Posts tagged as Technicals

What I'm looking at - small caps vs. large caps, corporate earnings, bonds, daily swings, RV's

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Stocks Have Gone Absolutely Nowhere

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Going nowhereThe most benchmarked index in the world has gone nowhere for over a year and a half. The S&P 500 was just trading at the same level it was at in ...

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Financials As A Sick Canary

Financial correctionLess than three weeks ago, financial stocks within the S&P 500 were within spitting distance of a fresh 52-week high. Now they’re mired in a correction, having pulled back more than 10% from their high.That’s a quick turnaround, which always worries investors. This was not a ...

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One Of These Curves Is Not Like The Others

Bulls yieldStocks plunged on Wednesday, with the most common excuse being renewed fears of recession due to a further inversion in the Treasury yield curve. Between various maturities, 60% of the curve is now inverted. That preceded a prompt and severe drop in stocks in 2000, but the three other ...

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Monday Color - 8 Straight 1%-ers, Large Calls, Corrections, Gold Buyers, Emerging Momentum

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The Stock-Bond Relationship Is Out Of Whack

Strained relationshipThe drop in stocks over the past week didn’t happen in isolation, as traders fled to the perceived safety of the bond market. That moved the Stock/Bond Ratio to an extreme level, even while the S&P remains in a generally positive environment.This has typically resolved in ...

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Shocks' Strong Tendency To Recover

Shocking^3We’ve looked at “shock days” quite a bit over the years, most recently in May. Monday’s session exceeded the one in May, with a move more than 3 deviations beyond what investors have become accustomed to over the past year.Swift, sharp declines like this almost never end up morphing ...

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Only Black Monday And 9/11 Were Worse Than This

Cluster muckSigns of a “split” market started to trigger in mid-July and continued to accrue into the first days of August. This has been one of the tighter clusters of warning signs we’ve seen over the past 50 years.By the time some of these trigger, stocks have already declined somewhat. By ...

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Tightest Cluster Of Small-Cap Weakness Since '99

A large “small” divergenceOver the past 30 days, there have now been 6 sessions when the S&P 500 was at or near a 52-week high, but the ratio of the small-cap Russell 2000 index to the S&P sunk to a 52-week low. That’s the tightest cluster of days since April 1999.Large, rounded peaks in the ...

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Tuesday Color - Gold vs Yen, Russell Lag, S&P Divergence, Mexican Breadth, Smart Money Selling

Here's what's piquing my interest so far on another day that's finding buyers not sticking around.Gold HedgeBloomberg notes that per Goldman Sachs, investors may be better off hedging against uncertainty with the yen than with gold. That's based on how pricey each of them are according to the ... [...]

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Hindenburg Omen Triggers For The 1st Time In 3 Months

A warning for stocks last fall was triggered by several conditions, primarily that major indexes were still in uptrends, but fewer and fewer stocks were driving them higher (the McClellan Oscillator moved below zero) and the market was split with a large number of securities hitting 52-week ... [...]

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Thursday Color - Dovish Fed, Sector Extremes, Round #, Value Line Lag, Twitter Bulls

Here's what's piquing my interest on what so far is looking like a very narrow-range day.When Doves FlyAccording to a note from Nordea Markets, the Fed has become the most dovish since 2009. This is based on the language the Fed uses in statements to the public, with a "dovish" bent meaning they ... [...]

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This Has Only Happened Twice In 40 Years

High confidenceDumb Money Confidence has recovered from its dip below neutral territory in May. Now above 77%, it’s to a level that has preceded weak annualized returns in stocks.As a signal, the first reading above this level after a dip below 50% has led to mostly weak short- and medium-term ... [...]

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Monday Color - Short-Term Optimism, Funds Vs Options, Lagging Small Caps And Surprises, Bulls Return, Bonds

Here's what's piquing my interest as markets suffer their usual post-holiday slide.Short-Term ExtremesWhile stocks didn't surge last week, they did hold their gains. And whoever was still trading over a holiday week was pretty optimistic it was going to continue.The shortest-term indicators we ... [...]

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Tuesday Color - Tech's Recovery, Gold Loss, Sector Breadth, Semi's, Japan's Surprises

Here's what's piquing my interest as traders start to drift away ahead of what is likely to be an extended holiday weekend.Tech RecoveryThe WSJ notes that the S&P 500's tech components have reached a new high for the first time in months, erasing the 10% correction from May.This is one of the ... [...]

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After This Happened, Stocks Fell 15%

A trio of laggardsEven though the S&P 500 recently hit a fresh all-time high, several sectors have been trailing. Small-cap stocks, transports, and banks have all hit new 52-week lows relative to the S&P.This is atypical behavior, with a tendency to lead to selling pressure. When two of the ... [...]

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Tuesday Color - Less Confident, Relative Lows, Bond Optimism, Gold Surge

Here's what's piquing my interest on a mostly weak day. Markets are likely going to be held to the latest posturings and headlines ahead of and during the upcoming G-20 meeting.Less ConfidentThe latest Consumer Confidence survey came in way below economists' expectations, which won't help the ... [...]

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350 Days To Nowhere, And Why Lagging Energy Isn't A Problem

350 days to nowhereThe Dow Industrials Average is trying to break out for the third time. It hasn’t gone anywhere since late January 2018, which was 350 days ago. It saw minimal upside and substantial downside since then.If we go back to 1900, there have been a handful of times it went this long ... [...]

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Wednesday Color - Everything Rallies, Bond Flow and Vol, Within 1%, Energy, France

Here's what's piquing my interest on this waiting-for-the-Fed day.Everything RalliesTuesday provided some interesting cross-currents, allowing assets to rise that normally provide some balance to each other. It was a bad day to be short pretty much anything - stocks, bonds, the dollar, gold, ... [...]

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3rd Time's The Charm?

Rush for the exitThe latest BofAML survey of fund managers showed one of the largest monthly declines in exposure in 20 years. That seems like it should be a contrary indicator, but has been decidedly not, with consistent declines in the months ahead and almost no rallies, which contrarians ... [...]

