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Go to: Top | Short-term Outlook | Int-term Outlook | Equity Updates | Indicator Summary | Commodity Updates
Short-term
Outlook (1-5 Days):
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Intermediate-term Outlook (1-3 Months):
Today's Update: We will remain Neutral for now.
Why: On
April 15th, the Dumb Money pushed up to 75%, and the
spread between that and the Smart Money reached to -45%.
In addition, we got a tremendous surge in the number of
bearish (for the market) Indicators At Extremes.
After we got the expected weakness and volatility exploded
higher, we experienced a very unusual situation with the "shock
day" on May 6th. We looked at somewhat similar days
on
May 7th, and the conclusions were clear - a
short-term rally was likely, probably being capped at a
62% retracement of the crash, then a re-test of the
panic lows. Since late May, we've looked at
quite a few bullish intermediate-term studies - we got
a major surge in pessimism, then several positive breadth
thrusts and positive price performance, all in the context
of an ongoing bull market. That has led to consistent
and significant gains when looking over the next 2 weeks to
1 month. However, June 4th's Payroll Report kneecapped
the nascent rally attempt and took us to a new closing low.
That is very unusual given the studies we discussed and
cannot be dismissed. But since we have seen a lot of
give-up among
Rydex traders
and
small options traders, and the S&P made another go at a breakout
above resistance, we were willing to give the
bullish outlook another shot. On June 22nd the S&P
fell back under its breakout level, and has since moved to a
new closing low, so we are standing aside in the
intermediate-term until a clearer picture emerges.
Recent Studies:
Two up days after a month without (6/04):
Bearish
Multiple breadth thrusts (5/28): Bullish
Extremely high ADX reading (5/27): Bullish
Oversold Indicator Score (5/21): Bullish
Sentiment:
Trend:
Back to mostly neutral readings.
Mixed long-term trend signals. Sup /
Res:
Other:
R: 1140; S: 1040 Nothing notable.
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Short-term Outlook
| Int-term Outlook |
Equity Updates |
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Commodity Updates
Equity Indicators - Updates and Extremes
Per the message sent yesterday
afternoon, our web hosting servers are still down. This is
exceptionally frustrating for everyone involved, so please understand
that we're doing everything we can to get them back up and running. Also as a reminder, we have not received any emails at
any @sentimentrader.com email address since about 5pm EST on Thursday.
If you've sent any email since that time, assume we did not (and will
not) receive it. You will have to re-send once the site is
functioning again. The site issues also means that I'm greatly hampered
with what I can do for a Morning Report, so this will just be an
abridged summary with no graphs. The damage over the past week has created a few
compelling extremes, mostly in the breath category. Most of our
sentiment-related guides are still relatively neutral because the
decline has been so quick. The best chance to see some extreme
pessimism sentiment-wise will be the ROBO put/call data we update over
the weekend. Speaking of breadth, one of the charts we post shows the
percentage of S&P 500 stocks (among about a dozen other sectors) that
are above their 10-day and 50-day averages. The latter figure
dipped under 5% for one of the few times in the past 12 years. In fact, the only other times it reached this low of a
level was in July 2002 and October 2008. Both were months that the
S&P put in some form of low, however the indicator first dipped under 5%
on July 12, 2002 and October 8, 2008...after both of which the S&P lost
another 15% in a quick way before rebounding. There were four times the S&P was this oversold on a
Payroll day. All four times, it gapped up that Friday morning,
averaging +0.7% and closed higher three times, averaging +1.7%.
The dates were 9/4/98, 7/5/02, 11/7/08 and 3/6/09. Seasonality-wise, the day before the 4th of July holiday
has had a slight positive bias, but it's nothing too spectacular, and we
most often saw weakness immediately after the break, especially over the
past decade. When the Payroll report fell on the day before the
holiday, the S&P was positive 4 out of 7 times, but with an average of
-0.2%. Overall, I don't see a hugely strong edge here for
either the short- or intermediate-term. If we get more weakness
today, then we'll see some exhaustion signals in technical work like
DeMark
indicators, and combined with the various oversold indicators, we
should be within a day or two (today or Monday) of at least another
short-term multi-day rebound. I'm not counting on anything lasting
though, given the technical damage done over the past week. Once the site is back up and running, I will send out
another note...and my apologies again for the outage.
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Short-term Outlook
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Equity Market Indicators
Notes: In mid- to late-May, we saw as many as 40% of our indicators at a bullish (for the market) and as little as 0% at a bearish one. That was the widest spread since March 2009, though it has gotten as high as 50% - 70% at some of the true panic lows over the years. On June 29th, we got another spike in bullish indicators above the 30% level...but again it's below what we've seen at many of the prior major lows.
More history:
* New extreme
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Bonds, Commodities and Currencies - Updates and Extremes
Nothing notable for today.
Jason Goepfert Founder, Sundial Capital Research, Inc.
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July
2, 2010,
9:00am EST
Neutral
Since June 24, 1067
SPX
