03/24/2012 Weekend Watering

[trendfollower]

Interesting read on Fed, Gold, S&P 500, and more:

http://bit.ly/HsQagH

[Harapa]

SPY_TRIN Model is in Buy Mode since 12/23/2011 (11.4% Gain). Check chart in the last weekend forum. It doesn't change much week to week.

Small Cap Intermediate/Long Term model transitioned to long term buy this week (due to improved lending_enviornment oscillator). Recall momentum component turned positive a week earlier. This suggests good time ahead for equities (off course time in weeks and months). Last three times when this model switched to this mode it produced a gain of 55% (2003), 80% (2009), and 34% (2010). Also, shorts are prohibited except intraday. Red/Green vertical bar indicate entry exit points.
Let happy time roll!

Short Term model remains in a buy mode. Despite experiencing the whipsaws while in the last trade, the position remains in profit (albeit a small one, +0.8%).

[Cobra]

Please post contents and images here, don't just a link. You can use your personal website address as signature, if people like your comments, they'll visit your site. Post only a link to your site is not allowed because if everyone does the same like you, the forum will become meaningless. So please, thanks.

[Cobra]

Interesting read on Fed, Gold, S&P 500, and more:

Please post contents and images here, don't just a link. You can use your personal website address as signature, if people like your comments, they'll visit your site. Post only a link to your site is not allowed because if everyone does the same like you, the forum will become meaningless. So please, thanks.

[Al_Dente]

BOND MARKET
Starting mid March, bonds collapsed across all maturities (bull for SPY green circles). This week bonds bounced (bear for SPY red circles).

Viewed another way, bonds are now in an intermediate-term downtrend (below their 50 and 200 MAs), which is still intermediate-term bullish for SPY.
All bonds are currently flagging up to backtest their MAs.
This isn’t a reversal, it’s a short-term flag (which is bear SPY short term), until a decisive breakout confirms a reversal of this trend.

You all know the drill: when folks smell a major rally, they sell their short-term bonds [bonds/notes/bills] to raise cash and buy stocks.
Here’s chart “evidence”: U can see how during the 2003-2007 rally, folks sold their st debt (pink) and bought stocks.
Conversely, starting in late 2007 they sold their stocks and bought the “safety” of st debt.
That’s no surprise; that’s the NORMAL inverse relationship between bonds and stocks.

Here’s what’s surprising: since the 2009 bottom, folks HAVE NOT BEEN SELLING ST DEBT to buy stocks (see the pink uptrend line 2009-2012),
even though their st debt is yielding nada-interest-rate income.
This curious uptrend in short-term debt just broke down (green circle) under its trendline (after double topping in Jan), for the first time since about
June 2009. This may be just a zig-zag whipsaw, but if this selling of st debt persists, it would be quite bullish for SPY.

NOTE: The Bernank “Twist” is not the culprit here, bcuz Ben continues to SELL short-term maturities, which should have been pulling the pink line down over the past two years (and Ben continues to buy longer-term maturities).
Any clarification/corrections, especially from bond freaks, would be appreciated.

http://www.youtube.com/watch?v=qNFvZLnU ... re=related

[BullBear52x]

Wow! another kickass weekenders +1

Where are we? no time to chat today got to go...Thanks everyone.

[shumushu]

hello folks, I think the market is sides to up because of a complex double bottom with a target of 1400 and 1407. My chart here:

You can find my trades on my blog as well.

[noob]

Thanks laoda! Any thoughts on VIX here?

NDX Hedgers are betting heavily on the downside.

No.

Thanks!

[xfradnex]

For SWalsh- SEC Probes Rapid Trading. See video on http://www.marketwatch.com/video/asset/ ... D0B462979D

Hope they are not being paid off to look the other way. They talk about leveraged ETFs causing all the problems; maybe, but it seems that these HFT guys can do alot more damage, especially if they use leveraged ETFs.

[SWalsh]

For SWalsh- SEC Probes Rapid Trading. See video on http://www.marketwatch.com/video/asset/ ... D0B462979D

Hope they are not being paid off to look the other way. They talk about leveraged ETFs causing all the problems; maybe, but it seems that these HFT guys can do a lot more damage, especially if they use leveraged ETFs.

Thanks for the link.

