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IS THIS RALLY GETTING LEGS? (AND ARE THE LEGS GETTING A BIG HAIRY?)

Today we got a lot of cover short position signals. What we did not get a lot of is actual buy signals. We got a few Buy Signals we like:SNDK, FLIR, YNDX.

Ordinarily, we would expect to see a lot more buy signals in a real rally. But we are in a transitory market, a market that isn't sure where to go. Last week I published an instablog that, I think, helps to explain why this is so: with the help of Ed Easterling's charts and discussion -- this is the kind of market he, Mr. Easterling, calls a 'Bear in Hibernation Market'. The Bear isn't loose; but neither is the Bull.

seekingalpha.com/instablog/428250-michae...

In terms of our internal indicators, our most short-term indicator has already topped out, indicating a good chance of a pull-back from here. (See first momentum chart.) Our longer term indicator has not really participated in the rally yet. But it sometimes takes longer to bottom.

The indicators above are for a group of 512 stocks and indexes we follow. The SPX itself looks like this, first in terms of our short-term momentum indicators; then in terms of the indicators we use to determine internal strength of the markets.

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Nothing much negative in this view of the SPX. It is short-term overbought; that is about all. But look at the NDX (Nasdaq), SOX (Semiconductors) and Shanghai, China.

NDX, Nasdaq Index

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SOX, Semiconductor Index

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SHANGHAI INDEX

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About 80% of the indexes we follow DO NOT look like the SPX. 80% look like the SOX, the NDX, and SSEC. The SPX is holding up quite remarkably, seeing that the global economy -- and the American economy -- are heading back in to the Underworld at a very fast pace. What is holding the SPX up? That will be something for the historians to figure out.

Today's momentum readings.

Momentum Entire Portfolio      
Date SPX CM ASP T11D Sum M4 21 Sm
7/2/12 1365.51 20.90% 7.62%  
7/3/12 1374.02 23.44% 7.62%  
7/5/12 1367.58 23.24% 17.19%  
7/6/12 1354.68 15.43% 18.75%  
7/9/12 1352.46 12.89% 18.75%  
7/10/12 1341.47 6.84% 16.99% 30.86%
7/11/12 1341.45 5.47% 14.65% 26.56%
7/12/12 1341.76 0.59% 11.52% 16.80%
7/13/12 1356.78 11.33% 8.98% 17.58%
7/16/12 1353.64 5.27% 8.40% 13.28%
7/17/12 1363.67 7.03% 6.05% 10.55%
7/18/12 1372.78 13.87% 4.30% 10.94%
7/19/12 1376.51 14.06% 3.32% 12.50%
7/20/12 1362.66 6.25% 1.17% 7.42%
7/23/12 1350.52 -5.66% -1.37% -2.35%
7/24/12 1338.31 -14.06% -1.37% -2.35%
7/25/12 1337.89 -10.55% -8.59% -16.02%
7/26/12 1360.02 1.37% -8.66% 43.55%
7/27/12 1385.97 11.72% -8.40% 47.46%
7/30/12 1385.3 8.98% -2.54% 48.24%
         
Date SPX M2F ALT Mom Max
25-Jul 1337.89 0 26.819  
26-Jul 1360.02 26.005 35.05  
27-Jul 1385.97 73.921 58.241  
30-Jul 1385.3 99.434 72.463  
         
  M2F Alt: overbought>90 and oversold<10    
  MOM Max: overbought>80 and oversold<20  
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Today's New Trading Signals:

The themes of our charts today feels quite scattered:

•My increasing bearishness on Australia and China shows up in two shortsale signals today: SNP and VALE. China Petro and Chemical Co (NYSE:SNP) has fallen from 125 to 89. It is now give a second rapid-fire shortsell signal. What does VALE, a South American, industrial company have to do with Australia? The whole industrial mining and metals buying that China has been doing to keep Canada and Australia out of recession is faltering. Canada and Australia have huge housing bubbles in progress also; and they are about to pop.

•Shortsell NDX. That says enough by itself.

• Sell Lululemon, STJ (medical) and SCCO (copper) aren't really connected thematically except to say look how well this trading system has called tops in these stocks, suggesting more selling coming into the markets.

• Short Canadian Dollar vs Japanese Yen. Is this more of the Canadian story, or more of the chronic JYen strength story (Yen's role in the global carry-trade).

