Member
Posted 02 March 2019 - 09:05 AM
As the hourly SPX chart shows, bulls have been hammering away at the top level of this strong resistance zone, going back several months, but so far failed to break through. Nevertheless, they hold the edge and can move above SPX 2810 next week, BUT it will bear little fruit since the markets can only move ahead in any substantial way ( more than 2%) if there is fuel or a catalyst to drive it up.
Member
Posted 02 March 2019 - 09:12 AM
The last time $SPX set a new 70-day Highest Close while $VIX was under 14 (before today)? Sep 20, 2018. The next day, the market peaked midday (still the current All Time High) and then began to sell off into a bear market. Happy Weekend, Everyone!
The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed.
Last changed Jan 24 from a Greed rating
Updated Mar 1 at 4:02pm
The McClellan Volume Summation Index measures advancing and declining volume on the NYSE. During the last month, approximately 10.83% more of each day's volume has traded in advancing issues than in declining issues, pushing this indicator towards the upper end of its range for the last two years.
Last changed Jan 24 from a Greed rating
Updated Mar 1 at 4:12pm
During the last five trading days, volume in put options has lagged volume in call options by 39.41% as investors make bullish bets in their portfolios. This is among the lowest levels of put buying seen during the last two years, indicating extreme greed on the part of investors.
Last changed Feb 27 from a Greed rating
Updated Mar 1 at 4:14pm
Stocks have outperformed bonds by 4.41 percentage points during the last 20 trading days. This is close to the strongest performance for stocks relative to bonds in the past two years and indicates investors are rotating into stocks from the relative safety of bonds.
Last changed Feb 19 from a Greed rating
Updated Feb 28 at 7:00pm
Member
Posted 02 March 2019 - 09:14 AM
This week’s NAAIM Exposure Index number is:
79.33
Last Quarter Average
53.76
http://www.naaim.org...exposure-index/
BLIP up on OSC while Summation Index is flat
Edited by dTraderB, 02 March 2019 - 09:15 AM.
Member
Posted 02 March 2019 - 09:16 AM
We are all well aware of the S&P 500 and the 200-day moving average, but how well does this moving average work for broad market timing? Pretty well, it turns out, but only on the long side.
I put the 200-day moving average to the test for the S&P 500 and other indexes in "On Trend" on February 21st (Youtube link here). In a nutshell, I found that closes above/below the 200-day work well overall, but a second moving average is needed to smooth closing prices and reduce whipsaws. While there is no such thing as the perfect setting, I settled on the 20-day SMA and 200-day SMA combo. A 20-day SMA sits between the closing price and the 50-day SMA. Thus, it offers fewer whipsaws than the close/200-day cross and less lag than the 50/200 day cross.
The chart below shows the S&P 500 in the top window with the 20-day SMA (green) and 200-day SMA (red). A bullish signal triggers when the 20-day SMA crosses above the 200-day SMA (green vertical lines), while a bearish signal triggers when the 20-day SMA crosses below the 200-day SMA (red vertical lines). As the chart details, there were 34 crosses over the last 25 years.
Chartists trading SPY based on these signals would have performed well on long signals, but not on short signals. Notice that there were 11 winners and 6 losers for when trading only long positions, and 14 winners and 20 losers when trading long and short positions. The vast majority of short positions resulted in losses.
The table below summarizes the results. Note that SPY includes dividends. I did not test with an inverse ETF because the data for the ProShares Short S&P 500 ETF (SH) only goes back to 2006. As the table shows, the Compound Annual Return is higher when trading only long positions and lower when short positions were added to the mix. The long-only strategy generated higher returns and was in the market just 72% of the time. Not only to did short positions reduce the returns, but they also increased the drawdowns.