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Buying Thrust Off A Low

The snapback on Tuesday was notable because of the structure: 1) Stocks hit a 50-day low, 2) in a relatively healthy market, and the rebound was 3) the largest in more than 100 days and 4) there was broad participation.More than 70% of volume flowed into advancing stocks that day. Nearly 90% was ... [...]

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Wednesday Color - Gaps, Tuesday's Jump, Breadth Recovery, Bitcoin, Corn

Here's what's piquing my interest so far this morning. When there's a large or notable gap I prefer to get these out early, even if today's looks to be fading as we head into the open.GappyStock futures are on track to show a relatively large positive gap up this morning as traders show some ... [...]

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Why This Has Been A Healthy Pullback

From new high to downtrendBarely a month after it was sitting at an all-time high, the S&P 500 fell far enough and fast enough to close below its 200-day average.This is one of the index’s quicker turnarounds from being at a multi-year high to falling below its average. When it had spent at ... [...]

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S&P Cycles From New High To Downtrend

The S&P 500 had spent nearly three months trading above its widely-watched 200-day moving average. It just ended that streak, and it triggered barely a month after the index was trading at a new all-time high.This is one of the index’s quicker turnarounds from being at a multi-year high to ... [...]

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Stocks Just Did Something They Haven't Done All Year

Shock dayOver the past year, investors have grown accustomed to certain magnitudes of market movements, and Monday’s session was far outside the norm. More than 2.5 standard deviations from the norm, which could be considered a shocking day.When coming within a couple weeks of a multi-year high, ... [...]

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Thursday Midday Color - First Pullback, Weak Sectors, Returning Investors

Here's what's piquing my interest so far on this whippy day.Finally, A 3%-erThe S&P 500 is on track to pull back by more than 3% from the highest point it rallied to since the December bottom. That's the first time it's pulled back by this "large" of an amount. That streak of more than 90 days ... [...]

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The Dow Is Being A Dud

Dow dudThe Dow Industrials dropped below the 50-day average for the first time in months. When it loses its trend after such a long time, and when so near a multi-year high, it has tended to snap back. It was an even better sign for the S&P 500.It was also the only one of the “big four” equity ... [...]

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Dow Drops Below 50-Day Average

Tuesday’s big decline was enough to knock a few indexes down a peg, but because of the strong trend, most of them are showing little to no technical damage. Among the “big four” U.S. indexes, only the Dow Industrials has really wobbled. For the first time in months, the Dow closed below its ... [...]

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Wednesday Midday Color - Vol Surge, Dow Drops, Sector Extremes

Here's what's piquing my interest so far on this meandering day.Vol SurgeThere are no shortage of measures which capture the big move on Tuesday. Perhaps because of the headline-driven nature of the decline, historical comparisons are less appropriate, but that seems to be the case ever time. ... [...]

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Friday Midday Color - Momentum Market, Energy Washout, Russell Breakout

Here's what's piquing my interest on yet another positive Friday. This marks the S&P's 14th rally out of 16 Fridays since the beginning of the year.Momentum MarketHere's a question I got the other day, reflecting some version that's been asked several times essentially asking the same thing:So ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far on this waiting-for-the-Fed day.Mexican MomentumIn Friday's report, we saw that "The MSCI Mexico Index closed above its 200-days for the first time in six months on Friday. Other times it went this long before ending a downtrend, it added to gains over ... [...]

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Tech's Perfect Signal

Tech’s fully recoveryOut of the S&P 500’s 11 major sectors, only one has made a fully recovery from the December decline, and it’s an important one. The information technology group has fully recovered from its decline of more than 24%.Other times it fully recovered a drop of 20% or more within ... [...]

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Dumb Money Does A 180

Full recoveryOver the past 50 days, Dumb Money Confidence has averaged 70%, the highest since early 2018. This marks a complete cycle from the extreme pessimism in December. When the 50-day average first breaches the 70% level, it has typically coincided with a temporary reprieve in unrelenting ... [...]

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Surge In S&P For The Quarter, Off A Low, And With Bonds

We've looked at several studies related to the surge in prices over the past couple of reports, so this is just a summary that we can track in the Active Studies. All of them have been shown in a report already - we're just putting them here for tracking purposes.Instead of posting them as ... [...]

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Russell's Failed Rally With A Yield Curve Warning

Bear patternThe Russell 2000 rallied for almost two weeks, then failed on Friday and set a lower low. That triggered a classic failed bear market rally attempt.Historically, that hasn’t meant much in the shorter-term, but over the medium- to long-term, risk tended to be higher than reward. These ... [...]

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Dollar Fails And Transports Keep Lagging

Dollar failureThe U.S. dollar hit a new high in early March, and optimism was high. That proved to be a headwind again, and the buck has since reversed to close at a 30-day low.This is an unusually quick reversal and quick reversals in the dollar like this have been a negative sign. During the ... [...]

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Transports / S&P Ratio Hits New Low

Thanks in large part to poor performance from Fed-Ex, the Dow Transports are really struggling, especially on a relative basis.The ratio between the Transports and the S&P 500 just hit a multi-year low, which isn’t something we see too often when the S&P itself is trading at a nearly six-month ... [...]

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No Pessimism Even As Small-Caps Struggle

No pessimismOn Monday, the last of our core indicators that was showing a hint of pessimism dropped off. At the same time, 40% of them were showing optimism. The last two times that happened, the S&P formed a kind of rounded peak.Since 1999, many of the positive returns were clustered in 2017, a ... [...]

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Hedgers Are Hedging As Transports Lag Amid Momentum Ebb

Hedgers actually hedgingHedgers in the major index futures pared their positions by more than $10 billion at the end of February. That’s one of their larger one-week increases in hedging activity.When they’ve made such big changes in the past, it has been a bit of a negative for stocks.Dow ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far on this weak day.Ebbing MomentumThe S&P 500 has finally closed below its 10-day moving average for the first time in at least 40 sessions. That's one of its most persistent short-term trends since 1928.At the same time, it has flattened out. Over the past ... [...]