Towards the end the reporter essentially said that the HFTs should get an advantage for maintaining an orderly market and taking risks. That is what a specialist used to do. Are they defned now as a specialist? I don't think so. When I see a losing week by an HFT (or how about a losing hour?) I'll believe they take risks.

So we have, essentially, a propaganda piece. Unless you have Madoff II to provide a photo-op illusion that leads to SEC press and promotions, or a Bosesky/Milken situation, they don't care. Why do I say that? Because I don't just think they don't care, I know they don't care. Let your mind wander.

The SEC can play the "we don't fully understand it yet" game all they like. But it is rather simple to see that HFTs will quote stuff to slow down the tape to prevent moves they do not like, or to generate a greater latency so that they can act.

NYSE requested, as per NANEX and links I posted here, that regulations be put in place that required a time for the trades to remain in the system. That would make them susceptible to them getting hit with positions they do not want as well as not being able to manipulate as they do as the frequency would diminish. They read the complaints and opinions and stated they would instead monitor and fine abusers OR, "I'm with the government.....I'm here to help". But here is the very understandable part of this - there is a virtual guarantee that those offers, such as a high I've seen of 1000 stocks offered in a one second burst of quotes of some 6,000 stocks listed and 600 usually 2-3 times a day, have to be naked short sales. And unless I missed a change, that is either extremely limited or outright banned at this point in time. I was told they get around it by claiming they could buy the stock elsewhere in moments if need be and that they are just doing arbitrage (profiting off a momentary difference in price of the same equity) which strains credulity.

The SEC is not going to do anything. Mary Shapiro was useless as Chairwoman of the CFTC in the 90s. They will do what they can to nail the little guy and justify their existence. There was an SEC lawyer who was fired and won about $700,000 for wrongful termination when he barked too much about a case he was about to try, as per Matt Talibi of The Rolling Stone, but former DA for the NY Southern District, Mary Jo White, talked the SEC out of all charges and the case was dropped. That's what drove the SEC lawyer nuts and he was fired.

Perhaps at some point in time the Mutual Funds Industry will garner enough power to get them to do what former NYSE head Grasso said, "Rip them out".

The exchanges have bookies now that are paid a vig AND they can throw the game. They can also concoct small cases to lose and tie-up the SEC and set their own fines in Settlement Agreements. Banks used to be safe havens for the money of the citizenry that held a steady stock price and paid small dividends. But the banks again needed a highly leveraged 1920s playing field, as the theft from poorly managed nations ran out of sovereign entities and they took a hit on debt about 15 years ago, where a Fed Window essentially plays directly in the market, or loans the money for others to do so in a quid pro quo.

They are destroying the manner by which capital is raised in America and Kondratiev would say, "I told you they'd do it again". But I don't expect the most corrupt administration in US history to stop them as they benefit from this Wall Street connection. But don't think I hold Bush innocent as I do not. Where the biggest problem lies in the potential groundwork for a revolution. And they are allowing this institutionalized rape to continue despite the public outcry against it. I wish Sinclar Lewis wrote a follow-up to his Nazi warning that we did not heed and entitled the book, "It Will Happen Here".

Thanks again....I guess I can go to bed now. Sleep apnea sucks when you get an attack and a massive adrenaline rush. I've been up for almost 24 hours. Commenting gave me something to do and an issue to chuckle at. The SEC might act....HA!

[Mr. BachNut]

Very impressive array of charts this weekend Al Dente. Wow!

I agree with you that treasuries and financials (not to mention Apple) have been key factors as of late. I am tracking them very closely as they should remain pretty key going forward.

One comment on the equity decline/treasury rally last week. There are many fund managers that manage to certain target asset allocations. With the equity rally and treasury decline year to date, many were coming into quarter-end overweight equities and underweight treasuries. So, in order to have their portfolios properly aligned by March 31, they have had to sell some stocks and buy some bonds. This influence should be waning by now and completely over by Tuesday. So, it wouldn't surprise me to see treasuries go a bit soft again providing some support to equites.

[Al_Dente]

Thank you to all weekenders.

