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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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  • Monday Pre-Market Update, July 23, 2012 8 comments
    Jul 23, 2012 3:50 AM | about stocks: SPY, TLT, DIA, QQQ, FXE, UUP

    Bottom Line:

    Yields continue to drop, cyclic stocks continue to underperform, defensive stocks continue to outperform. Short term indicators are flirting with overbought, while intermediate term indicators are producing a bearish divergence. The rally from the June 4th lows can be separated into three segments... this one looks like the worst yet.

    Update:

    As I've been mentioning in previous updates, the non-confirmations continue in both the bond and currency markets. Now, further non-confirmations have become apparent in intramarket analysis.

    First the S&P:

    (click to enlarge)

    Cyclical Indexes:

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    Notes: banks are threatening to break down.

    (click to enlarge)

    Notes: Semis look like they have broken down and come back to kiss the trend channel goodbye.

    Meanwhile the defensive Indexes continue to outperform:

    (click to enlarge)

    (click to enlarge)

    Indicators:

    Short term indicators came close to showing and overbought condition while intermediate term indicators are showing a bearish divergence.

    NYSE Advancers vs Decliners (Short term):

    (click to enlarge)

    NYSE McClellan Oscillator: (Intermediate Term)

    (click to enlarge)

    Percentage of Stocks Above their 20 DMA (Intermediate Term):

    (click to enlarge)

    Summary:

    This latest push upwards has occurred with the most visible non-confirmations in bonds, FOREX, as well as negative sector action. If I were a bull here, I would be very, very nervous.

    -Bill L.

    Disclosure: I am long SPXS.

    Stocks: SPY, TLT, DIA, QQQ, FXE, UUP
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This post has 8 comments:

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  •  
    Thank you for the update, Bill. What is your trading strategy at this point?
    23 Jul 2012, 09:37 AM Reply Like
  •  
    I'm short at approximately 1368, a convincing break of the June 4th rising trend channel and I will add, stopped out if there is a reversal over 1365, which would be a 61.8% retracement of the current move lower from the most recent pivot high.

    -Bill L.
    23 Jul 2012, 01:30 PM Reply Like
  •  
    Bill, after today reversal, I would be very very nervous if I were a bull
    23 Jul 2012, 01:30 PM Reply Like
  •  
    Bill,
    Have you compared the ETFs SPXS and SPXU? I've been using SPXU but am always open to better products.
    Thanks,
    Cal

    Cal G. Staggers
    (From Market Mentor)
    23 Jul 2012, 11:00 PM Reply Like
  •  
    Hey Cal,

    Sent you a PM.

    -Bill
    24 Jul 2012, 07:47 AM Reply Like
  •  
    Ummmm.... What's a PM ?
    24 Jul 2012, 09:13 AM Reply Like
  •  
    Private message.
    24 Jul 2012, 01:17 PM Reply Like
  •  
    Hi, Bill. Would you mind taking a look at the chart for XLE? Does it look like it's about to roll over? I'm thinking of adding a small block of ERY (inverse of XLE) just for a quick trade while it's still trading under $11.00. So far the market is behaving!
    24 Jul 2012, 10:24 AM Reply Like
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