03/05/2016 Weekend Update

[Cobra]

Institutional buying and selling chart from stocktiming shows more accumulation than distribution, and accumulation is up while distribution is down, so very bullish combination, should be more up ahead.

• When accumulation and distribution are down means we're in trending phase.

• When accumulation is up, distribution is down, it's a bottoming phase.

• When accumulation is down, distribution is up, it's the topping phase.

[Cobra]

Smart money starts to sell, so now it's time to watch top, i.e. if the market keeps going up while smart money selling hard, then it's a top. The selling is still small so should be more up ahead though.



How I use the chart:

I don't care what's the logic behind the chart. I found it works in the following two cases:

1.) When market up huge, if I see smart money huge short, best if new record short, then I know a short-term pullback is due soon.
2.) When market down, if I see smart money suddenly rises sharply from very negative value, then I know the pullback was over.

So I only use this chart for the above 2 cases. Besides those 2 cases, it means nothing to me. i.e. the absolute value of this chart means nothing to me, I only care if it rises sharply or drops sharply.

[fehro]

Daily, Weekly candles. Daily dojis, weekly bullish

[fehro]

Industry % Weeklies. Strong push up in oil and gas. Higher SPY volume today.

[fehro]

T2 http://www.worden.com/TeleChartHelp/Con ... rs_T2s.htm
another big jump in the stocks over the 40d ma 83%

[fehro]

T2 Channels % Stocks 1+2 Channels ><200d Weekly ><40d Daily

[fehro]

Yields

[Out of Bounds]

One of my favorite long term indicators is the 610 day moving average. Stickcharts won't allow anything longer than 600 but that's a fair approximation.

Here it is on a longer chart. Clearly we have dipped below it but we are above now and it is not time to abandon ship. The 610 average should be on everyone's watchlist though when looking at very long trends.

[Al_Dente]

Most of the “Risk Ratios” have improved

[Out of Bounds]

Here is an old Credit Suisse guide to technical analysis. It's a few years old but a nice guide for beginners who want learn a lot quickly.


https://drive.google.com/file/d/0B6L29- ... 9fTEk/view

[uempel]

For those those who cannot figure out why OoB shows MA 610: it's a Fib number - like 55, 89, 144, 233, 377 ...
As to MA 144 - SPX blew past on Friday:

Fib Moving Averages as support/resistance levels. 191 ain't a Fib number, but it is widely used too: 50% of 38.2 x 10

One of my favorite long term indicators is the 610 day moving average. Stickcharts won't allow anything longer than 600 but that's a fair approximation.

Here it is on a longer chart. Clearly we have dipped below it but we are above now and it is not time to abandon ship. The 610 average should be on everyone's watchlist though when looking at very long trends.

[Trades with cats]

The house of Morgan has an opinion that has been added to with lots of charts over at Zerohedge. Thier thesis is that this short covering bear market rally is the biggest since the November of 2008 event. They note that the central bankers have done nothing to help so far with both the G-20 last week and now the PBOC this week doing nothing.

What they don't say but other opinion pieces do is that Super Mario is expected to move rates to negative 0.4 next week followed up by the FOMC doing nothing but making it clear they are on track for a rate increase in April.

Back to JP Morgan- they are focusing on equity ETF's and CTA s (Commodity Trading Advisors or managed Futures accounts). Apparently about 30 $Billion has left ETFs so far this year and it has not started to return. Also the CTA's have only covered 1/3 of the shorts they have put on this year. So those two pools of dry powder could possibly move the market up another 100 points. That would make the S&P the most expensive it has ever been in history on a GAAP basis at over 22 times earnings. They are also clear that if this does not happen then the analog is that 2008 rally that was strong fast and ended in the 2009 sell off.

