TheDaily Stock Barometer is a proprietary measure of market energy. The direction of the stock barometer determinesour 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 weuse to confirm changes in direction. We maywait for the QQQQs to break support or resistance before changing mode.
EQUITYPUT CALL RATIO CHART
TheCBOE put/call ratio is comprised of two sets of data; equity options and index options. The index component contains items that are usedas 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 ofinvestor's fear and complacency.
TRIN/ARMSCHART
RichardArms developed the arms index. It is alsoreferred to the Trading Index or TRIN for short. Itis a measure of the ratio of up stocks and down stocks divided by the ratio of up volumeand down volume. Our Spread Chart convertsthe arms index data into momentum Buy and Sell Signals.
TICKCHART
Thetick index is represents the sum of all stocks ticking higher minus all stocks tickinglower (a stock is said to be trading on an up tick when it trades at a higher price thanthe last sale). It's utilized as a daytrading tool as it gives you an up to the second read of the intensity of buying andselling.
BREADTH(ADVANCE - DECLINE) CHART
Eachday several thousand stocks either advance, decline or remain unchanged. The number of advances and declines normallyranges from +2500 to -2500. A high number ofadvancing stocks normally marks a top just as a high number of declining stocks normallymarks a bottom. Monitoring the 5 and 13-daymoving averages of this allows us to better predict future prices.
VXOCHART
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 themarket is close to a bottom, as traders are willing to pay more premium for puts, whichact as Insurance on their long positions.
CycleTime
Monday will be day 17 in our UPcycle.
The Stock Barometer signals tend to follow a 5, 8 and 13 and sometimes 21 dayFibonacci cycle that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how longyou expect to maintain a position.
[font=" ’Verdana’,’sans-serif’"] [/font]PotentialCycle Reversal Dates
2008Potential Reversal Dates: 1/11, 2/1, 2/13, 3/6, 4/5,4/22, 5/23, 6/6. We publish these dates up to 2 months in advance.
The Qs are torturing resistance - if this rally is going to continue, it'llneed to push through these levels. There maybe a false reversal before it continues the advance - but it should stay in an uptrend.
My timing work is based on numerous cycles and has resulted in the above potentialreversal dates. They're predictive and havenothing to do with the barometer cycle times. However,due to their accuracy in the past, I post the dates here.
2007Potential Reversal Dates: 1/10, 1/14,1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/24,12/31.
2006potential 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.
StockBarometer Buy AndSell Signals
QQQQor SPY Chart: A chart is provided in every bi-weekly report and shows the barometer Buyand Sell Signals (which are provided in my morning updates) as well as showing the nexthighlighted 'reversal' window. The numbersadjacent to the buy and sell signals are the number of days between signal (cycle time).
Here'sone years of our end-of-day buy and sell signals for the Stock Barometer overthe past year. They're marked on the QQQQchart with red and blue lines (or red and blue arrows). Note we recently changed bottom and top to read buy and sell. - 04/7 Projected SELL Signal (17 days from last signal)
- 03/12 BUY (2 days)
- 03/10 SELL (3 days)
- 03/5 BUY (3 days)
- 02/29 SELL (13 days)
- 02/11 BUY (4 days)
- 02/5 SELL (8 days)
- 01/24 BUY (4 days)
- 01/17 CASH (3 days)
- 01/14 BUY (6 days)
- 01/04 SELL (9 days)
- 12/20 BUY (3 days)
- 12/17 SELL (23 days)
- 11/13 BUY (4 days)
- 11/07 SELL (7 days)
- 10/29 BUY (13 days)
- 10/10 SELL (3 days)
- 10/5 BUY (2 days)
- 10/3 SELL (2 days)
- 10/1 BUY (1 days)
- 9/28 SELL (12 days)
- 9/12 BUY (4 days)
- 9/06 SELL (3 days)
- 8/31 BUY (3 days)
- 8/29 SELL (7 days)
- 8/17 BUY (3 days)
- 8/14 SELL (4 days)
- 8/8 BUY (16 days)
- 7/17 SELL (3 days)
- 7/12 BUY (15 days)
- 6/20 SELL (4 days)
- 6/14 BUY (20 days)
- 5/15 SELL (27 days)
- 4/5 BUY (7 days)
- (historical reversal dates and performance figures are published at the Performance Page on the home page and updated at least annually)
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Thefollowing work is based on my spread/momentum indicators for the QQQQ, GLD, USD, USOand TLT. They are tuned to deliver signals inline with the Stock Barometer and we use them only in determining our overall outlookfor the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buysignal 'above zero' is more bullish than a buy signal 'below zero'.
Gold Spread Indicator (AMEX:GLD)
To trade Gold, utilize the Gold ETF AMEX:GLD. Thisgives us a general gage to the overall health of the US Economy and the markets, as wellas to assists us in the entry of positions in our stock trading service.
US Dollar Index Spread Indicator (INDEX:DXY)
To trade the US Dollar, I'd utilize the Power Shares AMEX:UUP: US Dollar IndexBullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.
BondsSpread Indicator (AMEX:TLT)
Totrade Bonds, I recommend Lehman’s 20 year ETF AMEX:TLT. Note that the direction of bonds can have animpact on the stock market. Normally, asbonds go down, stocks will go up and as bonds go up, stocks will go down.
OIL Spread Indicator (AMEX:USO)
Totrade OIL, utilize AMEX:USO, the OIL ETF. Welook at the price of oil as its level and direction can have an impact on the stockmarket.
Summary& Outlook
The barometer remains in Buy Mode and has so for 17 trading days (onMonday). We've been expecting themarkets to move higher into 4/5 (our key reversal date) but since that's a Saturday, thereversal can come on the Friday or the Monday. Thesekey reversal dates are based on cycle work, and as nothing works all the time, the marketsmay move higher into the next date, 4/22. However,due to their periodic accuracy, they are worth paying attention to.
Ihope you enjoyed the biweekly stock barometer. Thisarticle comes out every 2 weeks and gives our big picture view of the market. If you're interested in following our signals andlearning more about our system, then I invite youto click here and subscribe to the daily service - since the market canturn on a dime and so too can our interpretation as the market gives its daily clues tothe future. Or sign up for our freeweekly newsletter, where we provide up to date articles from our varioustrading services.
Wealso offer a free weekly indicator chart if you visit our home page and scroll to thebottom. This chart will be updated each week,so be sure to check back frequently for updates. www.stockbarometer.com- don't forget to scroll to the bottom.
As always, if you have any questions or comments, feel free to email mehere at jay@stockbarometer.com.
Regards,
Jay DeVincentis
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Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading havelarge potential rewards, but also large potential risk. You must be aware of the risks andbe willing to accept them in order to invest in these markets. Don't trade with money youcan't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures,Options, Mutual Funds or Equities. No representation is being made that any account willor is likely to achieve profits or losses similar to those discussed on this Web site. Thepast performance of any trading system or methodology is not necessarily indicative offuture results.
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