Bill L.'s  Instablog

Bill L.
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Methodology: setups require certain criteria to be met before trades can be executed, which include weighted statistical studies on several indicators of price, breadth, volume, and sentiment . Amount of risk taken is proportional to how many indicators are aligned. I mainly trade market... More
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  • Wednesday Morning, October 24, 2012 - Short Term Update 1 comment
    Oct 24, 2012 3:59 AM | about stocks: SPY, TLT, QQQ, UUP, FXE, IEF, DIA

    Bottom Line:

    Clouds on the horizon, but in the short term, the market is getting oversold.

    Indicator Summary:

    • Bullish: 65%
    • Neutral: 30%
    • Bearish: 5%
    • Aggregate Interpretation: Most of the short term technical indicators I watch are either oversold or quickly approach oversold. The only bearish indicator is current price momentum.

    Indicator Snap Shot:

    Percentage of Stocks Above their 20 DMA:

    (click to enlarge)

    Notes: Well within the oversold area with a long shadow on the bottom of the candle, indicating some support. A move out of the "setup" area should be the beginning of a move higher.

    NYSE McClellan Oscillator:

    (click to enlarge)

    Notes: Neutral, while leaning towards the oversold area, we could be basing here.

    NYSE Advance - Decline Line:

    (click to enlarge)

    Notes: Very close to oversold.

    NYSE Up - Down Volume:

    (click to enlarge)

    Notes: The 5 DMA isn't quite as low as the AD line, though it is very close to the last several lows in the indicator that have marked short term lows.

    NYSE TICK:

    (click to enlarge)

    Notes: Neutral territory.

    NYSE TRIN:

    (click to enlarge)

    Notes: With the 5 day drop off effect, this should have no problem breaking the oversold line tomorrow.

    Put / Call Ratio:

    (click to enlarge)

    Notes: The put/call ratio recently registered an optimistic extreme and is slowly creeping up.

    Price Action:

    SPX: Support / Resistance

    (click to enlarge)

    Notes: As I mentioned in the comments section of my previous update, a failure to reach the previous highs would be a sign that bulls are losing momentum. The SPX broke down, came back into the channel, and tested the previous high, as well as the light gray line, which is a less obvious, but important line of support/resistance. Why is it important? -Because the market seems to think so; throughout this trend it's reacted to that line multiple times. Who am I to argue?

    This decline has take out of the rising trend channel, and we're about 50% of the way through the European "We're going do anything it takes" remarks. It would be the ultimate market irony if QE-Infinity marked the death of the Bernake put...

    Dow Industrial:

    (click to enlarge)

    Notes: The Dow is almost at the first measured move target from a rectangle break down, and is now approaching Fibonacci support.

    Dow Transport Index:

    (click to enlarge)

    Notes: In the previous update I was thinking there could be some weakness in the market because the transport index looked like it was stalling before reaching the previous swing high. The bulls couldn't get the ball as far down field as they did in the last drive. Now, the opposite is occurring, the Transport index has fallen but not nearly as much as the Industrial index. If anything it looks like it's going to try and take another run up.

    Notes:

    Summary:

    Things are a little tricky here, longer/medium term there are some dark clouds on the horizon. Reading of last Friday's COT report, commercial hedgers continue to carry large short positions in most market index futures. The small specs continue to build large long positions, and this is generally a medium term (1-3 months) contrarian indicator. There's been a large increase in overall risk appetite measures, and they are only just now starting to react to declining prices.

    That said, in the short term, the broad array of indicators I watch are rapidly approaching oversold.

    Currently, no position.

    -Bill L.

    Stocks: SPY, TLT, QQQ, UUP, FXE, IEF, DIA
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  • sundate36
    , contributor
    Comments (291) | Send Message
     
    Thanks for the update, Bill. I guess the thing to watch now is whether S&P is going to make it back into the channel or approach it and turn back down?
    24 Oct 2012, 07:39 AM Reply Like
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