Since the October lows, I’ve been watching for volatility to give us a decent sell signal on the weeklies.
It hasn’t yet, but it’s VERY close, so I’m posting this early, when u might benefit from watching it fire live, instead of posting later, after the fact.
This chart summarizes the four separate charts linked below. An all-in-one chart would require 8 symbols which stockcharts just won’t allow.
I’m not comparing all volatility with SPY/$SPX, rather I’ve compared each volatility measure with its own index on separate charts,
which is why u will see some discrepancy in the red/sell boxes here, as I couldn’t fit all the other indices in.
This is all INVERTED volatility which I use ONLY for ease-of-eyeball viewing.
Red boxes indicate decent sell signals, blue boxes show fails or premature signals, pink shows the pending sell signal which could come soon
(next week/month, etc.).
Note: the sell-signal fires when the inverted volatility line crosses UNDER the signal line (and as u can c, they sometimes bounce around a bit at the top).

Here are links to the four separate master-charts if u need them
http://stockcharts.com/h-sc/ui?s=SPY&p= ... =261749781
http://stockcharts.com/h-sc/ui?s=$INDU& ... =250487270
http://stockcharts.com/h-sc/ui?s=$COMPQ ... =251860679
http://stockcharts.com/h-sc/ui?s=$RUT&p ... =251860684

http://www.youtube.com/watch?v=5EdmHSTw ... re=related

[Harapa]

BOND MARKET
You all know the drill: when folks smell a major rally, they sell their short-term bonds [bonds/notes/bills] to raise cash and buy stocks.
Here’s chart “evidence”: U can see how during the 2003-2007 rally, folks sold their st debt (pink) and bought stocks.
Conversely, starting in late 2007 they sold their stocks and bought the “safety” of st debt.
That’s no surprise; that’s the NORMAL inverse relationship between bonds and stocks.
Here’s what’s surprising: since the 2009 bottom, folks HAVE NOT BEEN SELLING ST DEBT to buy stocks (see the pink uptrend line 2009-2012),
even though their st debt is yielding nada-interest-rate income.
This curious uptrend in short-term debt just broke down (green circle) under its trendline (after double topping in Jan), for the first time since about
June 2009. This may be just a zig-zag whipsaw, but if this selling of st debt persists, it would be quite bullish for SPY.

Al, while since 1981 yield for 10 year UST (yellow line) is negatively correlated with S&P; this wasn't the case between 1951-1981. Also note that even in this period this correlation turned other way around for a short period several time (for example in 1987, 1993, 1998, 2009) before resuming its long term trend. I am not a real short term guy so I can’t comment how fluctuations in UST will affect stock prices next week but in the long term (weeks to months) stock may continue to rise despite rising yield. At this time, in my opinion, much of money flow into UST is driven by “flight to safety” behavior similar to what was seen during the period of Great depression. At that time folks remained in UST despite a negative real return. With current employment conditions you may continue to see love of treasuries for quite some time. The Lending _environment indicator that I show on my intermediate term model actually monitors the credit market. Since 1981 it always led change in stock prices by 3-6 months. This time it is late by ~6 months. Last time it behaved this way was in 1968-1981 period. In my mind current period bears many similarities with that time. We are likely to see up/down moves in stock prices much like in 70’s that won’t be predicted by credit market due to distortions induced by “flight to safety” and a “Fed willing to do anything to inflate the asset prices” behaviors.

The current "Chart of the week by Tom McClellan" has an interesting explanation of what is behind rising stock prices. Here is the chart.

And here is the explanation. http://www.mcoscillator.com/learning_ce ... versus_m2/

[Cobra]

BOND MARKET
You all know the drill: when folks smell a major rally, they sell their short-term bonds [bonds/notes/bills] to raise cash and buy stocks.
Here’s chart “evidence”: U can see how during the 2003-2007 rally, folks sold their st debt (pink) and bought stocks.
Conversely, starting in late 2007 they sold their stocks and bought the “safety” of st debt.
That’s no surprise; that’s the NORMAL inverse relationship between bonds and stocks.
Here’s what’s surprising: since the 2009 bottom, folks HAVE NOT BEEN SELLING ST DEBT to buy stocks (see the pink uptrend line 2009-2012),
even though their st debt is yielding nada-interest-rate income.
This curious uptrend in short-term debt just broke down (green circle) under its trendline (after double topping in Jan), for the first time since about
June 2009. This may be just a zig-zag whipsaw, but if this selling of st debt persists, it would be quite bullish for SPY.

