07/09/2016 Weekend Update

[BullBear52x]

SPX hit two-standard deviations above its 50ma today/Friday
It can go higher, but in the past couple years, 2 std dev has been seen at a turn, or a few days away from a turn (see red)

78std dev.png.png

seems like everywhere you look there is strong TA evidence for a short term relief rally pull back. my buy until it fails short term will be the theme in coming week.

[BullBear52x]

From it is what it is department:
buying is a little extended,. BTFD is back.

[BullBear52x]

Plan the trade and trade the plan:
intraday bulls got nothing to fear above 2127

For night crew on /ES, tonight will another interesting night for short term trade.

[rpccharts]

Armstrong BULL



Another element that strongly supports your view is that US equities will fly at some point in the future. If you take the trailing 10y avg real earnings yield from S&P500 (you can easily get them from Shiller’s site) and you normalise it by the 10 year US yield you get the attached chart.

We are at the same level of pre WWII when USA was an emerging market, now if we assume the normal range being between 1 and 1.5, rate may double and we would still be at the bottom of the range. This is without even taking into account any strong dollar cycle or sovereign debt crisis.

Having said that, earnings have been softening in dollar terms over the last few years but with a raising dollar which may have pushed people totally in the wrong direction.




REPLY: Yes. This is one of the views we track as well, but it is highly controversial. Many view the P/E ratio as proof that the market is overvalued, but the DOT.COM produced a P/E at 50. During a crisis when people are afraid to park money, the P/E will exceed 100 as it did with the 2007 crash.



Overall, there is a deep reflection of how cheap the market is today with low trading volume. It will not take much to shift capital flows from bonds to equities and this has nothing to do with its cheap price, growth, value, or any of the other scenarios that people rely on. We are in a different place — the preservation of capital.

[Al_Dente]

SPX hit two-standard deviations above its 50ma today/Friday
It can go higher, but in the past couple years, 2 std dev has been seen at a turn, or a few days away from a turn (see red)

seems like everywhere you look there is strong TA evidence for a short term relief rally pull back. my buy until it fails short term will be the theme in coming week.

July’s typical trading pattern, over the past 21 years [Jeff Hirsch, Almanac]
http://jeffhirsch.tumblr.com/post/14710 ... t-21-years

[fehro]

Ramblings.. all for fwiw.

As mentioned on Friday.. key time coming up. We have the potential for an explosive up move… yeah, I know terrible earnings, BREXIT, DB, etc, etc.
Could see an explosive and very fast move - on a gap.. maybe next week? on - "insert news here" (Japan/Bernanke meet, ECB banks bailout, etc).
Could see a sharp up move out of this 15month sideways action /bull flag, could be a stupid 20-60 point gap up. Blame it on buy anything US bonds, gold, equities, US dollar.. and sell Europe? As money leaves Europe in droves.

Then it gets tricky, cause that would be such a beautiful bull trap.. as Money managers are forced to buy the break out. Then break down extremely hard.. for the bearish view, and for the bullish view… the SPX would drag up all the other indexes to new All time highs.. as they lag severely. This divergence plays well to the "fake break" for the bears. So up into OEW then break down/gap down - on - "insert news here" (DB, Italian Banks, Euro Elections referendums, etc, etc) would be a beautiful island top.

European, and Asian Indexes look weak, yet China is allowing 300 Billion From China's Pensions funds into the market http://www.bloomberg.com/news/articles/ ... kets-foray

And of course the Bear side.. is DB derivative exposure… so some "possible" lines mapping direction all fwiw. Just some stuff to consider.. and probably a lot more that I'm not thinking about. The chart is "calling" the move.. the "news" will follow with the fit to the direction .. imho.

[QED]

Al_Dente, Thanks for sharing your charts! Here is a chart for you.

It is based on a Lowry indicator as charted by Arthur Hill (at the following link):
http://stockcharts.com/articles/mailbag ... olume.html



.

[fehro]

/ES 60m / 5m… holding last weeks pre-BREXIT high.. ascending wedge, or triangle .. break above 2125ish.. 2130 target.. or could triangle /expanding wedge 5m bull flag it.