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Tuesday Midday Color

Here's what's piquing my interest so far on this mixed day.China ShinesChinese stocks continue their march upward, which bodes well for the longer-term. We saw in previous reports how a 20% rise from a low in the Shanghai Composite had led to more long-term gains when buyers continued to press ... [...]

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Options Bulls Return As Investors Get Whipsawed

Options bulls returnThe smallest of options traders spent nearly 60% of their volume last week on bullish strategies, either buying call options or selling puts to open. That’s among the most aggressive bullishness using real money since the financial crisis.There were some weeks that showed ... [...]

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Monday Midday Color

Here's what's piquing my interest so far today.ReversalPretty nasty-looking outside reversal in indexes and funds like SPY today. But...be careful. These have a terrible habit of not working like chartists insist they should. Following is every time SPY gapped up above the highest close in the ... [...]

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Sector Correlations During The Rally

Since the December 24 bottom, the Industials sector has led the 11 major S&P 500 groupings with a gain of more than 25%.If we got back to 1928 and look at every time the S&P 500 rallied at least 10% for two months following a 52-week low, we can look at what sectors led/lagged and see how they ... [...]

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Nasdaq Hugs Its Average As Volatility Recede Despite Recession Risk

A tight hugThe Nasdaq Composite has hugged its 200-day average for more than a week.Bulls and bears could both make an argument for what that might mean, but since 1971 the Nasdaq has powered higher in the longer-term when it showed this kind of indecision around the widely-watched metric, ... [...]

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Crossing A Flat 200-Day Average As Optimism Follows The Thrust

Jumping over a flat averageThe S&P 500 finally closed above its 200-day average after a couple of months below. Because the decline was not that severe or long-lasting, the average was flat.When the S&P has ended a streak below its 200-day average and that average was flat, its returns were ... [...]

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Failing At The 200-Day After Mirror Image V-Shaped Rebound

FailedAfter two months below its 200-day average, the S&P approached it this week but then took a step back on Thursday, closing more than 1% below.Other times it approached its 200-day after at least a month below, and then showed signs of failure, it tended to close above its average soon, but ... [...]

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Nasdaq Escapes Bear Market As Investors Pull Out

Escaping the bearThe Nasdaq Composite has ended its bear market, at least according to two metrics. Unlike its rallies during the 2001 and 2008 bear markets, this time it has managed to exceed the 61.8% retracement of the decline. And it has rallied 20% from its low, the accepted definition of a ... [...]

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Nasdaq Escapes Its Bear Market

After falling into bear market territory, the Nasdaq Composite has ended it, at least according to two subjective metrics. The tech-heavy index has rallied 20% (rounded) from its low, and it has exceeded the 61.8% Fibonacci retracement of the decline, which it was not able to do in 2001 or 2008. [...]

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Good Overbought; Dow Leads Above 200-Day

Good overboughtAfter reaching an extreme oversold reading in December, the long-term McClellan Summation Index has cycled back to an overbought reading. What’s notable about this is just how quickly the Summation Index has cycled up to 500 after being so depressed just a month ago. The only time ... [...]

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Emerging Markets Rise Above 200-Day Average

For the first time in almost nine months, the MSCI Emerging Markets index has managed to close above its 200-day moving average. While this is a mixed event for most indexes and sectors, for emerging markets it has been a good sign, at least in the short- to medium-term.Over the next month, the ... [...]

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Last-Hour Binge Buying; Shutdown Ends; Consumers' Flagging Expectations

This is an abridged version of our Daily Report.Happy endingOver the past month, the S&P 500 has rallied more than 0.3% on average during the last hour of trading, one of its largest-ever clusters of gains.Not only has it been aggressive, it has been consistent. As noted by the fine folks at ... [...]

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Holding The Trend; Retail Investors Are Still Active

This is an abridged version of our Daily Report.Holding the trendAs noted by Investor’s Business Daily, the S&P 500 has managed to climb back above its widely-watched 50-day moving average and hold above it for a week straight. This ends a streak of more than 70 days without being able to do so, ... [...]

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S&P 500 Above 50-Day For A Week

Stocks have been trying to change their medium-term trend and doing well so far. Investor's Business Daily noted that the S&P 500 has been able to hover above its 50-day average for a full week, the first time in months it's been able to do so. But it's still trading below its 200-day ... [...]

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Narrowing Smart-Dumb Spread; 4 Straight Up Weeks

This is an abridged version of our Daily Report.Narrowing spreadAs stocks rally, Dumb Money has become more confident while Smart Money has increased their hedging activity. The spread between the two hit a multi-year extreme before Christmas and is now nearing zero for the first time in ... [...]

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S&P Gains 1% Four Weeks In A Row

The S&P 500 has managed to gain more than 1% four weeks in a row following its drop to a 52-week low. It has also gained more than 1.5% four weeks in a row, regardless of whether if following a low. Both have led to consistently higher prices, especially in the longer-term. [...]

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S&P Gaps Following Multiple Up Days In Downtrend

S&P 500 futures (and the SPY fund) gapped & closed higher on Friday after already having multiple up days, while being below the 200-day average.For both vehicles, it led to a very low win rate over the short-term. [...]

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S&P Nears 50% Retracement; Financial Sector's Big Buying Cluster

This is an abridged version of our Daily Report.Fibonacci hurdlesThe S&P 500 has erased nearly 50% of its October – December decline.Following a loss of more than 15%, this retracement in only 16 sessions is the 3rd-fastest ever. On average, it took a median of 39 trading days to get to the 50% ... [...]

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ETF Traders Not Buying The Rally; Nasdaq Is First "Big Four" Above Average

This is an abridged version of our Daily Report.Not buying itIn the three weeks following the December low, leveraged ETF traders have abandoned long funds while flowing into inverse (short) funds, suggesting they’re betting against the rally. When we look at the largest leveraged index ETFs ... [...]

