Wednesday, July 29, 2015

charts: September Stock Market

Courtesy of thepatternsite.com
Courtesy of thepatternsite.com
Possible Explanation By Investopedia
Since 1950, the month of September has seen an average decline in the Dow Jones Industrial Average (DJIA) of 1.1%, while the S&P 500 has averaged a 0.7% decline during September. Since the Nasdaq was first established in in 1971, its composite index has fallen an average of 1% during September trading. This is, of course, only an average exhibited over many years, and September is certainly not the worst month of stock-market trading every year.
There are several theories which attempt to explain this phenomenon. One particular theory points to the fact the summer months usually offer light trading volumes on the stock market, as a good deal of investors typically take vacation time and refrain from selling stocks from their portfolio. Once fall begins these investors typically return to work and exit positions they had been planning on selling. When this occurs, the market experiences increased selling pressure, and thus an overall decline.
*As well, many mutual funds experience their fiscal yearend in September. Mutual fund managers, on average, typically sell losing positions before year end, and this trend is another possible explanation for the market's poor performance during September.

Data from moneychimp.com
            Yrs  Yrs  Avg
Month  Up  Dn   Gain/Loss
Jan        39   26   +0.94%
Feb       37   28    -0.13%
Mar       42   23   +1.10%
Apr       44   21   +1.36%
May      37   28   +0.11%
Jun       33   32    -0.07%
Jul        35   30   +0.83%
Aug     37   28    -0.18%
Sep     29   36     -0.65%
Oct     40   25     +0.68%
Nov    43   22     +1.37%
Dec    49   16     +1.59%
The data above supports that September is the worst month of the year and that the best six months of the year is November to April.


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Past performance is not indicative of future results

Tuesday, July 28, 2015

charts:Tom DeMark Warning

TOM DEMARK WARNS: Chinese stocks are following the path of the Dow in 1929

While China’s stock market suffered one of the largest declines on record yesterday, we ain’t seen nothing yet, according to the man who predicted the low point for the Shanghai Composite index in 2013.
Tom DeMark, founder Arizona-based DeMark Analytics, believes there’s significant carnage still to come.
He’s predicting China’s stock market will decline by an additional 14% over the next three weeks as the market demonstrates a trading pattern that mimics that of the 1929 US crash, according to a report from Bloomberg.
DeMark suggests the benchmark Shanghai Composite index will sink to 3,200 points in the weeks ahead, extending the decline from the June 12 peak to 38%.
 
The premise of his call is that “the gauge’s moves since March are tracking those of the Dow Jones Industrial Average in 1929 when the gauge lost as much as 48%”. Despite the threat of government intervention undermining his call, DeMark believes his market indicators are most effective when the market is “manipulated”.
“Lip service and intervention like that — it’s false,” said DeMark, adding “there’s a certain way in which the market unfolds. The only thing the government could do is to postpone it.”
DeMark believes that despite renewed talk from the CSRC, China’s stock market regulator, that they will step up efforts to underpin the market, the increased intervention won’t be enough to sustain the 16% rally seen since the index bottomed earlier this month.
“Markets bottom on bad news, not good news. You want to have the last seller sell. We got good news at the recent low. The rally is artificial,” he said.

See the comparative charts for yourself...
DJIA up to October 16,1929, Courtesy of Worden Bros
Current Shanghia 2015 chart, Courtesy of Worden Bros
Now see what happened subsequent to October 16,1929 for the DJIA...
DJIA 1929 chart, Courtesy of Worden Bros

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Past performance is not indicative of future results



Monday, July 27, 2015

Fear Greed Index 2012-15 vs DJIA

Courtesy of eSignal & CNN
Top chart is the DJIA and the bottom chart is the Fear & Greed Index from mid 2012 to July 2015.
There is an interesting correlation between these two charts.

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Past performance is not indicative of future results

Fear Greed Index

Courtesy of CNN
This chart is from Monday July 27,2016 at 11:00 AM

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Past performance is not indicative of future results

Sunday, July 26, 2015

McClellan Summation Index

Chart Courtesy of Worden Bros.
Note the positive divergence in the chart above.
Lower tops in the Summation Index while there are recent rising bottoms in the histogram in the lower window.
This together with the Fear & Greed Index of 9 posted on July 24,2015 is a recipe for a bounce.
A dead cat bounce or a real turn around rally?  This can be determined once a bounce occurs.

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Past performance is not indicative of future results

Friday, July 24, 2015

Fear & Greed Index

Courtesy of CNN
Index is as of the close on Friday July 24, 2015

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Fear Greed Index

Courtesy of CNN

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DIA & SPY daily charts

Chart Courtesy of Chaikin Analytics
Chart Courtesy of Chaikin Analytics

The above charts are very informative when reviewing market trend.   It does give you an edge in determining the ability of the market to continue a trend or not to continue a trend.

Important areas to review on these ETF charts:
Power Gauge - not available on these ETFs
Price bars above or below the gold moving average (MA)
Chaikin Money Flow (CMF)
Overbought/Oversold (OBOS)
Relative Strength (RS)

What is very interesting is that both charts give the same hints at the July 20th high.
During the rally from the July 7th bottom the price bars could not generate enough momentum to get above Chaikin's proprietary gold MA and was stopped just below it.
CMF could not get out of the red area and get into the green area above zero while the OBOS indicator went from OS to OB.  This was a hint that the market rally may not hold up.
RS during this rally also could not get out of the red area and go into the green area.
Technicals / Trends = weak


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SSO 60min chart

                               This chart is courtesy of TradeStation
                               SSO 60min char from 6/5/15 - 7/24/15 

Top window - SSO 60min chart with moving averages (MA)
Middle window - White line is the volatility (high=high volatility & low=low volatility)
Bottom window - Oscillator cross over equals buy and sell signals & histogram follows in the same way

Notice that when there is low volatility the price is generally consolidating and following that consolidation the market breaks out of that consolidation.
Another way to watch this is to draw trendlines on the top and the bottom of the consolidation period.  Wait for price to break out and confirmed by the cross over of the MA's and oscillator cross over buy and sell signals.


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Past performance is not indicative of future results

Short Term Update

The following was posted on July 8,2015
Todays comments are in BOLD

June 30 to July 8 & may be to July 13 & possible to July 20th - cycles suggest a potential consolidation period with a possible bias to the upside.   
As of today this has been accurate, a sideways trend (actually since the beginning of the year) with a high on July 20th.

Short term details:(every date is +/-)
July 17-20 high   high was made on July 20th
July 23-29 low    On time so far  
Aug 4 high
Aug 8 low
Aug 13 high


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Past performance is not indicative of future results

Wednesday, July 15, 2015

CNN Fear/Greed Index

CNN fear and greed index


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Thursday, July 9, 2015

SPY weekly chart with REI

The following chart is the weekly SPY.  Below is the REI (range expansion index by Tom DeMark)

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Past performance is not indicative of future results

Wednesday, July 8, 2015

Short Term Update

The following was posted on June 29,2015
Todays comments are in BOLD

June 30 to July 8 & may be to July 13 & possible to July 20th - cycles suggest a potential consolidation period with a possible bias to the upside.  As of today this has been accurate, a sideways trend with a high on July 7th.



Short term details:(every date is +/-)
July 7-8 high
July 10 low
July 13 high
July 16 low
July 17-20 high
July 23-29 low


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SPY monthly chart

The SPY monthly chart above is courtesy of eSignal

There are three Andrews pitch forks on this chart.  Note when the trend changed and when the last trend line is broken in the direction of the change in trend.  We are currently sitting on the bottom trend line. 

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This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions. 
Past performance is not indicative of future results