1.22.10

US Equities

The SPX broke its November 2nd trendline Thursday but it managed to close above its 50-day moving average after trading down to it.  The SPX stopped right in a Fibnode (1115-1118).We're expecting a bounce either today or Monday which will provide the opportunity to get short next week. If the index breaches of the Fibnode at 1115, next support isn't until 1085.  The Dow's August 17th trendline passes through 10,277 today and  Fib support exists at 10,250.  This could be a good area for traders to get long for a short bounce.  Slight Fib support for the NASDAQ just under 2,250.  The 50-day moving average passes through 2,231 today.

1.21.10

US Equities

The Dow joined the SPX and NASDAQ in a sell mode and all three indices triggered sell signals yesterday.  All three indices also tested their post-November trendlines yesterday but managed to close above them.  Internal indicators are suggesting today may be an up day, no matter how small.  The SPX de-trended oscillator is very close to being oversold, the NASDAQ is oversold, and the Dow still has a way to go.  3-day RSI has not confirmed the sell trigger yet - It even printed a positive divergence.  Given that, and given that state of our internal indicators, we expect Thursday to resist the downtrend but this should be temporary and we would suggest moving to the sidelines per equities and/or getting short immediately.

1.20.10

US Equities

While CNBC may crow about new highs on Tuesday in the Dow, S&P, and NASDAQ, the big news here is that both the S&P and NASDAQ saw their BWIs breach previous lows taking their modes from buy to sell (the Dow still resides in a buy mode which makes sense given our price target has not been reached).  The NASDAQ, not surprisingly, bounced off the advancing trendline we mentioned in Tuesday's Market Update.   Despite the new sell modes we don't expect an imminent sell off (today) as the few signals our internal indicators gave yesterday were mixed.  It is time to start thinking about what needs to be done, however, as we expect a tradable decline to soon be upon us.  A move below 56.90 by the S&P's 14-day RSI would trigger a sell signal today.

1.15.10

US Equities

MeaCulpa!  On 1/7 we reported that the S&P's BWI had confirmed the sell mode.  We did say at the time that it didn't tell us alot.  What we missed at the time was that 14-day RSI had exceeded it's own upper Bollinger Band (we realized this only after we magnified our charts to an absolutely incredible degree yesterday).The net-net of all this is that BWI, by exceeding its own upper Bollinger Band on 1/6/10,  was not confirming its prior move to the sell mode but, rather, was confirming strength in RSI, thus changing its mode to 'buy' - which brings it in line with the Dow and NASDAQ, both of which are in buy modes.  We can't speak for anyone but ourselves, but we know we wouldn't have had the cajones to go long until RSI exceeded it previous high (12/28/09) on 1/5/10.  So where are we now?  The BWI is at one of those times when it has just printed an inflection point which now serves as its "prior low".  BWI could continue its advance...or it could take out the low it printed on 1/12.  As it is currently headed down, and very close to that 1/12 low, it could do so within the next day or two which would change its mode to sell.  Once mode makes a change we start looking for a trigger (buy or, in this case, sell) from RSI.  But the plot thickens!  Both 3-day and 14-day RSI have made negative divergences today as the S&P makes a new high!  It's too early to make any moves based on all this but vigilance is required today more than ever.  By the way, if you're reading this and wondering 'what the !@#$ are RSI and BWI?' we strongly suggest you take 10 minutes to read the Nov '09 SFO article describing the Carlson Confirmation Model.  We still believe we could squeeze a few more points out of the SPX (target 1156).  Dow resistance is not seen until 10,850.  Fibnode at 10,850-10,900.  We don't think the NASDAQ will exceed its 1/11/10 high but 2350 is next resistance after that.