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The Anti-Hindenburg Omen; Fed Recession Risk Rises

This is an abridged version of our Daily Report.The anti-HindenburgA compelling reason for caution last fall was the kind of split market that triggered a cluster of Hindenburg Omen warning signs. Over the past two weeks, there has been a cluster of signals that are the exact opposite of the ... [...]

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Sentiment Cycle; Ending The Correction

This is an abridged version of our Daily Report.Sentiment cycleDecades ago, Justin Mamis outlined an ideal Sentiment Cycle from greed to fear and back again. Quite a few cycles since then have adhered closely to the ideal.According to a Twitter poll by the well-respected Helene Meisler, most ... [...]

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Best-Ever Retracement; VIX Is Awfully Low

This is an abridged version of our Daily Report.Best-ever retracementTwo weeks into a recovery from a major decline, the S&P 500 has made back more than 40% of its losses. If we go back to 1928 and look at every time the S&P declined more than 15% from a multi-year high within a year’s time, ... [...]

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Starting The Year Off Wrong

As traders return from what for most was a week away, equity futures are getting hit hard. If they stay around here, it will be the worst open following a holiday since 2016. There have been 4 others with at least a 1% opening loss since the 2009 bottom.There hasn't been a very good record at ... [...]

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Swift, Severe Decline; Up Volume Thrust; Low TRIN

This is an abridged version of our Daily Report.Stocks just suffered one of the largest, swiftest pullbacks in 70 yearsThe S&P suffered a 17% loss in less than four months.That’s unnerving but is not the kind of decline that happens before or during economic recessions. They are mostly ... [...]

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A Pre-Holiday Review

The release of some of the weekly data we follow has confirmed just how extreme last week’s activity moved sentiment. I will be travelling for the holiday, so no end-of-day report will be published.One of the most reliable gauges we have is showing an extreme like we’ve rarely seen. When we ... [...]

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Another Volatile Session

This is an abridged version of our Daily Report.Another volatile sessionSome early optimism on Thursday was quickly erased, and stocks dove to new lows for this move. In the process, it triggered several extremes:* The Nasdaq is on the threshold of a 20% decline.* The percentage of securities ... [...]

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New Low Spike; Heavy Selling Cluster

As we head into the close on yet another dreadful day for stocks, along with almost everything else, there are a few things that are worth noting.Most importantly, there is clear evidence of wholesale selling on a level we rarely see. Since 1984, as far back as we can go, there have been only 8 ... [...]

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Equity Risk Premium Collapses; A Day Of Notable Moves; VIX Not Jumping

This is an abridged version of our Daily Report.Equity premium collapsesThe premium that investors are willing to pay for stocks’ earnings has collapsed relative to the yield available on bonds. The one-year z-score of the Equity Risk Premium is now 4 standard deviations below average, a ... [...]

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Long-Term Bears; Russell 2000 Bear Market; S&P Drops On Friday/Monday; Spike In 52-Week Lows

This is an abridged version of our Daily Report.Long-term bearsBuilding on what we looked at last week, we take a longer-term, multi-year look at prior bear markets, including their median loss and standard deviations. We also look at returns following major peaks in Consumer Confidence.The ... [...]

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Investors Flee Equities; Highly-Correlated Declines; December Selling

This is an abridged version of our Daily Report.Leaving en masseInvestors yanked $46 billion from equity funds this week. Even accounting for the usually mid-December outflow, as a percentage of total fund assets, this is the largest outflow in at least 15 years.After the other weeks when there ... [...]

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Bear Market Roadmap; Pessimistic CFOs

This is an abridged version of our Daily Report.Bear market roadmapThere have been 20 bear markets in U.S. stocks since 1950. If we look at their average price path during the next year, the S&P’s performance since September shows a high correlation to 10 of them.After those 10 bear markets were ... [...]

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New Lows In Financials; Buy-The-Rally Is Dead, Too

This is an abridged version of our Daily Report.Financial troublesMore than half of the stocks in the S&P 500 Financials sector have declined to a 52-week low, the most in more than two years.After investors have sold so many in a single sector to this low of a level, it has tended to bounce. ... [...]

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Buy The Dip Is Dead; December Reversal; Smart Money Is Covering

This is an abridged version of our Daily Report.Buy-the-dip is deadOver the past six months, there has been a dramatic decrease in the probability that buyers will step in after weakness. After reaching a 20-year high earlier this year, the probably that investors will buy the drip has dropped ... [...]

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Follow-On Selling

More concerns about the efficacy of trade talks are the consensus excuse for why futures are showing a large loss this morning. Whatever the actual reason(s), we're seeing a rare one-two punch.The last times the S&P 500 cash index lost at least 3% then the futures market gapped down more than 1% ... [...]

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Largest Gap Since '11; Presidential Services

Most of the time, participants have no idea why markets move. Reasons are given during and after the fact, but they're just guesses that sound good, really.A handful of times each year, though, the reasons are clear. Based on the way markets have been trading in recent weeks and the reaction ... [...]

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A Weak Retracement; A Dollar Milestone

This is an abridged version of our Daily Report.A weak retracementAt its high point of the bounce during the past two weeks, the S&P never managed to retrace more than 61.8% of its pullback from the September peak.It has now started to fail and fall back to the lower end of its range. While ... [...]

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Bear Market In Stocks; Small-Cap Stumbles

This is an abridged version of our Daily Report.A bear market in stocksWhile the major indexes are far from a 20% decline, many S&P 500 components have declined more. At the depths of the decline in October, more than 40% of the S&P reached bear market territory.That often served as a low point ... [...]

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A Bad Month; Wide Confidence Spread

This is an abridged version of our Daily Report.A bad monthThe S&P suffered 16 negative days in October, tied for 3rd worst since 1928 and the most since 1970.The pressure was enough to trigger a sell signal for a popular trend-following strategy, with a close below its 10-month average, that ... [...]