•TYX (10-Year TBond Yield) Shortsale: more strength in TBonds, US Dollar, means more weakness in EU and more trouble in Europe? This is a question. Dollar strength means stock weakness? Another question.

•Three stocks that look like pretty good buys years technically: FLIR, SNDK, YNDX.

 

 

    Trades for Trades for  
    Tuesday Monday  
    31-Jul 30-Jul  
         
TRADING SYSTEM T11D Sunmarry 10/Zero  
(Intermediate-Term)      
SYMBOL CLOSE Today Yesterday Company
         
CDXS 3.11 Enter Short   Codexis Inc
COV.L 238.75   Enter Short Cove Energy
CTIC 0.511   Enter Short Cell Therapeutics
EZCH 36.57   Enter Long EZChip Semiconductor
FLIR * 20.48 Enter Long   Flir Systems
GRPN 6.9   Exit Short Groupon INc
JBLU 5.41 Enter Short   Jet Blue
NSM 22.3   Enter Short Nationstar Mortgage
OREX 5.13 Enter Short   Orexigen Pharmaceuticals
RAVN 33.91   Enter Short Raven Industries
SNDK * 41.17 Enter Long   SanDisk Corp
TSLA * 27.35 Enter Short   Tesla Motors Daily
YNDX * 20.83 Enter Long   Yandex NV
         
* See chart        
         
TRADING SYSTEM M2F ALT    
(Short-Term)      
SYMBOL CLOSE Today Yesterday Company
         
^DJT 5,112.37 Exit Long   Dow Jones Transport Index
^FTSE 5,693.63 Enter Short   FTSE Daily Index
^NDX * 2,642.12 Enter Short   Nasdaq Index Daily
^RUT 791.58 Exit Long   Russell SMall Cap Index Daily
^SMSI 686.64   Enter Short Madrid General Index Daily
^TNX * 1.504   Enter Short 10-Year CBOE Interest Rate
^TYX 2.579 Enter Short   30 YEAR TREASURY YIELD
^XCI 1,100.30 Enter Short   Amex Computer Index Daily
ACN 60.38   Enter Short Accenture PLC
ADBE 31.01   Enter Short Adobe Daily
AIG 31.72 Exit Long   American Intl Group Daily
BK 21.45   Exit Long Bank of NY Mellon
BZF 18.65   Enter Short Brazilian Real long currency
CADJPY=X 78.178 Enter Short   Canadian Dollar/Japanese Yen
CBI 34.94   Exit Long Chicago Bridge and iron
CSC 24.29   Enter Short Computer Sciences
CTSH 57.31   Enter Short Cognizant Tech Solutions
DRYS 2.32   Enter Short Dry Ships Daily
DSX 6.75   Enter Short Diana Shipping
EEV 28.3   Enter Long Short MSCI Emerging Markets ETF Daily
EFZ 48.13   Enter Long Short MSCI EAPE Index ETF Daily
EIRL 20.28   Enter Short Ireland ETF
EL 53.83   Enter Short Estee Lauder
EPI 16.75 Exit Long   India ETF
EUFN 15.24   Enter Short Euorpean Financial Index
EUM 30.72   Enter Long Short Emerging Markets
EURARS=X 5.62 Exit Long   Euro/Argentine Peso
EURBRL=X 2.502 Exit Long   Euro/Brazilian Real
EURINR=X 68.251 Exit Long   Euro/Indian Rupee
EWC 26.6   Enter Short Canada ETF
EWG 20.2   Enter Short Germany ETF
EWQ 19.65   Enter Short France ETF
FDS 93.05 Enter Short   Factset Research
FISV 72.25 Exit Long   Fiserve Inc
FTS.TO 33.4 Exit Long   Fortis
FXB 155.59 Exit Long   British Pound ETF
FXI 34.06   Enter Short FTSE/XINHUA China 25 Index ETF
GBPCNY=X 10.036 Enter Short   British Pound/Chinese Yuan
HAP 34.246   Enter Short Hard Asset Producers ETF
ICN 20.25   Enter Short Indian Ruppee ETF
INTC 25.76   Enter Short Intel Daily
IYJ 68.43   Enter Short Dow Jones Industrial ETF
JCI 24.71 Enter Short   Johnson Controls
JOSB 42.65 Enter Short   JOS A. Bank Clothiers
KOL 23.35 Enter Short   Coal ETF
LD 47.27 Enter Short   Lead ETF
LLL * 70.35 Exit Long   L3 Communications
MAKO 13.37   Enter Short Mako Surgical Corp
MWA 3.54 Exit Long   Mueller Water Products
MYY 27.79   Enter Long Short Midcap Index Short
NANO 15.06   Enter Short Nanometrics Inc
NKE 95.85   Enter Short Nike Daily
NZDJPY=X 63.423 Enter Short   New Zealand Dollar/Japanese Yen
PDLI 6.85   Exit Long Protein Design Labs
PG 65.1 Enter Short   Proctor and Gamble Daily
PPA 19.06   Enter Short Aerospace and Defense ETF
PSQ 26.25 Enter Long   Short QQQ Index ETF
QQQ 64.82 Enter Short   Powershares QQQ
RHT 53.76   Enter Short Red Hat
SCCO * 32.09 Exit Long   Southern Copper
SCHN 28.43 Enter Short   Schnitzer Steel Indust
SDD 31.22   Enter Long Short Small Cap Index ETF Daily
SHLD 49.96 Enter Short   Sears Holdings
SLG 79.18 Exit Long   SL Green Realty
SLX 42.78 Enter Short   Steel ETF
SMN 16.97 Enter Long   Short Basic Materials
SNP * 89.76 Enter Short   China Petrol & Chemical Co
SRS 25.23 Exit Short   Short Real Estate ETF Daily
STJ * 37.54 Exit Long   St. Jude Medical
SYK 52.34   Exit Long Stryker Corp
TD 78.83 Enter Short   Toronto Dominion Bank
THC 4.65 Enter Short   Tenet Healthcare
THD 68.97   Enter Short Thailand ETF
THLD 7.21   Enter Short Threshold Pharma
TNA 52.4 Enter Short   Direxion Daily Small Cap Bull
TTI 7.12 Enter Short   Tetra Technologies
TTM 20.23 Enter Short   Tata Motors
TWM 30.63 Enter Long   Short Russell 2000 Index ETF Daily
TZA 18.18 Enter Long   Direxion Daily Small Cap Bear
USDTHB=X 31.555 Exit Short   USDollar-Thai Baht
UUP 22.77   Exit Short US DOLLAR INDEX BULLISH ETF
VALE * 18.27 Enter Short   VALE S.A.
XME 39.8 Enter Short   Spider Mining Metals ETF
XRT 59.49 Exit Long   Retailers ETF
         
