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Thursday, April 26, 2012
GO
The Summation index is finally turning higher and crossing its 13 day moving average. In the past this has led to rallies lasting a month or more.
The MCO and SUM Index
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Friday, April 20, 2012
Facebook IPO May 17
The Facebook IPO is set for May 17, 2012. I was curious about how the general market reacted after the last mega IPO for Google. Here are the comparative charts starting in August 2004 until Google peaked out along with the indices.
With the current market in a defensive mode, the old adage to "Sell in May" may not apply this time around. The MCO and SUMmation Index are moving slowly towards a buy configuration and the Facebook IPO may be the catalyst.
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Tuesday, April 10, 2012
MCO update 4/11/12
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Yesterday I noted elsewhere that the Climactic Volume Indicator was suggesting the bounce which we saw today.
Tuesday: The chart below should be self explanatory. The CVI is made a rather extreme low today indicating panic in the market and the potential for an immediate reversal tomorrow. Of course nothing with the market is black and white and this coould be the start of a waterfall decline like we saw in late 2011 (left side of chart).
However the MCO closed at -315, with the 10% Index at -488 which is quite oversold and the area one would expect to generate at least a healthy . bounce.
The SPX cash closed at 1358.59 below the 2STDEV BB at 1375.14, and below the 3 STDEV BB at 1362.17, just above the July 2011 high at 1356.50. With the SPX below the Bollinger Bands like this we need to see an immediate rally and then a retest of the current lows within a few trading days to reverse the market correction which has been in effect for the last few months. If not...
making lows not seen in awhile.
click to enlarge
Monday, April 9, 2012
MCO Update 4/09/12
The McClellan Oscillator dropped into oversold territory Monday. This was accompanied by the Cumulative Volume Index spiking down to -55, an area which has produced bounces in the past. It is not clear whether or not the current decline harbingers something worse to follow.
The Summation INdex, at -2417 is now in neutral territory (zero=+1000) and with the MCO below -200 even if the market begins to bottom here, with the MCO forming a complex reversal pattern, the SUM Index should get below -2000 before turning higher.
Because of the prolonged divergence between the MCO and SUM with the SPX the current spike may only represent a retest of the early March lows. So far the 10% Index has stayed above the -500 threshold which is constructive. All of this looks like a "wall of Worry" correction in a bull market fueled by low interest rates. As long as we don't experience a complete breakdown over the next week or so we can expect a decent rally into the summer months.
The SPX with the MCO and Summation Index
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The Summation INdex, at -2417 is now in neutral territory (zero=+1000) and with the MCO below -200 even if the market begins to bottom here, with the MCO forming a complex reversal pattern, the SUM Index should get below -2000 before turning higher.
Because of the prolonged divergence between the MCO and SUM with the SPX the current spike may only represent a retest of the early March lows. So far the 10% Index has stayed above the -500 threshold which is constructive. All of this looks like a "wall of Worry" correction in a bull market fueled by low interest rates. As long as we don't experience a complete breakdown over the next week or so we can expect a decent rally into the summer months.
Click to enlarge
Saturday, March 24, 2012
MCO Update 3/23/12
The McClellan Oscillator is pulling back to retest the low made two weeks ago. We are in the zone for the 39 TD (trading day) and the 13TD cycle low spots. It might have been Friday but I have a hunch it will probably stretch out a little longer into either Monday or Tuesday.
What we don't want to see here is a breakdown in the MCO and its components. The MCO, New Highs and Summation Index have been diverging from the SPX price, moving lower while the SPX moved higher. Late in a move this might be of some concern. However, since the markets made very oversold lows last October, and fear is still prevalent among the investing public, I think what we are seeing is a quiet correction in stocks as investors remain skeptical and exit the market. On the positive side, the Climatic Volume Indicator (not shown here) has remained well behaved and not given any signals that could be seen as the buying climaxes one would expect if the market was forming a top. Some caution is warranted until the indicators quit lagging the price action but my view remains bullish.
This chart is a bit different than the others. It only covers the last three months with the $SPX plotted using hourly data and the indicators using daily data. There is a slight misalignment but it's small, about 1/2 a day.
The SPX with the McClellan Oscillator
Click to enlarge
What we don't want to see here is a breakdown in the MCO and its components. The MCO, New Highs and Summation Index have been diverging from the SPX price, moving lower while the SPX moved higher. Late in a move this might be of some concern. However, since the markets made very oversold lows last October, and fear is still prevalent among the investing public, I think what we are seeing is a quiet correction in stocks as investors remain skeptical and exit the market. On the positive side, the Climatic Volume Indicator (not shown here) has remained well behaved and not given any signals that could be seen as the buying climaxes one would expect if the market was forming a top. Some caution is warranted until the indicators quit lagging the price action but my view remains bullish.
This chart is a bit different than the others. It only covers the last three months with the $SPX plotted using hourly data and the indicators using daily data. There is a slight misalignment but it's small, about 1/2 a day.
Click to enlarge
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