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Massive Sell Programs; Hard, Fast Pullback, Near-Record Negative Momentum

This is an abridged version of our Daily Report.Everybody outDuring the past 3 weeks, we’ve seen a near-record amount of sell programs at some point during the trading day.The lowest NYSE TICK during that stretch is now the 2nd most extreme in history, with an average of more than a net 40% of ... [...]

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A Non-Recessionary Correction; The Trend Is No Longer Your Friend

This is an abridged version of our Daily Report.Non-recessionary pullbackMost recession models show a low probability of an imminent economic recession. If we use a simple, non-optimized, real-time model, it’s currently showing 0% probability.In that kind of environment, 10% pullbacks in stocks ... [...]

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Stocks, Sectors In Correction; Nasdaq's Bad Day; S&P Negative YTD; Spike In Pessimism

This is an abridged version of our Daily Report.Stocks in correctionThe S&P still hasn’t suffered a correction, if we define it by a 10% decline from a 52-week high. With the severe loss on Wednesday, it has just barely missed the cut. Most of its stocks haven’t been so fortunate, however. With ... [...]

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Major Reversal; Jump In New Lows; Dumb Money Purge

After the big reversal on Tuesday, futures were indicated to gap lower again on Wednesday. In the history of the S&P 500 futures, that had led to rebounds over the next several sessions every time.As it stands now, futures have recovered, which dampens the short-term outlook quite a bit. ... [...]

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Gap To New Low

I mentioned yesterday that I may be out of the office today to join a last-ditch call for the search for Jayme Closs. Having a daughter the same age and growing up in the same area, it hits close to home.Markets aren't making that easy, with futures indicated to gap down to new lows. For the S&P ... [...]

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Correcting Oversold; Quick Change In Character; Every Dow Stock Rises

This is an abridged version of our Daily Report.Correcting oversoldThe McClellan Oscillator has gone from extremely oversold to neutral. It was below -90 just a few days ago and is now up to -10.Such a rapid change in character has been a good sign during uptrends, and that context was important ... [...]

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V-Shaped Bounces And Explosion In Hedging

This is an abridged version of our Daily Report.V-shaped probabilityFollowing declines like the past month, v-shaped bounces were common. Almost 40% of the precedents formed a bottom within a couple of sessions. While some short-term volatility was normal, all but a few of the precedents ended ... [...]

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Quick Change In Character; Smart Money Steps In; Emerging Stocks Rebound

This is an abridged version of our Daily Report.A quick change in characterThe S&P went from 52-week high to below its 200-day average in only 3 weeks. That ended a streak of more than six months above its 200-day average. Other times it underwent a quick change in character, from a 52-week high ... [...]

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Index Corrections As Panic Spreads

This is an abridged version of our Daily Report.CorrectionsAfter ending long streaks in uptrends, the Russell and Nasdaq fell into corrections. That has typically led to a poor risk/reward in the months ahead for both.PanicThe selling pressure on Thursday generated at least a couple readings of ... [...]

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Crap And Gap

Whenever there is volatility like that past two days, it's easy to pick and choose from a number of different extremes. There are so many that one can find something, anything, to support their view of either a bounce or more selling pressure.The majority of what we looked at was inconclusive. ... [...]

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Streaks End As Concern Rises

This is an abridged version of our Daily Report.Streaks end as concern risesMajor indexes ended some notable streaks, which were nearing record lengths. The S&P 500 ended months without a 1% move by tripling that to the downside. The Russell 2000 and Nasdaq Composite both ended long periods ... [...]

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A Little Panicky

With a failed bounce attempt intraday, we're starting to register a few more signs of notable pessimism or even outright panic. It's understandable, since this would be one of the few times in modern markets when the S&P 500 suffered back-to-back 2% losses during a generally uptrending market.As ... [...]

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Follow-Through Selling

With futures indicated to open lower following yesterday's pummeling, let's take a look at behavior following similar sell-offs that bled over to the next morning.Pre-market trading has the reputation of being emotional, with large gaps being driven by knee-jerk reactions to hyperbolic media ... [...]

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Just A Whiff Of Panic As Streaks End

As stocks continue to follow though on the negative conditions that had been building for the past few weeks, we're starting to see the very beginning signs of pessimism, or even outright panic.Volume in inverse ETFs is on track to exceed 1.2% of total NYSE volume, which (if it holds into the ... [...]

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NDX Breaks 50-Day, Breadth Momentum Rolls Over

On a quick administrative note, we've now added priority email support for all Premium members (which you are if you're receiving this). Instead of emailing admin, send requests to premium "at" sentimentrader "dot" com and it will automatically go to the top of our priority list.Market-wise, ... [...]

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Small Starts To Struggle As Confidence Leads To Dollar Peaks

This is an abridged version of our Daily Report.Small hasn’t been so beautifulWhile leading year-to-date, small-caps have been lagging the S&P over the past few months. The ratio of the Russell 2000 to S&P 500 is very close to falling to a multi-month low, a worse sign for small-caps than ... [...]

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Small Business Has Never Been Better As Hong Kong Slides Into A Bear

This is an abridged version of our Daily Report.Never betterSmall business owner optimism is at record highs, surpassing two other periods since 1979.Despite worries about labor, owners have exceptionally high confidence about future conditions. It is backward-looking for stocks, though, and ... [...]

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A Week Of Warnings As Transports Break Out

This is an abridged version of our Daily Report.A week of warningsEvery day last week triggered a Hindenburg Omen or Titanic Syndrome technical warning signal.While they are much-maligned and not immune to failures, similar clusters of these warning signs preceded consistent weakness across ... [...]

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Stocks Shrug Off Economic Reports Amid Buying Follow Through

This is an abridged version of our Daily Report.Shrugging off disappointmentEconomic reports haven’t kept up with economists’ outlooks, but it hasn’t mattered as the S&P 500 has rallied to all-time highs. When stocks hit a 200-day high and economic surprises a 200-day low, future returns were ... [...]

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Dollar Fails As S&P Momentum Stalls

This is an abridged version of our Daily Report.A dollar failureThe U.S. dollar ended a long streak without a new high in early August by closing at its first 52-week extreme in more than 400 sessions.Since then, it rallied more than 1%, then failed by closing below its breakout price, which has ... [...]