The weak points in the new record highs are several. First and foremost the short covering has been sparked by corporate buyback money entering the market in the largest amount yet seen. BofA Merrill showed us the hard numbers on that last week. We know for a fact that those flows end in another couple of weeks. Second, lots of ink has been spilled on how everyone from Bridgewater on down has been reducing their gross exposure since last fall. With Central Bank policy uncertainty why would they be in a rush to reverse and start expanding exposure? Would the CTAs totally reverse and go all in neutral let alone long by a short rally spurred by Chinese Bank lending with no support that end usage has stopped falling. Third is the junk bond market. The cash flowing in has allowed the funds to swell their positions in the oil patch and other potential high loss high yield areas. But Goldman told us in December that the door was closing on new debt for buybacks. I see it as the door is closing, not the same as slammed shut. There is still a lack of liquidity and my canary for that is the tech unicorns (yet to go public tech start ups valued at over 1 billion). Yesterday the Wall Street Journal had almost two full pages of what has to be an obit for the unicorns. Technically it was about how Fidelity, Blackrock and others have all written down the valuations of their investments and essentially stopped putting anymore money in. Zerohedge keeps reminding us that their have been zero IPO's so far this year. Aiding and supporting that view is the marvelous position of Junks first cousins the CLOs which are all supposedly dropping in value.

So my bottom line is I am going with the 2008 analog for now. If this thing keeps going up once we are into earnings season, then I will have to re-evaluate. Not that it matters because I have no long term positions at this time, but if direction becomes clear I will go back to swing trading.

[Al_Dente]

[source: Bespoke]

[uempel]

[source: Bespoke]

35bespoke.png.png

Great info, thanks Al!

[uempel]

Trades with Cats: I had not looked at 2008 for a few days and the difference is remarkable. The 2008 rebound went on for 45 trading days and didn't quite make it to 61.8 percent. The 2016 rebound began 16 trading days ago and touched 61.8 percent on Friday Too many greedy robots jumping in at the same time? Difficult to assess what's going on.

2008: Chart shows the first few months of the decline. Crash started in earnest when Lehman Brothers filed for Chapter 11 on September 15.

2016: Fast and furious compared to the moves in spring 2008, but the losses are softer and the rebound is stronger

[Al_Dente]

[source: Bespoke]

Great info, thanks Al!

[source: Bulkowski]

[tsf]

Source: Kora Reddy PastStat

Kora Reddy ‏@paststat March 5. 2016
$SPY when gains for 4 days in row and cls < 200-DMA , 55/60 wins for bears at an avg of 102 bps ->
http://stks.co/uL8K
http://paststat.com/backtest-report/tra ... 2016-03-04


Kora Reddy ‏@paststat March 5. 2016
$IWM bearish $STUDY , with 26/27 wins , when cls < 200 DMA & rsi(2) > 95 ->
http://stks.co/yL6q
http://paststat.com/backtest-report/tra ... 2016-03-04

[josephli]

Some thought on IWM:
1. Second leg down exceeding 100% MM. Most likely another major leg down to retest low.
2. Long term H&S break down, with neckline retest. whether current rally is good bye kiss remains to be seen.
3. There might be some more room on the up side for current rally.
4. Short term extreme OB.

my personal understanding is that a straight line rally like this has very little support area. once down cycle begins, the down leg could also be very fast.
If your horizon is couple of months out, then it seems to be a very good shorting opportunity with reasonable short term and intermediate term RR ratio.

[jason_70]

viewtopic.php?f=2&t=1959#p216589

Every index in the world has "hot pockets" on both sides. Either we rally higher or crash. There cannot be another game in town. Pick your side and play safe

Guess bulls win.
Breadth thrust has been the best since 2009. April 2009 is when we were last in similar state. Will we continue rallying from here?
In 2009 we were one of the cheapest markets in at last over 3 decades.
In 2016 we are the most overbought and expensive market in history.

Place your bets

[uempel]

Quite a few indicators point to the SPX 2013/2020 area. SPX 2019/20 might be key. Whatever, most likely next week will be highly volatile - and fun to trade

[source: Bespoke]

Great info, thanks Al!

[source: Bulkowski]

The attachment 35bulkowski.png.png is no longer available