for reaching it's terminal value
these 10 pt. gyrations will probably continue through tomorrow
Love you Sundancer! Thank you 🙂
Carl just sold one unit at 1164.50
🙂
Carl missed the run, and jumped back in too early when it fell. Tough market.
Carl at day’s end:
1165-1176 estimate for today (11 points)
1160.25 -1176.50 actual today (16.25 points)
Nailed the high, missed the low
Trades:
In /ES at 1167.25, out at 1164.50 (loss of 2.75 points)
Grade D (lost money)
TZA opened down 2.7%. Gap was filled, as was yesterday’s gap ($6.82 to $6.84). TZA was up 2.0% at the high, and closed up 1.7%.
We are in a New Moon Trade, which favors TZA.
Following AmericanBulls guidelines, this trade bought TZA today at yesterday’s closing price ($7.04).
After eight days, this trade is down 2.4%, and owns TZA over night.
Volume for TZA was fairly high overall, and the highest volume for an up day in 34 days. Good for TZA.
$RVX (VIX for $RUT) was up 6.0% yesterday and closed up 6.8% today with TZA up 1.7%. No divergence.
TZA has now been up 6 of the last 10 days — chop.
The low for TZA today was $6.70, the lowest TZA price since the birth of George Washington. Not good for TZA.
Ultimate Oscillator for TZA bottomed at 20 twenty three trading days ago and has generally risen since then but has remained below 50 for twenty two days and finally broke above 50 (50.152). Indicating the end of weakness for TZA. Was up 11 points today. Rather fantastic for TZA.
MACD on the monthly chart crossed over upwards slightly (0.009) yesterday, and is at 0.034 today. This last happened 2 months ago. Rather fantastic for TZA.
Bollinger Bands for $RVX (VIX for $RUT): today’s huge white candle rose above the congestion area and closed above the Top Bollinger Band. MACD has crossed from below and is rising. Looks like $RVX will be falling. The last time $RVX closed above the Top Bollinger Band, $RUT fell for 10 days. Good for TZA.
Bollinger Bands for $RUT: The black candle for $RUT fell back into a congestion area. The top Bollinger band is falling, and $RUT seems to have returned to a topping formation. MACD crossed down today. Good for TZA.
Bollinger Bands for $RUT:$RVX ($RUT vs VIX for $RUT): today’s black candle fell far below the congestion area. The upper Bollinger Band is falling. Looks like a confirming that the topping process is completing. Good for TZA.
TZA had a higher high, lower low and higher close – very good for TZA.
Money flow for the Total Stock Market was $365 million flowing out of the market on an down day. Generally good for TZA.
I will post the AmericanBulls candlestick interpretation a bit later.
Overall, it looks very good for TZA tomorrow.
I'm not going out on a limb and saying that “the top” was put in today… but it's highly likely. Of course it might not be the final top, as I suspect we churn higher into the summer months.
If this wasn't the short term top… we are within sneezing distance now.
what are you showing for the HOD on SPY?
I've got 118.17, but the high trade was 118.10
LOL… I actually show 118.1666 spy for the high. Cute huh?
LOL… the operators always give me a good laugh
the sacrifice ritual is next SUN-day
I hope I am not the one being sacrificed!
Oh great, that means we go higher again! When will they stop with the fake prints?!
for those with eagle eyes will notice the operator stopped GS .02 shy of it's 1/7/10 high today, it's sequence of lower highs remains unbroken
Until we get to that 118.17 print! We shall see. McClellan showing we go south now (since we clearly crossed the 0 line). But perhaps they bring it to a triple top after we reach the oversold levels on the $NYMO.
http://stockcharts.com/h-sc/ui?s=$nymo
Although I suppose we could still bounce from here as we did in late November after we crossed the 0 line.
The Daily view from Americanbulls
TNA is now a SELL. There was a low reliability SELL-IF signal last evening, which was confirmed today when TNA (after a gap up) dropped to yesterday’s closing price ($55.61). The candlestick today was a Long Black Candlestick (strong selling pressure).
TZA is now a BUY. There was a low reliability BUY-IF signal last evening, which was confirmed today when TZA (after a gap down) rose to yesterday’s closing price ($7.04). The candlestick today was a White Candlestick (normal buying pressure).
Two recent TZA Buy signals have failed and may perhaps serve as a warning:
Buy at $7.33, sell at $7.14
Buy at $7.11, sell at $7.05
Buy at $7.04 today
Summary of $RUT based ETFs:
Hold: IWM (1x) [I think AB is just wrong here. It’s a sell also (to me)]
Confirmed SELL: UWM (2x), TNA (3x)
Confirmed BUY: RWM (-1x), TWM (-2x), TZA (-3x)
Action for tomorrow: none
The Daily view from Americanbulls
TNA is now a SELL. There was a low reliability SELL-IF signal last evening, which was confirmed today when TNA (after a gap up) dropped to yesterday’s closing price ($55.61). The candlestick today was a Long Black Candlestick (strong selling pressure).
