The Daily
EQUITY PUT CALL RATIO CHART
The CBOE put/call ratio is comprised of two sets of data; equity options and index options. The index component contains items that are used as a hedge, thereby distorting the correlation and interpretation of the indicator. I use the equity put/call ratio. This is one of the most accurate read of investor's fear and complacency.
TRIN/ARMS CHART
Richard Arms developed the arms index. It is also referred to the Trading Index or TRIN for short. It is a measure of the ratio of up stocks and down stocks divided by the ratio of up volume and down volume. Our Spread Chart converts the arms index data into momentum Buy and Sell Signals.
TICK CHART
The tick index is represents the sum of all stocks ticking higher minus all stocks ticking lower (a stock is said to be trading on an up tick when it trades at a higher price than the last sale). It's utilized as a day trading tool as it gives you an up to the second read of the intensity of buying and selling.
BREADTH (ADVANCE - DECLINE) CHART
Each day several thousand stocks either advance, decline or remain unchanged. The number of advances and declines normally ranges from +2500 to -2500. A high number of advancing stocks normally marks a top just as a high number of declining stocks normally marks a bottom. Monitoring the 5 and 13-day moving averages of this allows us to better predict future prices.
VXO CHART
The VIX is a measure of volatility on options pricing. We use the old VIX, which is now called the VXO. The higher the volatility, the more likely the market is close to a bottom, as traders are willing to pay more premium for puts, which act as Insurance on their long positions.
Cycle Time
Monday will be day 2 in our up cycle.
The
Potential Cycle Reversal Dates
2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21. We publish these dates up to 2 months in advance.
We are at the 3/9 (3/10) date and while it looks like it could be a top, with the market bouncing to the 38.2% retracement level, the level of bearishness suggests that we are going to move up into 3/24 - meaning that people are betting some pretty big dollars that the market is going to move lower. And when the crowd leans to the left, we lean to the right.
My timing work is based on numerous cycles and has resulted in the above potential reversal dates. They're predictive and have nothing to do with the barometer cycle times. However, due to their accuracy in the past, I post the dates here.
2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates based on 'other' cycle work were 12/27/04, 1/25/05, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.
QQQQ or SPY Chart: A chart is provided in every bi-weekly report and shows the barometer Buy and Sell Signals (which are provided in my morning updates) as well as showing the next highlighted 'reversal' window. The numbers adjacent to the buy and sell signals are the number of days between signal (cycle time).
Here's one years of our end-of-day buy and sell signals for the
3/23 PROJECTED SELL (11 Days from previous signal)
3/8 BUY (34 Days)
1/18 SELL (4 Days)
1/11 BUY (17 Days)
12/22 SELL (6 Days)
12/14 BUY (0 days)
11/24 SELL (0 days)
11/14 EXIT/CLOSE/CASH (9 days)
11/01 SELL (18 days)
10/26 BUY (18 days)
10/2 SELL (4 days)
9/26 BUY (14 days)
9/6 SELL (15 days)
8/15 BUY (4 days)
8/9 SELL (12 days)
7/24 BUY (10 days)
7/10 SELL (29 days)
5/26 BUY (33 days)
4/10 SELL (8 days)
3/29 BUY (6 days)
3/21 SELL (5 days)
3/14 BUY (10 days)
2/28 SELL (8 days)
2/15 BUY (23 days)
1/12 SELL (6 days)
1/04 BUY (31 days)
11/29 SELL (28 days)
(historical reversal dates and performance figures are published at the bottom of the
[/list]
The following work is based on my price based spread/momentum indicators for the USD$, XAU, GLD and TLT. They are tuned to deliver signals in line with the Stock Barometer. Combined with up/down indicators and you have a powerful tool for pinpointing market reversals.
Gold (GLD:AMEX & INDEX:XAU.X)
I monitor Gold in the form of GLD and the XAU as well as the US Dollar Index as a general guide to the overall health of the US Economy and the markets, as well as to assist us in the entry of positions in our Gold Stock Service.
Bonds (Amex:TLT)
I include bonds in our studies and use Lehman’s 20 year ETF, as the direction of bonds can have an inverse impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.
Summary & Outlook
The barometer issued a Buy signal this week placing us in Buy Mode. The alignment with the recent reversal dates suggests that the 3/9 could have been either a top or a bottom. Given the high level of pessimism, meaning that everybody thinks the market is going to go lower, it is likely that the market will move higher into 3/24 - either testing the broken trend line or going up as high as to test the gap from February 27th.
Again, if you're new to the biweekly stock barometer, welcome. This article comes out every 2 weeks and gives a big picture view of the market and our recent activities. If you're interested in following our signals and learning more about our system, then I invite you to click here and subscribe to the daily service - since the market can turn on a dime and so to can our interpretation as the market gives its daily clues to the future. Or sign up for our[color= red;] free weekly newsletter[/color], where we provide up to date articles from our various trading services. We're also going to be releasing a free trading video in 2007 - so sign up today.
As always, if you have any questions or comments, feel free to email me here at
Regards,
Jay DeVincentis
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