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Dow's Long Correction With Positive S&P Breadth

This is an abridged version of our Daily Report.The Dow’s long correctionThe Dow has gone 130 days without a new high or 20% loss, one of its longer stretches in purgatory. Other periods when it got stuck in a correction mostly resolved higher, with a choppy 1-2 months generally leading to new ... [...]

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Leaders Become Laggards As Traders Bet On Volatility

This is an abridged version of our Daily Report.Leaders become laggardsThe Nasdaq Composite and Russell 2000 have lost their 50-day averages after months above, a change from June when both were leading the market. Even with the S&P 500 and Dow Industrials above their averages, future returns ... [...]

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Risk Appetite Wanes As Small-Caps' Trend Ends And Funds See Outflows

This is an abridged version of our Daily Report.Lack of risk appetiteDiscretionary stocks are at a multi-month low relative to defensive Staples.That sign of risk-off behavior is unusual with the S&P near a high but has not been a good excuse to sell stocks.Another trend endedThe small-cap ... [...]

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S&P Nearly Ends Its Correction And Staples Their Downtrend

This is an abridged version of our Daily Report.Still waiting for the cigarThe S&P 500 rallied to within 1% of its previous high, nearly erasing the 10% pullback it suffered earlier this year.Other times it got so close to a high, it took an average of another 4 days to reach it, with generally ... [...]

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Good Growth During Earnings Season As Nasdaq Leads

This is an abridged version of our Daily Report.A great season of earningsEarnings season is expected to bring another quarter of impressive growth.When that growth is high, however, earnings season carries more risk than reward.Tech is leading the chargeThe Nasdaq Composite is leading the four ... [...]

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Russell's Band Bounce And Lack Of German Confidence

This is an abridged version of our Daily Report.Russell band bounceThe small-cap Russell 2000 has bounced from its lower Bollinger Band to its upper in just a week’s time.That kind of rebound has preceded impressive gains over the next six months.German vote of no confidenceA German economic ... [...]

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Stocks Are Stuck As Turnover Explodes

This is an abridged version of our Daily Report.Stuck exactly in the middleThe S&P ended its first half stuck exactly at the midpoint of its year-to-date high and low.It’s more typical for stocks to be near the upper or lower end of their range by mid-year. Similar years led to weak returns over ... [...]

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Emerging Stocks' Uptrend Ends As S&P Suffers 4th-Longest Pullback

This is an abridged version of our Daily Report.Emerging stocks’ long-term uptrend is goneEmerging markets have ended one of their longest-ever long-term uptrends.Risk was high after the others ended, especially over the next two months. They’ve already seen an 8% drop since the trended ended, ... [...]

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Dow's Streak Snapped As China ETF Nears Bear Market

This is an abridged version of our Daily Report.Had to happen sometimeThe Dow Industrials Average ended its 2-year streak of holding above its 200-day average, its 7th-longest streak in an uptrend since 1900.It wasn’t a death knell for the index, especially when the Leading Economic Indicators ... [...]

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Emerging Market's Negative Surprises Even As Nasdaq Hits June High

This is an abridged version of our Daily Report.Emerging disappointmentEconomic surprises in emerging markets have been consistently, and increasingly, negative.That has led to mostly poor returns in emerging market stocks and currencies. It has been better for emerging market bonds (in ... [...]

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Lots Of Up Days Without Much Impact As Dollar Hits Overbought And VIX Spikes

This is an abridged version of our Daily Report.All icing, no cakeThe S&P showed a gain on 57 out of the first 100 days this year, one of its best “first 100 days” ever.Even so, it showed a meager year-to-date gain, suggesting that all those up days didn’t pack much punch. Similar years led to ... [...]

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Russell Breaks Out But Suffers Buying Climax

This is an abridged version of our Daily Report.Small-caps follow breadth to new highsThe Russell 2000 hit a new all-time high intraday on Monday. That’s the first 90-day extreme, high or low, for the index in more than three months.A move to new highs after that long, and with such positive ... [...]

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S&P Breaks Out As Tech, Energy Highs Surge And

This is an abridged version of our Daily Report.A broken pattern emboldens bullsThe S&P 500 put in consecutive lower highs since the January peak, but broke that to the upside on Thursday.The initial breakout from a coiled pattern has a high failure rate in the medium-term. Similar breakouts ... [...]

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Economic Uncertainty During Midterm Summers As Stocks Form Lower Highs

This is an abridged version of our Daily Report.Midterm summer bluesThe summers of midterm election years are weak more often than not. Supposedly, it’s supposed to get even worse if investors are uncertain about government economic policy.Going back to 1900, however, that doesn’t seem to be the ... [...]

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A Long Correction As Bond Yields Hit Overbought

This is an abridged version of our Daily Report.The correction that won’t endRallies keep failing, and the S&P is now more than 50 days into its correction.A lengthy time in correction territory has led to some severe declines, but even more rallies. Times when the S&P recovered quickly from a ... [...]

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Cancelling Dow Theory Sell Even As Volume Declines

This is an abridged version of our Daily Report.Cancelling the Dow Theory sell signalAfter the Dow Industrials and Transports fell into a Dow Theory sell signal, Transports have caught fire. They just hit a 50-day high, which technically doesn’t cancel a sell signal but it might as well.Forward ... [...]

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Back Above A Technical Level As Volatility Drops And A/D Line Hits A High

This is an abridged version of our Daily Report.Indexes reclaim technical levelsAccording to media reports, Tuesday’s jump in the Dow and S&P above their 50-day averages was important. The Dow does tend to have markedly better annualized returns when trading above its average.But as an all-clear ... [...]

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A "Bearish" Pattern As Traders Flee Dollar Funds

This is an abridged version of our Daily Report.“Bearish” engulfingThe price pattern in the S&P does not look promising, according to textbook technical analysis. Friday arguably was a bearish engulfing pattern that suggests weak buying interest and eager sellers.It has not been a successful ... [...]

