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[TTHQ Staff]

 

The Daily Stock Barometer is a proprietary measure of market energy.  The direction of the stock barometer determines our short-term outlook on the market's direction.  A BUY or SELL signal is triggered when the indicator clearly changes direction. If the line is moving up, we are in BUY MODE and if it's moving down, we are in SELL MODE.  The black line is a 5-day moving average that we use to confirm changes in direction. 

 

EQUITY PUT CALL RATIO CHART

 

 

 

The CBOE put/call ratio is comprised of two sets of data; equity options and index options.  Theindex component contains items that are used as a hedge, therebydistorting 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
 
 
 

Thetick index is represents the sum of all stocks ticking higher minus allstocks ticking lower (a stock is said to be trading on an up tick whenit 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.  Thehigher the volatility, the more likely the market is close to a bottom,as traders are willing to pay more premium for puts, which act asInsurance on their long positions.

 

Cycle Time
 

Monday will be day 2 in our up cycle.

 

The Stock Barometer signals tend to follow a 5, 8 and 13 and sometimes 21 day Fibonacci cycle that balance with 'normal' market cycles.  Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.

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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, 5/6, 6/15.  We publish these dates up to 2 months in advance.
 
June 15^th is behind us now.  We did issue a signal and are in Buy Mode.
 

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.  2005Potential 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.

 

Stock Barometer Buy And Sell Signals

 

QQQQor SPY Chart: A chart is provided in every bi-weekly report and showsthe barometer Buy and Sell Signals (which are provided in my morningupdates) 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 Stock Barometer over the past year.  They're marked on the QQQQ chart with red and blue lines (or red and blue arrows).  Note we recently changed bottom and top to read buy and sell.  
 

 

• 6/15 BUY (21 days)
• 5/15 SELL (27 days)
• 4/5 BUY (7 days)
• 3/27 SELL (13 Days)
• 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)
•  (historical reversal dates and performance figures are published at the bottom of the home page and updated annually)
  [/list]  
  
  The following work is based on my price based spread/momentum indicators for the USD$, XAU, GLD and TLT.  Theyare tuned to deliver signals in line with the Stock Barometer. Combinedwith up/down indicators and you have a powerful tool for pinpointingmarket reversals. 
   
  
  Gold (GLD:AMEX & INDEX:XAU.X)
   
   
   
   
   
  
  Imonitor Gold in the form of GLD and the XAU as well as the US DollarIndex as a general guide to the overall health of the US Economy andthe markets, as well as to assist us in the entry of positions in ourGold Stock Service.
   
  
  Bonds (Amex:TLT)
   
   
   
  
  Iinclude bonds in our studies and use Lehman’s 20 year ETF, as thedirection 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
   
  We remain in Buy Mode. 
   
  Nowthat we're at a key reversal date and the market moved up into it,there is the chance that we did see the top on Friday and this topwould be it for the summer.  However, the system moved into Buy Mode and prices pushed higher, thus we had to issue a signal.
   
  As for action to expect, if you look back up on the chart of the Qs, we had a large gap up on Friday.  That gap is likely to get filled.  If it gets filled on Monday, then expect an advance to at least test the highs.  Remember,tops are filled with hope and we still have a little fear out there -once the fear evaporates, we can begin to see the market climate shiftfrom fearful on selling to complacence on selling.  Then the potential of a larger move lower moves in.
   
  
  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 [color= red;]I invite you to click here and subscribe to the daily service[/color] - 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.
   
  Have a great rest of the weekend.
   
  As always, if you have any questions or comments, feel free to email me here at jay@stockbarometer.com.  Who knows, your question may be on other minds and could be posted in a future article.
   
  Regards,
   
  Jay DeVincentis
   
  
  Trading involves high risk.  Past results are not indicative of future returns.  Stockbarometer.comand all individuals affiliated with Stockbarometer.com assume noresponsibilities for your trading and investment results.