TZA is now a BUY. There was a low reliability BUY-IF signal last evening, which was confirmed today when TZA (after a gap down) rose to yesterday’s closing price ($7.04). The candlestick today was a White Candlestick (normal buying pressure).
Two recent TZA Buy signals have failed and may perhaps serve as a warning:
Buy at $7.33, sell at $7.14
Buy at $7.11, sell at $7.05
Buy at $7.04 today
Summary of $RUT based ETFs:
Hold: IWM (1x) [I think AB is just wrong here. It’s a sell also (to me)]
Confirmed SELL: UWM (2x), TNA (3x)
Confirmed BUY: RWM (-1x), TWM (-2x), TZA (-3x)
Action for tomorrow: none
for those with eagle eyes will notice the operator stopped GS .02 shy of it's 1/7/10 high today, it's sequence of lower highs remains unbroken
Until we get to that 118.17 print! We shall see. McClellan showing we go south now (since we clearly crossed the 0 line). But perhaps they bring it to a triple top after we reach the oversold levels on the $NYMO.
http://stockcharts.com/h-sc/ui?s=$nymo
Although I suppose we could still bounce from here as we did in late November after we crossed the 0 line.
I'm not going out on a limb and saying that “the top” was put in today… but it's highly likely. Of course it might not be the final top, as I suspect we churn higher into the summer months.
If this wasn't the short term top… we are within sneezing distance now.
what are you showing for the HOD on SPY?
I've got 118.17, but the high trade was 118.10
LOL… I actually show 118.1666 spy for the high. Cute huh?
Oh great, that means we go higher again! When will they stop with the fake prints?!
LOL… the operators always give me a good laugh
the sacrifice ritual is next SUN-day
I hope I am not the one being sacrificed!
TZA opened down 2.7%. Gap was filled, as was yesterday’s gap ($6.82 to $6.84). TZA was up 2.0% at the high, and closed up 1.7%.
We are in a New Moon Trade, which favors TZA.
Following AmericanBulls guidelines, this trade bought TZA today at yesterday’s closing price ($7.04).
After eight days, this trade is down 2.4%, and owns TZA over night.
Volume for TZA was fairly high overall, and the highest volume for an up day in 34 days. Good for TZA.
$RVX (VIX for $RUT) was up 6.0% yesterday and closed up 6.8% today with TZA up 1.7%. No divergence.
TZA has now been up 6 of the last 10 days — chop.
The low for TZA today was $6.70, the lowest TZA price since the birth of George Washington. Not good for TZA.
Ultimate Oscillator for TZA bottomed at 20 twenty three trading days ago and has generally risen since then but has remained below 50 for twenty two days and finally broke above 50 (50.152). Indicating the end of weakness for TZA. Was up 11 points today. Rather fantastic for TZA.
MACD on the monthly chart crossed over upwards slightly (0.009) yesterday, and is at 0.034 today. This last happened 2 months ago. Rather fantastic for TZA.
Bollinger Bands for $RVX (VIX for $RUT): today’s huge white candle rose above the congestion area and closed above the Top Bollinger Band. MACD has crossed from below and is rising. Looks like $RVX will be falling. The last time $RVX closed above the Top Bollinger Band, $RUT fell for 10 days. Good for TZA.
Bollinger Bands for $RUT: The black candle for $RUT fell back into a congestion area. The top Bollinger band is falling, and $RUT seems to have returned to a topping formation. MACD crossed down today. Good for TZA.
Bollinger Bands for $RUT:$RVX ($RUT vs VIX for $RUT): today’s black candle fell far below the congestion area. The upper Bollinger Band is falling. Looks like a confirming that the topping process is completing. Good for TZA.
TZA had a higher high, lower low and higher close – very good for TZA.
Money flow for the Total Stock Market was $365 million flowing out of the market on an down day. Generally good for TZA.
I will post the AmericanBulls candlestick interpretation a bit later.
Overall, it looks very good for TZA tomorrow.
At the time I wrote that, DRV was at 8.05 ish. Luckily for me, it went up about 5.5% since.
My first reply to this was eaten by Disqus, which is really unfortunate because the context in the markets were very different than now.
I do appreciate the longer term view on these correlations, and I understand the caveats — the market never cares what wave we're in or what this-or-that indicator says.
Like any trader, I'm looking for an edge. I will examine any theory or indicator that seems to work.
http://en.wikipedia.org/wiki/Dow_Theory
See item #4. Stock market averages must confirm one another, and transports are the example given.
Was Dow Theory designed to be used in a short time frame like I'm using it? I doubt it. Did it work in January, anyway? Yes. Could IYT rocket to a new high tomorrow? Sure. But … IYT was scoffing at the strong move today, and looks to be pointing downward.
Disclaimer: short via my (very small) trading account, 33% long in my retirement account.
I know what Dow theory is. But theory is just that. Examine the data and see for yourself. I already showed two cases of spectacular failure in my previous post above.
Your examples are excellent, and clearly show why Dow Theory is just a theory.