Al, while since 1981 yield for 10 year UST (yellow line) is negatively correlated with S&P; this wasn't the case between 1951-1981. Also note that even in this period this correlation turned other way around for a short period several time (for example in 1987, 1993, 1998, 2009) before resuming its long term trend. I am not a real short term guy so I can’t comment how fluctuations in UST will affect stock prices next week but in the long term (weeks to months) stock may continue to rise despite rising yield. At this time, in my opinion, much of money flow into UST is driven by “flight to safety” behavior similar to what was seen during the period of Great depression. At that time folks remained in UST despite a negative real return. With current employment conditions you may continue to see love of treasuries for quite some time. The Lending _environment indicator that I show on my intermediate term model actually monitors the credit market. Since 1981 it always led change in stock prices by 3-6 months. This time it is late by ~6 months. Last time it behaved this way was in 1968-1981 period. In my mind current period bears many similarities with that time. We are likely to see up/down moves in stock prices much like in 70’s that won’t be predicted by credit market due to distortions induced by “flight to safety” and a “Fed willing to do anything to inflate the asset prices” behaviors.

The attachment SPX_TNX.png is no longer available

The current "Chart of the week by Tom McClellan" has an interesting explanation of what is behind rising stock prices. Here is the chart.

The attachment spy.png is no longer available

And here is the explanation. http://www.mcoscillator.com/learning_ce ... versus_m2/

Yeap, depends on what age we're in, yield and stock may trend differently. I think we're back into inflation age now.

[Harapa]

Last time it behaved this way was in 1968-1981 period. In my mind current period bears many similarities with that time. We are likely to see up/down moves in stock prices much like in 70’s that won’t be predicted by credit market due to distortions induced by “flight to safety” and a “Fed willing to do anything to inflate the asset prices” behaviors.

Here is how my long term SPX_TRIN system performed in that era.
Time Period:1/1/1968-5/1/1981
Total Gain B&H: 84%, provided you remained invested all these years (?)
Total Gain (long & short): 378%, maximum loss for 1 trade 11%
Win Rate: 66% (16/24)
Total Gain (long only): 167% (Double of B&H), maximum loss for 1 trade: 9%
Win Rate: 75% (9/12)
Happy Trading

[SWalsh]

This is market related in that you no longer have the right to protest any political event worth protesting. Tired of the Fed? Don't show up with that sign unless you want to go to jail. Read on if you'd like to know why:

So far, from my observation and those of others, HFT allows the mkt to be moved as they like. But who really is "THEY" that is spoken about? The court case against the programmer who stole some code from GS openly stated "In the wrong hands this could be used to manipulate prices". And what link does GS have to the government? Does anyone need that answer? Read all of Matt Talibi's articles in The Rolling Stone.

I'm sure everyone knows about Operation Wall Street and their desire to shut down the Fed via protests. And personally, giving congress the power to regulate the money supply seems to exceed Brahm Stoker's "Dracula" in fright, so I don't agree with that move.

So consider what might come next as what we are allowed to say is being limited, because while we were sleeping, HR 347 was very quietly signed into law. If you are thinking of showing up with a sign that reads, "Abolish the Fed", or 'Stop Taking Wall Street Money", consider that the Secret Service might be selecting you with a small group to arrest as an example for exercising what was once free speech, because those protesting are now felons and that free speech was just signed out of existence. Here is a short clip of Judge Napolitano speaking of this removal of American's long-standing right to petition the government. Personally, I cannot believe I am an American who is seeing this:

http://youtu.be/nKjy0PDlKV4

And here are 90%+ of Congress supporting the bill:

http://my.firedoglake.com/jeanine4truth ... s-protest/

In 2008 some congressmen wanted a bill passed that offensive letters sent to their offices could bring severe penalties as it interfered with their duties. It looks like they all are going to get their way as they control the markets and what we can say. When will it become a felony to speak out against the Fed as it becomes considered interference with their ability to carry out its duties?

SWalsh

P.S. I was just told that they broke two DeMark signals immediately after they would have been acted on last week. Whether there is a War Room that makes these decisions or not is irrelevant. The facts are plain that Elliott Wave and DeMark signals are routinely obliterated. Just be sure in the future to only bitch a little.