1.14.10

US Equities

Our Fiblines model is indicating that Monday may have been the top.  We would hesitate to invest even TARP money using this indicator in isolation but it is one more piece of the puzzle.  It has an eerie way of lining up at tops and bottoms and matches our call that the S&P has significant resistance at 1140-1156.  A move below 60.68 by the SPX 14-day RSI will trigger another sell signal.  The Dow made a new high yesterday, continues in its buy mode, and we don't see any resistance until 10,850-900.  The NASDAQ is also in a buy mode but seems to be having problems getting up a head of steam which makes sense given our previous comment that it has reached a resistance zone.  Stochastics and MACD are rolling over.  An advancing trendline passes through 2275 today.  A breach of that level would have us concerned.  We suspect that the two broader indexes will tread water waiting for the Dow to complete its run.

1.13.10

US Equities

Tuesday saw the pullback we were looking for in the equity indices.  The big difference in the pullback between the SPX/NASDAQ and the Dow gives us more confidence that the SPX/NASDAQ are in the resistance ranges previously noted but the Dow may have more room to run on the upside.

1.12.10

US Equities

The Advance-Decline line and ratio refuse to confirm the post 1/4 advance.  A host of other divergences are apparent as well.  The VIX closed at 17.55 putting it beneath 2 standard deviations below its 20-day moving average.  In addition our 3-day RSI-VIX model is flashing a sell signal as 3-day RSI on the VIX is under 20 and 3-day RSI on the SPX is over 80 - a short-term sell signal.   Today was the end of the 107-day top-to-top cycle range. All this, and yet new 52 weeks highs, at 548, have made a new high, confirming the rally!  Short-term pullback, followed by another advance?  We see Dow resistance at 10,900, NASDAQ between here and at 2350, SPX between here and 1156.

1.8.10

US Equities

The Dow and SPX both hit new highs on Thursday but not the NASDAQ.  There is a DiNapoli zone at recent high of 2314 which will be hard to crack.  CCM gave a sell signal yesterday on the NASDAQ.  The 3-day RSI failed to break above 80 during the recent advance.

1.7.10

US Equities

The BWI sell mode in the S&P was confirmed today.  While that doesn't tell us a lot, the fact that 3-day RSI has been unable to exceed 80 during this 2010 rally speaks volumes.  The Dow has been unable to make any headway since 1/4 when it generated a laundry list of  negative signals given by our internal indicators (see 1/5 commentary).  Yesterday was our estimate for the top of the 107 day cycle.  This cycle has a 5-day widow on either side of its estimated date so the next few days could be interesting...particularly with non-farm payrolls on Friday.

1.6.10

US Equities

Tuesday was a mixed day in equities with the Dow down and the SPX and COMP both up.  SPX closed at Fibonacci resistance. Confluence zone between here and 1156.  If the 107-day cycle doesn't stop this locomotive in the next few days (today is target date), we'll have to seriously consider getting long again.

1.5.10

US Equities

Lots of signals from our internal indicators that we may have seen a tradable top yesterday which is well within our +5 day window of the 107-day top-to-top cycle.  Negative divergences in the McClellan Oscillator, New 52-week highs, the 10-day moving average of the up/down volume ratio, and the 5-day moving average of the up-issues ratio all point to at least a short-term top.  In addition, the Advance-Decline line has move to 1.5 standard deviations over its 20-day moving average, the Put/Call ratio at .70 is within a gnats breath of 1 standard deviation below its 14-day moving average, and the Up/Down volume ratio itself (not the moving average) have moved to 1 standard deviation above its 20-day moving average  indicating these metrics are all stretched and due for relief. 

12.31.09

US Equities

The Euro-Yen Cross:  BWI has slipped into the sell mode.  50-day moving average slipping below 200-day.

SPX and Dow both made intraday dips and recovered.  Not the typical beginning of a large drop.  Investor's Intelligence reports the percentage of bears at a 22 year low.  Not a good sign for the future.

12.30.09

US Equities

SPX printed an engulfing bear candlestick yesterday/the Dow, a shooting star, both negative short-term.  We're not seeing anything that would make a coming pull-back anything more than the indices re-loading for another attempt up.

