Jump to content



Photo

Internals... Now why on earth would anyone short this wonder rally ?


  • Please log in to reply
42 replies to this topic

#1 ogm

ogm

    Member

  • Traders-Talk User
  • 13,780 posts

Posted 16 March 2013 - 06:43 AM

How can anyone think this market isn't going to go up every day for the foreseeable future ?

In one of the threads a couple days ago I said something like "internals aren't there anymore" .... I meant it.

Breadth continues deteriorating as the market advances. Each spike made on a progressively lower breadth.

Leadership has narrowed significantly. Sure, summations are still high, but summations are slow moving indicator. A second derivative of breadth. Breadth > MCO > Summations.

Here are all of them + stocks above 50 DMA ... I think its self evident here.


Posted Image

Edited by ogm, 16 March 2013 - 06:46 AM.


#2 CLK

CLK

    Member

  • Traders-Talk User
  • 10,787 posts

Posted 16 March 2013 - 07:08 AM

Internals often lag in a secular bull market. The internals measures used today were not around until late in the secular bull cycle, the earliest was NYAD and it only started in 1991, and you will see that at times, price stayed well ahead of it on breakouts. I think Fib has A/D data going back 100 years, he might could confirm what I am saying. I look at price, volume, A/D(both NYA and COMPQ), and intermaket. The most relevent indicator in this context most likely is price.

#3 ogm

ogm

    Member

  • Traders-Talk User
  • 13,780 posts

Posted 16 March 2013 - 07:15 AM

Here is the analogy I'm looking at.


Posted Image

#4 ogm

ogm

    Member

  • Traders-Talk User
  • 13,780 posts

Posted 16 March 2013 - 07:17 AM

Internals often lag in a secular bull market. The internals measures used today were not around until late
in the secular bull cycle, the earliest was NYAD and it only started in 1991, and you will see that at times,
price stayed well ahead of it on breakouts. I think Fib has A/D data going back 100 years, he might could confirm
what I am saying. I look at price, volume, A/D(both NYA and COMPQ), and intermaket. The most relevent
indicator in this context most likely is price.



I don't argue that we are in a bull or bear market. I'm looking for an IT decline at this point. We'll see what it turns into. Some long term measures say that this may turn into a full blown LT top. But We'll see how this works out.
I don't think we are in a 1996 environment, however. The whole new industry was emerging back then.

Edited by ogm, 16 March 2013 - 07:19 AM.


#5 CLK

CLK

    Member

  • Traders-Talk User
  • 10,787 posts

Posted 16 March 2013 - 07:34 AM

Here is the analogy I'm looking at.


Posted Image




I am watching the same setup, the problem I have with shorting here is that price has gone straight up,
I doubt it goes straight down from here, it has to consolidate, but it can also keep going straight up
and MACD follow it and the divergence disappear. If I see a couple weeks of volatile chop, then this may be a top,
until then, I consider all shorting as too early. Also, I would not want to short until MACD has crossed back down,
and that has to happen within the divergence, not from higher.

Edited by CLK, 16 March 2013 - 07:42 AM.


#6 fib_1618

fib_1618

    Member

  • Traders-Talk User
  • 10,144 posts

Posted 16 March 2013 - 07:46 AM

Sure, summations are still high, but summations are slow moving indicator. A second derivative of breadth.

The MCO and MCSUM and their technical usage.

The rest of the thread may also prove to be beneficial as well.

Fib

Better to ignore me than abhor me.

“Wise men don't need advice. Fools won't take it” - Benjamin Franklin

 

"Beware of false knowledge; it is more dangerous than ignorance" - George Bernard Shaw

 

Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

Technical Watch Subscriptions



 


#7 ogm

ogm

    Member

  • Traders-Talk User
  • 13,780 posts

Posted 16 March 2013 - 07:49 AM

I am watching the same setup, the problem I have with shorting here is that price has gone straight up,
I doubt it goes straight down from here, it has to consolidate, but it can also keep going straight up
and MACD follow it and the divergence disappear. If I see a couple weeks of volatile chop, then this may be a top,
until then, I consider all shorting as too early. Also, I would not want to short until MACD has crossed back down,
and that has to happen within the divergence, not from higher.


Could be.
I wish I could predict the exact path how this plays out. I can't.
But there are glaring divergences not only in MACD or RSI but in internals too. Leadership has narrowed, former leaders like AMZN are starting to fall out of the sky.
Can they keep pumping the index heavyweights like the DOW stocks some more ? Maybe. But its going to be easier and easier to pick shorts.
My scanner that scans for RSI divergence short setups has been producing 20+ setups in the SPX index a day for the past few days vs 1-2 buy signals. So the stuff is weakening. You can see that in the % of stocks above 50 DMA chart very easily.

Sentiment is ripe, Insiders selling in droves, leverage levels have skyrocketed, so there are plenty of signs that this party is about to come too an end one way or another.

#8 ogm

ogm

    Member

  • Traders-Talk User
  • 13,780 posts

Posted 16 March 2013 - 08:03 AM

Sure, summations are still high, but summations are slow moving indicator. A second derivative of breadth.

The MCO and MCSUM and their technical usage.

The rest of the thread may also prove to be beneficial as well.

Fib



Fib,

Thank you for the excellent explanation. You're absolutely correct.. with Summations this high it would be hard for the price to "just collapse" ... that however doesn't mean that the decline may not get underway however slowly.
High summations do indicate momentum in internals, and as any momentum it has to weaken first before it kicks in the opposite direction.
Second derivative isn't an insulting term, just a mathematical one :) Summations are a very valuable technical tool, I always knew that. But they are still based on breadth.
And breadth is starting to noticeably under perform, I'm sure you're not going to argue that. MCO is obviously getting weaker, % of stocks above various moving averages, Bullish % indexes, etc. The rally is losing steam and broad support in internals.

Now we may differ in opinion if it re-accelerates upwards or keeps getting worse, which may lead to summations completely rolling over eventually (several days of negative breadth would do the trick) ... but that's a different story.

Edited by ogm, 16 March 2013 - 08:12 AM.


#9 DrSP

DrSP

    Member

  • Traders-Talk User
  • 2,391 posts

Posted 16 March 2013 - 08:15 AM

CLK, What happened to the data before 100 years? <_< Also, apparently isn't this whole rally based on the "thrust" from 2010, according to Fib? :rolleyes: You guys are too funny. :lol:
You could be a billionaire or an industrial worker or a teacher or a moderator of a forum - Hold a good conscience because that is what matters.

#10 Rogerdodger

Rogerdodger

    Member

  • TT Member*
  • 26,862 posts

Posted 16 March 2013 - 08:57 AM

I hope my conspiracy theory on the "sequestration manipulation" is wrong. It involves maximum pain intentionally caused for maximum blame. See: Des Moines Register, October 2012 "So when you combine the tax cuts expiring, the sequester in place, we’re going to be in a position where I believe in the first six months we are going to solve that big piece of business. It will probably be messy. It won’t be pleasant." There could be no better "optics" than a 2% sequester causing a falling stock market and a peaking economy.

Edited by Rogerdodger, 16 March 2013 - 09:06 AM.