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Smart Money Drops As Traders And Economy Favor Dollar

This is an abridged version of our Daily Report.Smart money collapseMonday nearly saw a 20-year record decline in the Smart Money Index that compares first hour vs last hour trading. The past 30 days has consistent seen selling in the SMI, suggesting dumb money buying and smart money ... [...]

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Earnings Season As A Savior As Stocks Get Stuck

This is an abridged version of our Daily Report.Good earnings as a saviorAnalysts expect robust growth in earnings as companies report them over the next four weeks. Good growth is also expected to save stocks as they just corrected ahead of earnings season.This has been a shaky leg upon which ... [...]

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Successful Test As Pessimism Spikes

This is an abridged version of our Daily Report.A few good daysThe S&P dropped down to challenge its February low on March 23. Since then, 3 of the last 6 sessions have been “good” with either a 1% gain or 80% up volume.Over the past 30 years, that has indicated a successful test of a low.Forget ... [...]

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Failed Bounce And Put Purchases

This is an abridged version of our Daily Report.Failed bounceBefore some modest after buying interest, the most important index in the world triggered a failed bounce.That’s one of the most feared patterns for bulls because it shows a complete lack of buying interest. The S&P did suffer ... [...]

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Corporate Bonds Struggle As Newsletter Writers Retrench

This is an abridged version of our Daily Report.Corporate bond strugglesOver the past 30 days, investment-grade corporate bonds have had some of the worst breadth readings in 13 years. Fewer than 42% of bonds advanced, and more than 12% of them hit 52-week lows on average.Forward returns after ... [...]

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SPY's Red Monday Leaves An Island And Death Crosses

This is an abridged version of our Daily Report.A red bull market MondayBull markets sometimes suffer heavy selling following weekend news events, but even so, Monday was severe. It ranked in the bottom 3.5% of all bull market Monday’s since the inception of the popular SPY fund.Other times it ... [...]

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Lopsided Volume Swings As MLPs Suffer Pessimism

This is an abridged version of our Daily Report.Everybody out, then in, then out againDuring the past month, volume has been gyrating wildly between losing, winning, then losing securities. A 3-day average of the Up Volume Ratio keeps swinging from one extreme to the other.During uptrending ... [...]

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Down Days And MLPs

The following are what was posted today to the private Twitter feed, which you have access to if you're receiving this Note via email. Just request to follow @SenTrader_Prem and send an email to admin@sentimentrader.com with your username. We're in the process of streamlining the content posting ... [...]

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A "Good" Correction As Silver Specs Give Up

This is an abridged version of our Daily Report.Good vs bad correctionsIn these first two weeks following the Dow’s drop into a correction, it has followed the path of many “good” corrections. Those are times when the Dow fell 10% from a high, then no more than a further 7% during the next ... [...]

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Shades Of '87 In Stock/Dollar/Rate Moves As 50-Day Fails

This is an abridged version of our Daily Report.Shades of ’87 (among others)Over the past year, stocks have rallied, and the dollar has collapses as the Fed raises rates.That is similar to 1987, but there were also other dates that didn’t lead to nearly such dramatic results. After similar ... [...]

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Best Recovery Ever As Investors Flee Bonds

This is an abridged version of our Daily Report.Best recovery everAfter falling into a correction a week ago, the Dow Industrials index has rallied every day and added 5.6%. That ranks among its best-ever recoveries after falling more than 10% below its high for the first time in months.Other ... [...]

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Six-Month Analogs With Record Momentum Shift

This is an abridged version of our Daily Report.Six-month comparisonsLooking at analog comparisons of different time periods is fraught with data-mining risk, but they can still prove useful in some contexts. Looking at how stocks have traveled since August, there have been 26 six-month time ... [...]

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Panic And Reverse

This is an abridged version of our Daily Report.Panic and reverseStocks suffered a panic day on Monday, then reversed early losses to close higher. That matches several other instances that led to consistent returns going forward.There was volatile back-and-forth then another run at the prior ... [...]

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Unfolding Momentum

This is an abridged version of our Daily Report.CrashMonday’s trading – and post-close moves – are the types of action only seen a few times in history. Large, swift declines from a high have tended to lead to capitulatory moves that lead to rebounds in the medium-term. The possible liquidation ... [...]

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Dollar Ignores Rates As S&P Shows Exhaustion

This is an abridged version of our Daily Report.Ignoring the rise in ratesDespite a steady rise in interest rates, the U.S. dollar has declined more than 10% over the past year.That’s unusual, especially given the magnitude of the fall in the dollar and the rise in rates. The other times it ... [...]

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Burst Of New Highs As Optimism Hits 30-Year High

This is an abridged version of our Daily Report.A rare burst of new highsMost of the major indexes and sectors had more than 25% of their stocks hit a 52-week high on Tuesday. Only Staples and Utilities saw fewer than 10% of their stocks hit a new high. On average across indexes and sectors, 27% ... [...]

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Global Momentum Spurs Melt Up Chatter

This is an abridged version of our Daily Report.Global synchronized momentumMost major stock markets are not only rallying, they’re showing extreme momentum. The weekly Relative Strength Index across 6 major global indexes is now the highest in history.High readings in that indicator suggest ... [...]

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Opening Enthusiasm As Wall Street Upgrades

This is an abridged version of our Daily Report.Don’t sleep or you’ll miss itSo far in December, the stock market’s gains have come overnight, with regular trading hours showing a net loss. That is unlike what we’ve seen for most of this year. The Smart Money Index looks at early-morning versus ... [...]

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Record Small Business Optimism As Investors Buy The Dip

This is an abridged version of our Daily Report. Near-record optimism (again)Small business owners are showing nearly the highest optimism readings in 45 years, confirming other surveys that are showing somewhere between multi-year to multi-decade extremes in optimism.High levels in the past led ... [...]