[KeiZai]

Thanks all for great charts,

good you mentioned past years, i was looking at some old charts few weeks ago to find fractals and i finished with scared face that we are "in" 1999 after 1998 crash...there are pretty much similarities...hopefully now history will not repeat itself in 1978 i dont know nothing about macro enviroment so it is hard to say if that fractal can be similar to nowadays but if 1975 "is" 2008, 1978 - 2011 we can expect one corrective wave before ultra-bull market will start to new highs around 2000+ ...one key thing for ultra bull market is missing - volume, that is why i am inclined toward fake bull market and correction before real bull market can start. But if we are in real bull run then based on a Livermoles chart we can be somewhere around point 6. Based on a kitchin growth cycle in point B.

Back to reality pullback was shallow, market wants to go higher that seems like sure thing so we can expect at least one more push up before bigger correction will happen (IF)

P.s: this market is f* strong! despite of missing volume or just because?...poetic question #2: why is volume missing if everything is fine?

[TWT]

SPX: Do we have a correction in progress ?

The confirming irrefutable evidence that will validate at least a "mild pullback" will occur when price breaks the Trend Line Support that connect the wave (2) & wave (4) at 1376

The bad news for the bears is that Since the December up leg is in force every single attempt to provoke a trend reversal has been a short lived corrective affair, resulting in a clear and persistent up trend.

Last week ´s pullback unfortunately is also corrective; you have to be creative in order to come up with an impulsive labelling, and creativity is a dangerous feature in EW analysis. Therefore Bears have to pray that Mr Market has begun a corrective pullback. The trend reversal will have to be corroborated by a lower high in the next 1-2 days.
Keep also in mind that as we approach month & quarter end the market´s bias will most likely be bullish.

In my opinion the price action can be labelled as a Zig Zag = ABC.
We know that until now ABC means higher, therefore Bears badly need a lower high and then break the mentioned Trend Line Support.

Therefore next Monday/Tuesday they will have to cross the fingers and hope that price will be detained in the range of the 0.618 retracement = 1404 – last lower high = 1407.75 with a wave (B or X).

Usually a short-lived counter trend rebound traces 2 up legs. At eod Friday we only have one, hence I believe that by eod Monday /Tuesday we should have the Zig Zag in progress with the potential reversal set up “on trial”

A few other short-term indicators like CPCE, Trin & Tick did not reach extreme readings at Friday´s lod, then maybe “this time it could be different”.

A “mild” correction should have a target at 1340 while if the the 10 w MA which stands at 1357 is breached the next target box should have a target in the range 1302-1274

If the potential short-term reversal set up is killed then I can say that if price clears the 1406 horizontal resistance the next obvious potential stopping point is located in the 1440 zone.

Given the well-known exogenous stimulus, if price also breaks the 1440 area then there is “only thin air” until the upper Trend Line Resistance in the area of 1500

[Harapa]

P.S. I was just told that they broke two DeMark signals immediately after they would have been acted on last week. Whether there is a War Room that makes these decisions or not is irrelevant. The facts are plain that Elliott Wave and DeMark signals are routinely obliterated. Just be sure in the future to only bitch a little.

I think looking for demon in everything is a recipe for disaster because it takes away the objectivity when comes to making investment decisions.
TD sequential measures price exhaustion, something that doesn't happen that easily in early stages of a bull market even though everyone and their cousin hopes for. Take a look at TD sequential signals (down red arrow indicate completion of TD sequential) at the start of 2003 bull market. Every signal failed to transpire a market sell off. Whom should we blame for these failures? Now-a-days after completion of each TD sequential many expect a sell off, when it doesn't happen rather than recognizing the past history they look for alternate explanations.

Here is a TD setup that has worked well since 2009. Up 231% (vs 94% B&H), 85% win rate. Up 24% since Oct 1, 2011, 100% win rate. If HFT are there to go against the normal behavior of the markets then why they haven't be able to break this one? or they don't want to brake this because this makes money for them.

I just wonder if HFT are really that important as your writings suggest? If they indeed are pushing the markets I ask them to do that with even more conviction, this helps me make money . I think we all are here to make money and not revolutionize the way the Wall Street works (Pardon my expression if you don't like it). Lets stay on our objective!

Disclaimer:I am not associated with Tom DeMark or his marketed products. I am just user of his methodologies.

[TraderGirl]

There are two turns this week, Monday and Thurs. I am attempting to figure out the direction based on astro's. There are neg astro's on Monday, but more positive on Tues/Weds, so I am assuming we put in a bottom on Monday some time, then head higher into Weds afternoon/Thurs morning. It also follows along a potential wave structure. Should we head higher than 1414 by Thursday, of course this is null and void...