Market timing with the 200-day SMA can produce decent returns with reduced risk, but only on the long side. Despite some good short trades in 2001-2002 and 2007-2008, short trades as a whole did not make money over the last 25 years. The S&P 500 is above its 200-day SMA some 70 percent of the time and trends higher more often than lower. Why fight it!
https://stockcharts....e-the-bait.html
Member
Posted 02 March 2019 - 09:18 AM
JOHN MURPHY
After having one of the strongest starts to a new year in history, major stock indexes find themselves testing yet another potential overhead resistance barrier. And they're doing so while in an over-extended technical condition. But they've been looking over-extended for most of the past month. Chart 1 shows the Dow Industrials testing their early November intra-day high at 26,300 (first red circle). A decisive close above that previous peak would clear the way for a retest of last October's record high. But it has to clear its November high first. The Dow remains above its 200-day moving average (red arrow). Its blue 50-day average, however, remains below its 200-day line. On a more positive note, its 20-day average (green arrow) remains above the other two longer averages. If the Dow does pull back, that would the first moving average to be tested. Maybe even the 200-day. One cautionary note is fact that its daily MACD lines (lower box) have been converging over the last month and are close to turning negative. That would be their first time in negative territory since the end of December. That might be enough to signal some short-term profit-taking. Or possibly a period of consolidation to work off its overbought condition.
Chart 2 shows the S&P 500 in a similar technical condition. The SPX is testing its November intra-day high at 2815. If it does pull back, it could retest its 20 and 200-day averages (green and red lines). Chart 3 shows the Nasdaq Composite Index also testing its November intra-day high at 7572. The lower box in Chart 3 shows its MACD histogram bars in danger of falling below their zero line (red circle). That would signal that the MACD lines themselves are turning negative.
Chart 1
Chart 2
https://stockcharts....mber-highs.html
Member
Posted 02 March 2019 - 09:22 AM
I have been preaching TOPPING for the past three weeks! But, while the markets have not skyrocketed, there is no absolute indication that the TOPPING is almost over.
CARL:
" When I say "some kind" of corrective action, I'm thinking along the lines of a move down to test the December lows, but if we look on the chart below at what happened in 2003, it may not be any worse than several weeks of consolidation. Looking at market action after other Summation Index extreme tops, we might conclude that in a bull market "overbought" is not such a big deal, but it is still a warning of vulnerability."
DP WEEKLY/MONTHLY WRAP: Internals Overbought and Topping
The McClellan Summation Index (ratio-adjusted version) has had the longest uninterrupted upside run since 2003, when the market was coming up off of the 2000-2002 bear market lows. The indicator is very overbought and it is trying to top, so we should expect some kind of corrective action over the next several weeks.
When I say "some kind" of corrective action, I'm thinking along the lines of a move down to test the December lows, but if we look on the chart below at what happened in 2003, it may not be any worse than several weeks of consolidation. Looking at market action after other Summation Index extreme tops, we might conclude that in a bull market "overbought" is not such a big deal, but it is still a warning of vulnerability.
The DecisionPoint Weekly Wrap presents an end-of-week assessment of the trend and condition of the stock market (S&P 500), the U.S. Dollar, Gold, Crude Oil, and Bonds.
Watch the latest episode of DecisionPoint on StockCharts TV's YouTube channel here!
https://stockcharts....nd-topping.html
Member
Posted 02 March 2019 - 09:26 AM
Few bears
The AAII survey shows only 20% bears this week. Per the Backtest Engine, this tended to lead to poor returns in HYG.
Slowing growth
The GDP release relieved some investors by being better than feared. But forecasts show that growth this quarter is likely to be the lowest in 8 quarters.
Like we’ve seen during past studies looking at economic or earnings recessions, the hype doesn’t often translate to forward returns. Looking at other times when stocks rallied into lower GDP growth, any worries seem over-hyped as future returns were fine.
Back to bullish
In late December, the AIM Model of surveys collapsed to the most extreme level of pessimism possible. Now that stocks have rallied like they have after other times the model fell to 0%, it is back above 75%.
That’s a quick turnaround for what tends to be a slower-moving reflection of sentiment.