12.29.09

US Equities

The SPX printed a doji candlestick yesterday reflecting indecision.  The de-trended oscillator is overbought giving a sell signal.  The same holds true for the NASDAQ.  Normally, we'd be all over a signal like this like Paris Hilton on a T.V. camera.  So why the hold up?  The Dow gave a CCM buy signal last Wednesday and its de-trended oscillator is not overbought.  The fear is that the SPX/NASDAQ BWIs may confirm the advancing RSI prior to seeing RSI break its own advancing (very steep)"anti-trendline".  In times like these we prefer to remember the observation of W.D. Gann that the most significant trendline is a 45-degree trendline.  We'll wait and see whether RSI can break an imaginary 45-d trendline prior to BWI confirming the recent advance.  It's quite possible that the DOW could flip to a sell mode but it would have to happen quickly.

12.24.09

US Equities

A new high in 52-week new NYSE highs is confirming the Santa Claus rally we're seeing yet 'new highs' at 375, has yet to exceed the Oct 14 high of 472.  At yesterday's high, 1121.58, the SPX has finally retraced 50% of the downturn since Oct'07.  Negative RSI divergences have disappeared.  Assuming 1120 isn't given up, the next target is 1133 by 12/26.

12.23.09

US Equities

The SPX printed new closing and intra-day highs yeterday, closing where the post Nov 2 advance equals 38.2% of the July-October advance.  It also broke out of its month-long trading range.  The break out targets a minimum move to 1,132. The Advance-Decline actually dropped today as did the A/D ratio.  Negative RSI divergences still with us.  The Dow has still not made a new high so there is a diverence in price between the indices.  The NASDAQ has entered its 'kill zone' as price has entered a DiNapoli confluence zone, 2250-2265, just as the de-trended oscillator is flashing a sell signal.

12.22.98

US Equities

Several negative divergences today in the internal indicators (A/D Line & Ratio, McClellan Oscillator, New Highs, 3-day RSI, etc, etc.  One stand out is the Total Put/Call Ratio which dropped to 0.62 - the lowest level since August 21st.  This is a sign of extreme complacency.  Put this observation together with a low VIX and investors (investors?) must be thinking a Santa Claus rally is upon us.  The S&P failed to make a new closing high by only 6bps however the Dow is almost 100 points from taking out its prior closing high (12/14).  The NASDAQ managed a new closing high yesterday at 2237.  Heavy Fibonacci resistance zone at 2250-2270.  Despite the new high, 3-day RSI was unable to move over 80 and printed a negative divergence.  14-day RSI is at 2 deviations above it's 20 day moving average.  With BWI in a sell mode, that constitutes a sell signal.  Bottom Line: feeling very negative on US equities today.

12.18.09

US Equities

The move down in equities today gave a clear sell signal with the SPX RSI dropping beneath the level we mentioned in yesterday's commentary.  The SPX close and low were exactly 38.2% of distance of the 12/4-12/9 decline.  Still watching for support at 1087 (Dow 10,286).  Next support 1075, 1060-1065. 

12.17.09

US Equities

All three US equity indexes we follow, SPX , DOW and NASDAQ Composite have seen their BWI move into the sell mode. 

Dow: the advance since July 9th is now equal to the March/June advance.  The drop in the RSI yesterday could be interpreted as a CCM sell signal but the rise in RSI since Dec 8 has been too steep to make us totally comfortable calling a top.  If we could see 3-day RSI move below 20 that would probably do it.  We will be watching our internal indicators in the meantime.  Bottom line: We think this market is in the "kill-zone" and are looking for a tradeable decline from this area.

SPX: a move by 14-day RSI below 54.73 would be a sell trigger.

12.16.09

US Equities

The Nasdaq Composite's BWI moved into a sell mode yesterday.  While RSI (14-day) could be construed as giving a sell-signal, with 3-day RSI having just recently been above 80 we're not anxious to call for selling the index.  The S&P's BWI is acting in an unprecedented fashion.  Suffice it to say that the hourly chart since 12/9 was broken immediately yesterday morning, during the 2nd half hour the index rose to give the broken trendline a 'kiss goodbye' and then fell for the remainder of the session.  At this point we're retracting our buy recommendation.

