Click to enlarge
Wednesday, December 24, 2008
Gold
If we assume the deflationary trend abates during 2009, then GOLD has a ways higher to go. The chart is a graphic response to observations by Steven Rock on another message board. It should not be taken as a prediction of the direction for gold over the short term.
Original chart markup was by Steven Rock
Click to enlarge
Click to enlarge
Monday, December 15, 2008
Flatline
The McClellan Oscillator has managed to stay above +100 for the past two weeks. Considering the nastiness of the recent decline, this is positive behavior but does not signify the start of an impulse move higher. Rather what we are seeing is a rebound from a crash-oversold position which should last for another two or three months.
The chart below reflects the severity of the recent decline, almost all stocks on the NYSE are in major declines. Over the last three weeks we have begun to see some rebound activity as the Percent of Stocks Above the 50 Day MAVG has started to move up off the floor. Unfortunately the Percent of Stocks Above the 200 Day MAVG has barely budged and is flatlined in the 5% zone.
This is options expiration week and we can expect a choppy market, based on the high MCO reading we could expect a bias to the downside. I still expect the major averages to try to test the 200 day moving averages over the next few months. While I expect the trend to be moderately higher, IRA investors should remain in cash.
SPX with HiLo's and Percent Above
Click to enlarge
The chart below reflects the severity of the recent decline, almost all stocks on the NYSE are in major declines. Over the last three weeks we have begun to see some rebound activity as the Percent of Stocks Above the 50 Day MAVG has started to move up off the floor. Unfortunately the Percent of Stocks Above the 200 Day MAVG has barely budged and is flatlined in the 5% zone.
This is options expiration week and we can expect a choppy market, based on the high MCO reading we could expect a bias to the downside. I still expect the major averages to try to test the 200 day moving averages over the next few months. While I expect the trend to be moderately higher, IRA investors should remain in cash.
Click to enlarge
Tuesday, December 9, 2008
MCO update for Monday 12-9-08
The McClellan Oscillator is up in rarified territory again and it is unlikely it will go much higher. Over the next day or so we could see a pullback before resuming the upward move in the indexes. I cannot determine whether or not the correction will produce a sharp one day decline of just a day or so of choppy behavior.
The McClellan Oscillator for Monday 12/9/08
Click to expand
The 65 minute DJIA Chart - Fibonacci Time Cycles
Click to expand
Nothing special here, the DJIA continues to work it's way higher against a huge wall of worry. This chart updates the one in the previous posts to provide a check on how well the fibonacci time projections are working. The 610-233-89 nesting missed the low by 3 bars and was the start of the acceleration higher. The 60 is the nominal 10 trading day cycle which looks like it is inverting here or only strong enough to produce a minor correction. It's experimental enough to be fun to just watch but I wouldn't make bets on it.
Updated dialogue at 10:36
Waver said And note how price has broken above the various moving averages. They were resistance, but now the moving averages are support. At least, it reminds me of the charts of late 1929 to April 1, 1930.
Yes, that's what I think as well. It's option time coming up, plus any residual tax loss selling and an high MCO reading, so we could get a little pause here. It is very nice that the markets did not collapse 400 points right out of the chute today. Volatility is high so a 200 point correction is just a nervous jiggle (tell that to my stock george:-) but I'm encouraged here so far.
I really think this is a market one needs to step back, take a deep breath and look at closely to see what is really happening. Is it really the end of the world? Remembering that it always seems like the end of the world at the low, are we really seeing the total collapse of the capitalist system here, or just a major screw up and the pain that goes along with it?
If you look at individual stocks, a lot are down 50% to 80% from their highs of not just a year ago. I'm inclined to think that once again, the market is right and that it is doing what it needs to confuse the most people. The panic we have just experienced is enough to keep the majority waiting for a bottom 30% to 50% lower before they jump in and scoop up the bargains. This seems like a very obvious point of view to hold, how can it possibly be correct?
I think the momentum low has probably been established and that absolute price low may be in as well. If not, I seriously doubt we will make lower lows that are more than 10% lower than what we have just seen. There are some gaps and stuff, along with a need for a positive divergence in market breadth which keep me sanely cautious. But I think the superbears are going to be again proven really wrong.
Click to expand
Click to expand
Nothing special here, the DJIA continues to work it's way higher against a huge wall of worry. This chart updates the one in the previous posts to provide a check on how well the fibonacci time projections are working. The 610-233-89 nesting missed the low by 3 bars and was the start of the acceleration higher. The 60 is the nominal 10 trading day cycle which looks like it is inverting here or only strong enough to produce a minor correction. It's experimental enough to be fun to just watch but I wouldn't make bets on it.
Updated dialogue at 10:36
Waver said And note how price has broken above the various moving averages. They were resistance, but now the moving averages are support. At least, it reminds me of the charts of late 1929 to April 1, 1930.
Yes, that's what I think as well. It's option time coming up, plus any residual tax loss selling and an high MCO reading, so we could get a little pause here. It is very nice that the markets did not collapse 400 points right out of the chute today. Volatility is high so a 200 point correction is just a nervous jiggle (tell that to my stock george:-) but I'm encouraged here so far.