A nice couple of months
The momentum we’re seeing now is a good sign, and much is being made that this is the “best two months to start a year since…”. When both January and February showed a gain, the S&P did tend to continue rising over the next 10 months. But other two-month combinations showed much better returns than Jan-Feb, suggesting the calendar isn’t that big of a deal.
Good start
The S&P 500 isn’t the only market with a good start to the year. It was the best ever for crude oil. Other good starts saw gains in early March almost every time and was mixed after that. Other markets struggled, especially emerging markets.
Few bears
The AAII survey shows only 20% bears this week. Per the Backtest Engine, this tended to lead to poor returns in HYG.
https://www.sentimen...ouple-of-months
Member
Posted 02 March 2019 - 09:30 AM
One reason why I am calling for a swift reversal if there is a 1 to 2% SPX rally next week; my daily VIX buy will be triggered by another 3 to 5 % down move (in VXX)
Citi Panic/Euphoria inched up this past week. Might be kissing Euphoria in another week or so
Bank Index didn't want to close anywhere near the highs. and BKX:SPX lags.
The DJIA
Member
Posted 02 March 2019 - 09:32 AM
S&P 500 Clears the 200-day. Should we Take the Bait?
Arthur Hill | March 02, 2019 at 05:29 AM
We are all well aware of the S&P 500 and the 200-day moving average, but how well does this moving average work for broad market timing? Pretty well, it turns out, but only on the long side.
I put the 200-day moving average to the test for the S&P 500 and other indexes in "On Trend" on February 21st (Youtube link here). In a nutshell, I found that closes above/below the 200-day work well overall, but a second moving average is needed to smooth closing prices and reduce whipsaws. While there is no such thing as the perfect setting, I settled on the 20-day SMA and 200-day SMA combo. A 20-day SMA sits between the closing price and the 50-day SMA. Thus, it offers fewer whipsaws than the close/200-day cross and less lag than the 50/200 day cross.
The chart below shows the S&P 500 in the top window with the 20-day SMA (green) and 200-day SMA (red). A bullish signal triggers when the 20-day SMA crosses above the 200-day SMA (green vertical lines), while a bearish signal triggers when the 20-day SMA crosses below the 200-day SMA (red vertical lines). As the chart details, there were 34 crosses over the last 25 years.
Chartists trading SPY based on these signals would have performed well on long signals, but not on short signals. Notice that there were 11 winners and 6 losers for when trading only long positions, and 14 winners and 20 losers when trading long and short positions. The vast majority of short positions resulted in losses.
The table below summarizes the results. Note that SPY includes dividends. I did not test with an inverse ETF because the data for the ProShares Short S&P 500 ETF (SH) only goes back to 2006. As the table shows, the Compound Annual Return is higher when trading only long positions and lower when short positions were added to the mix. The long-only strategy generated higher returns and was in the market just 72% of the time. Not only to did short positions reduce the returns, but they also increased the drawdowns.
Market timing with the 200-day SMA can produce decent returns with reduced risk, but only on the long side. Despite some good short trades in 2001-2002 and 2007-2008, short trades as a whole did not make money over the last 25 years. The S&P 500 is above its 200-day SMA some 70 percent of the time and trends higher more often than lower. Why fight it!
https://stockcharts....e-the-bait.html
Why fight it? I don't know, it is the strategy of most traders out there, they are always searching for the fast money drops, always trying to pick tops for the next crash and going broke in the process. Only if they are just scalping the highs and are very nimble taking 5-10 or less can they do alright.
Member
Posted 02 March 2019 - 09:37 AM
$SPX is projected to report a year-over-year decline (-3.2%) in earnings for Q119, led by the Energy (-13%), Materials (-11%), and Technology (-11%) sectors. http://ow.ly/Kv0450mp5w0
74% of $SPX companies (73 of 99) have issued negative EPS guidance for Q119, which is above the 5-year average of 71%. http://ow.ly/Ge2c50mp59b