The Put/Call ratio, overlaid with Bollinger Bands (14 day, 1 standard deviation) gave a sell signal yesterday.  It was not joined by any of our other internal indicators in giving this signal

12.11.09

US Equities

The 1079-1083 range of support for the SPX still holding strong.  The big index gapped up yesterday to close at 1102.35 kissing the underside of a Fibonacci trendline.  14-day RSI failed to give a buy signal.  A buy would be triggered today with a close over 56.15 by RSI.  Today is the target date for another 107 day cycle top.  Usually a 2 day window either side of the target date.

12.10.10

US Equities

SPX dipped briefly below that 1087 support level discussed yesterday but bounced and closed up 4pts at 1095.95 on Wednesday.  The detrended oscillator (not shown) became oversold on Tuesday and predicted today's bounce.  That, plus the 107 day cycle top expected this Friday, and we would expect the market to have an upward bias for the remainder of the week.  As the SPX's BWI is in the buy mode, we'll be watching to see if 14-day RSI can break through 56 where the RSI declining trendline crosses on Friday.  Doing so would constitute a buy trigger.

12.09.09

US Equities

Nice day Tuesday...if you were short.  The Dow stopped right on a Fibonacci trendline but CCM gave a fresh sell signal.  The S&P broke its respective Fib trendline but BWI is still on a buy signal and 3-day RSI refuses to breach 20 which would make us feel better about being short the SPX even though BWI is in the buy mode.  Although stochastics and MACD are rolling over, a break under 1087 is needed to become totally comfortable with a short position in the SPX.

12/8/09

US Equities

Slow, inside day yesterday in the equity markets; S&P down, Dow up.  Stochastics and MACD rolling over (negative sign).  A drop below 56.47 in the DOW's 14-day RSI would be another sell signal.  Overhead resistance for SPX at 1120 which is the 50% retracement of the entire bear market since October '07.

SOX, Semiconductor index, looking like it could stretch to ~341.

12/4/09

Equities

The total put/call ratio breached 1 standard deviation below its 14-day moving average yesterday.  This is often a good sell signal.

12/3/09

Equities

A doji candlestick formed in the S&P yesterday.  This is a sign of potential reversal.  Its implications are short-term but its something to be aware of.  BWI still in buy mode but RSI has yet to trigger a buy signal.  Still seeing negative divergences in both 3day and 14 day RSI.  Divergences can be broken, however.  A closing high above 1,118 will have us thinking a final upleg is upon us and would target 1138-1155.

Sentiment

Investors Intelligence % bears at 16.7% - a very low reading (very few bears) and contrarian bearish.

12/2/09

Equities

The CCM gave a buy signal on the NASDAQ Composite yesterday.  That signal has not been confirmed by either the SPX or Dow.  SPX 14-d RSI needs to exceed 59.27 on the close today to give a buy signal.  RSI still exhibiting negative divergences in equity indices.  Nikkei has had a couple of nice days.  It will take very little downside, however, to give a fresh sell signal.  EEM got a good bounce yesterday too.  Still in sell mode and negative divergence in RSI.  Hold shorts unless old closing high (42.07) is surpassed.

11-30-09 

U.S. Equities

Even with the markets closed last Thursday, Lindsay's 107 day cycle came like clockwork to global markets (Market Update 11-23-09) with news of Dubai World seeking debt relief and sending investors running for the exits.

The Dow fell on Friday and closed at 10,309.90, just over solid support (~10,250).  Some support at 10,100 but next solid support at 9,950.  Friday's drop moved the Dow CCM solidly into a 'sell' signal. 

The S&P 500 closed right on the 23.6% Fibonacci retracement of the November advance.  The SPX's BWI moved into a buy mode but it would take an extreme move up to trigger a buy signal in RSI.  Good support at Friday's low (1,083).  Next support ~1,075.  Friday's drop breached the post-March uptrend line.