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Closing On Lows, Discretionary Streak

This is an abridged version of our Daily Report. Closing on the lows (WHAT?!)The S&P 500 fund, SPY, has closed near the day’s intraday low for the past two days, an unusual sight during this strong uptrend that has seen so many intraday dip-buyers. It hasn’t closed on the low on consecutive days ... [...]

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Silver's Inconsistent Signs

Over the past couple of sessions, there have been some notable moves in silver, which seems like it should be a good sign for the metal going forward. There was heavy selling to end the week, then a reversal from a low on Monday. That often signals exhausted selling pressure.Unfortunately, it ... [...]

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Breadth Thrust In Euro Stocks

With the big rally in major stocks in the eurozone (at least in euro terms), the most impressive breadth readings in the world have now been recorded in those stocks.Looking at an array of indicators across time frames, we can see that there has been a huge block of buying interest in the stocks ... [...]

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Spike In Buying Climaxes

Among the weekly indicators that have been updated through Friday, one of them stuck out after the numbers were finalized - the number of buying climaxes among S&P 500 stocks spiked to the highest level since January 2015.A stock suffers a buying climax if it trades to a 52-week high during the ... [...]

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All Four Major Indexes At New Highs

I'm not really in the office this week, but we had quite a few questions about the simultaneous new highs in all of the major indexes on Monday. Buyers are following through on their normal pre-holiday binge, and managed to close the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and ... [...]

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3-Month Lows In November

As stocks continue to sell off into the afternoon, the S&P 500 is in danger of doing something it hasn't done in four years - close at a multi-month low in November.Most of us have heard about how November through April is the most seasonally positive time of the year, and we're already passed ... [...]

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Gap And Go?

This a quick follow-up to the notes from yesterday about single-day reversals. Futures are indicating a modest gap up this morning, suggesting some short-term follow-through.As we saw from the previous studies, further upside over the next several days was not unusual, but the gains were usually ... [...]

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Reversal Day As A Bottoming Signal

After what looked like an ugly morning, with stocks breaking down to multi-month lows, enough buying pressure has come in to push indexes like the S&P 500 above their opening prices, carving out a reversal day (so far).We've looked at reversal days many times in the past, with the conclusion ... [...]

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Big Currency Declines

With the story of the day (so far) being the collapse in the British pound, several members have asked whether a major currency has ever suffered such a big drop when it was already at a low level.The answer is yes, many times. Including the pound. Including recently.Because of the various ways ... [...]

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Reversing The Reversal

Stocks have rallied strongly from the gap down open (which didn't quite qualify for the 0.25% gap mentioned in a Note earlier this morning), with the S&P 500 up more than 1.5%.Even with the impressive gain, stocks haven't erased their losses from Friday. So let's take a look at other times the ... [...]

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Streak Without A 1% Loss About To End?

For the first time in months, the S&P 500 is in danger of suffering a 1% daily loss. It would mark the first time since June 27 it had done so.The streak of 50+ days is one of the longest in the last 20 years.Let's go back to 1928 and look for every time the index lasted at least 50 days without ... [...]

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Biotech Is Taking Off

One of the hottest sectors over the past week has been biotechnology, up another 2% on Wednesday (depending on the index).This marks a large thrust off the low on June 27. On that day, the Nasdaq Biotechnology Index had closed at its lowest price in more than a year, suggesting that the past ... [...]

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Telecom Stocks Fall Into Shorter-Term Downtrends

On March 30, we took a look at the S&P 500 Telecom sector and how every member was above their short-, medium- and long-term moving averages. When that has happened in the past, the sector tended to struggle in the shorter-term.That was nearly the peak for the sector, which has corrected 5.5% ... [...]

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The 50-Week / 100-Week "Death Cross" Is Yet More Bunk

It seems like a cataclysmic technical sell signal triggers on stocks every couple of months or so. Add this one to the pile, as reported by Bloomberg:In a note to clients, Intermarket Strategy Ltd. Chief Executive and Strategist Ashraf Laidi points out that the S&P 500's 50-week moving average ... [...]

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Nasdaq Composite Loses Its 200-Day Avg

For the first time in a couple of weeks, the tech-heavy Nasdaq Composite index has traded below its 200-day average. The simple technical indicator is often used as a filter to determine whether a market is in a bull or bear market environment.Since its inception in 1971, when the Composite was ... [...]

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Golden Cross With A Rising 200-Day Average

The Dow Jones Industrial Average is about to enjoy a "golden cross", when the 50-day average crosses above the 200-day average. We've looked at this in various markets over the years, typically with the conclusion that it's mostly useless.The wrinkle being discussed this time is that the 200-day ... [...]

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Crude Oil On Cusp Of 7th-Largest Intraday Reversal

Late last year, we went over a handful of signs in crude oil that had only been seen at prior long-term lows. Sentiment measures were at or near historic extremes and the kind of price activity witnessed was typically seen near long-term inflection points.Going into today's session, expectations ... [...]

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Crude Oil About To End Record-Breaking Streak

With early gains to start the day, crude oil may finally end a record-breaking streak. It has been below its 200-day average for 427 trading days, by far the longest such stretch in its history.Many traders use the 200-day average to define bull and bear markets, so the chance that crude could ... [...]

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Back-To-Back-To-Back Reversal

It's still early in the trading session but with a bit more weakness into the close, the S&P 500 would be on track to have back-to-back-to-back 1% reversals.This kind of volatility after a large rally is widely considered to be a negative, as it indicates increasing uncertainty among traders and ... [...]

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Every Major Telecom Is Above Average

Among the best gainers on Tuesday were telecom companies, with many of them up 2% or more. Most telecom funds are now up 20% or more from their lows.That performance has driven all five members of the S&P 500 Telecom sector above their short-, medium- and long-term moving averages.This happened ... [...]

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Getting Out When Averages Cross

Basic, long-term trend-following systems have become all the rage. Backtested results show that owning stocks, or almost any other asset class, when they are above a long-term moving average (such as 10 or 12 months), and not owning them when below the average, is superior on a risk-adjusted ... [...]

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