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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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  • Tuesday, November 6, 2012 - Short Term Update 2 comments
    Nov 6, 2012 10:17 PM | about stocks: SPY, DIA, QQQ, TLT, IEF, FXE, UUP

    Bottom Line:

    For the last few days the market has been attempting to go higher. That said, the market seems to be doing so with little bullish momentum. The indicators I watched have gone from very oversold to neutral without price moving much. And when the indicators move, and the market doesn't, you're on the wrong side. The market needs to clear 1435 to keep the rally alive.

    Price Action:

    SPX - Short Term:

    (click to enlarge)

    Notes: The SPX was stopped here last week, so clearing this resistance would be a good sign. Some indexes such as the SOX, the BKX, the CYC have already cleared this hurtle while other indexes such as the Nasdaq are badly lagging. If the SPX goes below 1423, and I'm getting out of the way again.

    Dow Industrial:

    (click to enlarge)

    Notes: As I mentioned, we're almost back to overbought and the market hasn't done much. That's not a good sign. A continued failure to rally and subsequent break of current support and there isn't much support confluence till 12,400, almost a thousand Dow points lower.

    Dow Transport Index:

    (click to enlarge)

    Notes: The good news (for bulls) is that the transport index has already exceed the 11/2 highs, the bad news is that not by much, short term momentum is overbought, and the transport is starting to run into overhead resistance.

    Indicator Summary:

    • Bullish: 40%
    • Neutral: 50%
    • Bearish: 10%
    • Aggregate Interpretation: The cumulative picture still slightly favors a continued rally. Thus far however I've been disappointed with the lack of urgency from the bulls.

    Indicator Snap Shot:

    Percentage of Stocks Above their 20 DMA:

    (click to enlarge)

    Notes: Still a bullish chart...

    NYSE McClellan Oscillator:

    (click to enlarge)

    Notes: Probably one of the more bullish charts, this looks like a basing pattern after touching oversold.

    NYSE New Highs - New Lows:

    (click to enlarge)

    Notes: Still advancing from oversold.

    NYSE Advance - Decline Line:

    (click to enlarge)

    Notes: Recovered from oversold and back to neutral.

    NYSE Up - Down Volume:

    (click to enlarge)

    Notes: Another neutral reading.

    NYSE TICK:

    (click to enlarge)

    Notes: Neutral.

    NYSE TRIN:

    (click to enlarge)

    Notes: The TRIN has from one of the more oversold readings to nearly overbought, with little recovery in stocks. This is a definite change of character in the market since when then market got even a little bit oversold, stocks rallied sharply (in the last few weeks and months). Also note that while not "oversold," the TRIN is at levels where it reversed at the previous two pivots.

    Other Notable Notables:

    • As I mentioned in yesterday's update, how the market takes the election results tends to dictate the direction of the market for the next several days, and up until two weeks. So if you're a bull, you'll want to see a positive reaction tomorrow and vice versa.

    Summary:

    To summarize, the market should be rallying, it's not, more like barley hovering. I'm a mild bull here but if we see a down market tomorrow, I think there's a good chance the bounce gets erased.

    -Bill L.

    Disclosure: I am long SPXL.

    Stocks: SPY, DIA, QQQ, TLT, IEF, FXE, UUP
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Comments (2)
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  • Hi Bill - thanks for the update. I was wondering whether you may consider posting your future trades under 'stock talks', like so many SA contributors do. Something along the lines of "am thinking about going short S&P at such and such level - detailed technical analysis to follow soon". That way, those of us who are familiar with your indicators could follow you in the trade more quickly. (By the time your analysis is posted under 'Instablog' the better entry point is usually gone...Just a request.)
    7 Nov 2012, 08:17 AM Reply Like
  • Author’s reply » I'm working with some developers to create my own website. My goal is to have site members alerted by twitter about trades real time (along with the analysis of content). Seeking Alpha has been good to me (usually), but sometimes I feel they are too hands on during the editorial process. If that's too subtle, they make me write things that I don't myself agree with because it will get them more views, thus more ad revenue. That however is not my main concern.
    -Bill L.
    7 Nov 2012, 12:16 PM Reply Like
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