         
* See chart        
         
TRADING SYSTEM ChartMeter    
(Intermediate-Term)      
SYMBOL CLOSE Today Yesterday Company
         
^HUI 417.488 Exit Short   Gold Stock Index Daily
^SMSI 686.64   Exit Short Madrid General Index Daily
^XAU 153.82   Exit Short Philadelphia Gold and Silver Index Daily
BBVA 6.56   Exit Short Banco Bilbao Argent SA
CLWR 1.16   Exit Short Clearwire
COW 28.754   Exit Short Livestock ETF
CYTX 2.64 Enter Long   Cytori Therapeutics
EWP 23.11   Exit Short Spain Index
FRO 3.81 Exit Short   Frontline Limited Shipping
FST 7.06 Exit Short Enter Short FOREST OIL
GRPN 6.9 Exit Short   Groupon INc
HLCS 0.072   Exit Long Helicos Biosciences
ICN 20.25   Exit Short Indian Ruppee ETF
IES.DE 1.028 Exit Short   Intesa San Paolo SA
LD 47.27   Exit Short Lead ETF
MT 16.13 Exit Short   Arcelor-Mittal Steel
MTL 6.12   Exit Short Mechel Open Joint Stock Company
QRM 1.27   Exit Short Quest Rare Metals
RBS 6.96   Exit Short Royal Bank of Scotland Daily
SAN 6.08   Exit Short Banco Santander
SNP 89.76   Exit Short China Petrol & Chemical Co
TSU 22.33 Exit Short   TIM Part (Tele Cellular)
URS 34.78   Exit Short URS Corp
YOKU 16.9 Exit Short   YouKu China
         
* See chart        
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Michael J. Clark, Hanoi, Vietnam