I really think this is a market one needs to step back, take a deep breath and look at closely to see what is really happening. Is it really the end of the world? Remembering that it always seems like the end of the world at the low, are we really seeing the total collapse of the capitalist system here, or just a major screw up and the pain that goes along with it?
If you look at individual stocks, a lot are down 50% to 80% from their highs of not just a year ago. I'm inclined to think that once again, the market is right and that it is doing what it needs to confuse the most people. The panic we have just experienced is enough to keep the majority waiting for a bottom 30% to 50% lower before they jump in and scoop up the bargains. This seems like a very obvious point of view to hold, how can it possibly be correct?
I think the momentum low has probably been established and that absolute price low may be in as well. If not, I seriously doubt we will make lower lows that are more than 10% lower than what we have just seen. There are some gaps and stuff, along with a need for a positive divergence in market breadth which keep me sanely cautious. But I think the superbears are going to be again proven really wrong.
Tuesday, December 2, 2008
DJIA Fibonacci Cycles
The fibonacci time harmonics for the next few days. There is a nesting occurring this coming Friday, give or take a day.
The DJIA 65 minute chart - 6 bars per day
Click to expand
Click to expand
Indigestion
After five up days in a row. I was probably remiss in not warning that Mondays correction could be severe but why ruin a holiday?
Most of us have never seen such an extreme market decline and there is something which can be learned from the current MCO behavior.
On the chart I've marked some price points P1 and P2 which correspond to the pullbacks which occurred when the MCO corrected from overbought levels above +200 (Points 1 & 2)
Generally speaking, in a 'normal' market a +200 reading on the MCO has bullish connotations. If the MCO moves above +200 WITH the 10% index rising from a corrective low above the -400 level, it is an indication that market breadth is very bullish and that prices are moving strongly higher.
In cases where the 10% Index repeatedly is going below the -500 level, especially in the very rare cases we are seeing now where the 10% Index has gone below -1000 it is clear that the market is very weak. In very week markets the MCO "correction" from the +200 level tends to be VERY SEVERE in terms of price loss and Mondays action proves the case. (Point 4)
In general the severity of the corrections can be inferred from the levels reached by the Summation index. Without sticking hard and fast numbers in the levels, I have generally found that when the SUM Index is "high" market rallies are strong, price movements in individual issues is exaggerated, a larger percentage move occurs. Conversely, when the SUM Index is "low" like it is now, market declines, including overbought corrections like Mondays, tend to be severe, individual issues make exaggerated high volatility moves to the downside. (Point 5)
Point 3 just points out that both the MCO and the 10% Index can stall at/near the zero line. Either this can reverse the trend, or just be a pause to refresh. In the current market, it's probably a good bet to assume the worst and that the markets will attempt to retest the lows again.
However, this nastiness is getting long in the tooth and yesterdays violent move to the downside might have been the bulk of the correction and that we could see an upward reversal sometime in the next few days.
The McClellan Oscillator for Monday 12/1/08
Click to expand
PS: (see chart in the previous post below) Gold decided that deflation was more likely than inflation and acted like a turkey Monday, so much for the 200 day test.
Most of us have never seen such an extreme market decline and there is something which can be learned from the current MCO behavior.
On the chart I've marked some price points P1 and P2 which correspond to the pullbacks which occurred when the MCO corrected from overbought levels above +200 (Points 1 & 2)
Generally speaking, in a 'normal' market a +200 reading on the MCO has bullish connotations. If the MCO moves above +200 WITH the 10% index rising from a corrective low above the -400 level, it is an indication that market breadth is very bullish and that prices are moving strongly higher.
In cases where the 10% Index repeatedly is going below the -500 level, especially in the very rare cases we are seeing now where the 10% Index has gone below -1000 it is clear that the market is very weak. In very week markets the MCO "correction" from the +200 level tends to be VERY SEVERE in terms of price loss and Mondays action proves the case. (Point 4)
In general the severity of the corrections can be inferred from the levels reached by the Summation index. Without sticking hard and fast numbers in the levels, I have generally found that when the SUM Index is "high" market rallies are strong, price movements in individual issues is exaggerated, a larger percentage move occurs. Conversely, when the SUM Index is "low" like it is now, market declines, including overbought corrections like Mondays, tend to be severe, individual issues make exaggerated high volatility moves to the downside. (Point 5)
Point 3 just points out that both the MCO and the 10% Index can stall at/near the zero line. Either this can reverse the trend, or just be a pause to refresh. In the current market, it's probably a good bet to assume the worst and that the markets will attempt to retest the lows again.
However, this nastiness is getting long in the tooth and yesterdays violent move to the downside might have been the bulk of the correction and that we could see an upward reversal sometime in the next few days.
Click to expand
PS: (see chart in the previous post below) Gold decided that deflation was more likely than inflation and acted like a turkey Monday, so much for the 200 day test.
Subscribe to:
Posts (Atom)