|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Go to: Top | Short-term Outlook | Int-term Outlook | Equity Updates | Indicator Summary | Commodity Updates
Short-term
Outlook (1-5 Days):
Go to: Top | Short-term Outlook | Int-term Outlook | Equity Updates | Indicator Summary | Commodity Updates
Intermediate-term Outlook (1-3 Months):
Today's Update: We will remain Neutral for now.
Why: In late May, we 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. But after just a brief respite, June 4th's Payroll Report kneecapped
the rally attempt and took us to a new closing low.
In the process, we saw very
oversold conditions and some give-up among
Rydex traders and
individual investors. In early July, we saw
even more evidence of excessive pessimism. The big
missing piece, though, was the price action - the S&P was
making a clear series of lower highs and lower lows, which
muddled the risk/reward of stepping in and buying into those
pessimistic conditions. The market has obviously
recovered well from there, and with the advance/decline line
making a
new all-time high, things were looking brighter for
stocks. But August 11th's knock-down gave us the
potential for a failed break of important resistance, and
we're back to being stuck in a longer-term trading range.
Recent Studies:
No Fidelity funds better than cash (7/06):
Bullish
Rydex traders giving up (7/07): Bullish
AAII survey shows low bullishness (7/08): Bullish
Sentiment:
Trend:
Mostly neutral readings.
Mixed long-term trend signals. Sup /
Res:
Other:
R: 1140; S: 1040 Nothing notable.
Go to: Top |
Short-term Outlook
| Int-term Outlook |
Equity Updates |
Indicator Summary |
Commodity Updates
Equity Indicators - Updates and Extremes Over the past
six months or so, we've highlighting the trouble with breadth (the
number of advancing versus declining stocks, and the volume that flows
into them). Not "trouble" in
the sense that breadth has necessarily been bad, but in the sense that
due to [insert your favorite excuse here, such as high-frequency
trading] we've seen more "all or nothing" days than we've ever seen
before. Breadth figures have become exceptionally volatile, unlike
anything in at least the past 70 years. Because of that,
I've relied less and less on the daily extremes, but still usually
mention them when they pop up. Like yesterday. The volume
flowing into rising stocks yesterday was so tepid that the Arms Index
(better known as the TRIN) spiked above 6.0 for one of the few times in
the past 40 years.
Because of the
weird breadth readings we've been seeing, lately we've been using
Reuters historical data for testing purposes. It typically lines
up very well with what is reported in the Wall Street Journal. So using that
data back to 1984, the table below shows the S&P 500's performance
following other days when the Arms Index spiked above 6:
Date
Days Before Low 1
Day Later 1
Week Later 2
Weeks Later 1
Month Later 3
Months Later The 2nd column
shows the number of trading days that passed before the S&P put in at
least a month-long or so bottom. And it's pretty remarkable that
in every case but one, that low was put in within a week, and except for
two instances, it was either that day or the next. Prior to 1987,
we would have to go all the way back to 1955 to find the next-earliest
Arms Index reading above 6. Because we're using a different data
source here, the results aren't exactly comparable, but close enough. From 1940 -
1955, there were 21 days that showed such an extreme. The table
below shows the S&P's performance afterward: 1
Day Later 1
Week Later 2
Weeks Later 1
Month Later 3
Months Later The results
obviously weren't nearly as impressive, as the average returns were
actually negative during the next couple of weeks, and the consistency
of being positive was spotty. But much of that
was due to how the market often performed back then - we'd get a big
selloff, then a huge short-term relief rally, then another big dive down
that put in a market bottom. And in fact, looking at those 21
occurrences, the median number of trading days before the S&P put in a
substantial low was only 5 days. I'm not quite
sure just how much weight to put on these figures anymore, but I do
think they are worth consideration. The historical record is clear
that when we get this kind of Arms Index extreme, the S&P 500 put in a
tradable low within a week's time on average, usually sooner than that
during the past 25 years. And that's something we should keep in
mind during the next several sessions.
Go to: Top |
Short-term Outlook
| Int-term Outlook |
Equity Updates |
Indicator Summary |
Commodity Updates
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Equity Market Indicators
Notes: On June 29th, we got another spike in bullish (for the market) indicators above the 30% level, similar to what we saw in late May. Once again, it wasn't quite a spike in extremes like we've seen at other major lows, but it was apparently enough for the buyers to step in, as we've rallied well since then. While the percentage of our indicators at a bullish extreme have understandably drifted lower in response, oddly so has the number of bearish ones. We have seen few of our indicators reflect too much optimism in the rally thus far.
More history:
* New extreme
Go to: Top | Short-term Outlook | Int-term Outlook | Equity Updates | Indicator Summary | Commodity Updates
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Bonds, Commodities and Currencies - Updates and Extremes
Nothing notable for today.
Jason Goepfert Founder, Sundial Capital Research, Inc.
Go to: Top | Short-term Outlook | Int-term Outlook | Equity Updates | Indicator Summary | Commodity Updates
Forwarding or other distribution of this email is prohibited without the express permission of Sundial Capital Research, Inc. If you do not possess a firm-wide license, then forwarding this message will violate your subscription agreement.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
© 2001-2010 Sundial Capital Research, Inc. All rights reserved. sentimenTrader.com is a trademark of Sundial Capital Research, Inc. Sundial Capital Research, Inc. 12527 Central Avenue NE, Suite 165 Blaine, MN 55434
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
August
12, 2010,
8:05am EST
Neutral
Since July 20, 1057
SPX
Bearish For The Market
