Tuesday, November 29, 2016

charts: 3 Peaks & a Domed House

Courtesy of @ThinkTankCharts, as of Nov 23,2016
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chart: 1st Termer from New Party

Courtesy of McClellan Financial Publications
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great chart: Earl & Earl2

LunaticTrader.com
By Danny

Stocks have kept going up and the Nasdaq is reaching the 5400 level, as we suggested it would in our post two weeks ago. So, what's next? Let's have a look at the S&P 500 chart:

We stay in a lunar green period for the rest of the week, so we can prepare for some kind of top in the coming days.
Technically the S&P 500 is facing several overhead resistance levels between 2220 and 2300. I don't think we are going to race straight through them, but of course I could be wrong.
My Earl indicator (blue line) has turned down already, and the MoM is entering the "euphoric" +8 zone. As you can see in the chart MoM reaching +8 often marks major peaks, which are typically followed by a significant pullback or by several months of sideways churning. MoM reaching -8 typically marks tradeable bottoms. Nothing is perfect but this is something that works pretty persistently in any market. MoM indicator for various markets and stocks is posted on my Twitter every day.
On the plus side the slower Earl2 (orange line) is still climbing healthily and appears in no mood to turn down already. This could be enough to hold up the market into year's end. It makes it more likely that we will get sideways action with only marginal new highs being printed in December. So, that is my current base scenario.

Danny | November 28, 2016 at 1:38 pm

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Russell 2000 win streak

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Friday, November 25, 2016

charts: Chaikin Analytics, DIA, SPY, QQQ

Courtesy of Chaikin Analytics
Courtesy of Chaikin Analytics
Courtesy of Chaikin Analytics
Note that there is some divergence in several charts. 
Breath is also not as strong as it should be when there is a new bull move. 
Keep a careful watch on your charts. 

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Saturday, November 19, 2016

chart: NYSE McClellan Summation Index

Courtesy of StockCharts.com
Just study this chart carefully.
Do you see what I see?

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Tuesday, November 15, 2016

chart: SPY weekly

SPY weekly Courtesy of eSignal
The stock market has been in very wide trading range since late 2014.  Unlike other indexes, the Transports have not made a new high since late 2014, although it has been very strong since Election Day.  
The weekly SPY is a chart to watch carefully as indicators get close to over bought. 
Index funds have had marginal growth.  The investors that watch and act on sector rotation have had better results along with investors that stick with stocks that display the best relative strength(RS).  Drop the stocks with weak RS and buy the stocks with strong RS.  It has been a stock pickers market.

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Sunday, November 13, 2016

charts: >5% NYSE issues hitting New Highs & New Lows

Nov 11, 2016
By Dana Lyons
J. Lyons Fund Management Inc.



For the full article and charts, use the following link:
http://jlfmi.tumblr.com/post/153051852470/is-abundance-of-new-highs-and-new-lows-a-bad-omen


Additional comments by:
On Twitter By   Hey Now


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charts: The Day after the Election

Courtesy of Nautilus Capital
Courtesy of Nautilus Capital
Courtesy of Nautilus Capital

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Friday, November 11, 2016

charts: Presidential Cycle Patterns

Chart In Focus, by Tom McClellan
The Market, Under a New President


November 10, 2016

Investors get fearful ahead of a big election, because the outcome is unknown.  Unknown risks are what investors fear most.  Now that the result is decided, we have known risks to deal with. 
Investors were also fearful ahead of the 2012 election, which also had a surprising (for some) result.  Recall that Gov. Romney had been up by 1-4% in the last polls leading up to that election.  Polling that year was admittedly disrupted by the arrival of Hurricane Sandy, which also shut down the stock market for 2 days. 
And interestingly, the market now is doing a pretty good imitation of the path of price movements 4 years ago.  In 2012 there was a dip into mid-November after the Nov. 6 election.  This time it was a dip the week before the Nov. 8 election.  But in each case there has also been a strong rebound after that dip. 
You may have heard before that having a Democrat president is better for the stock market than having a Republican president, and there are statistics which can be used to support that.  In the following chart, the averages for each category since 1933 are plotted:

The real truth is a lot more nuanced than just saying one is better than the other.  On average, the market has performed better for the first 16 months of Democrats’ terms,  but then by the 3rd year that advantage completely disappears.  And market performance in the 4th year is worse on average under a Republican president.  A big part of that is the weakness after the Oct. 1987 crash, and from the 2008 bear market,  both of which happened under Republican presidents. 
Another differentiation among presidents concerns whether there is a new president from a different party, versus a 2nd term president or a new one from the same party.  This one is a much bigger deal, especially during the first year of a new presidential term. 
Generally speaking, investors respond more favorably at first to getting a new president from a different party.  This has to do with celebrating that they got the change they wanted (or so they think).  That positive emotion tends to wear off right around inauguration day, when they realize that the new president has not fixed all of the problems already. 
The negativity under a new president persists as the year runs on, because of a habit they all seem to have.  I have seen this same behavior repeatedly over my lifetime.  A new president comes in, and spends his first year “discovering” that conditions are even worse than we were told during the campaign, and then tells us that “the only solution” is whatever package of tax hikes/cuts or spending adjustments he wants to make.
Bill Clinton did this in 1993.  Despite 5% GDP growth then, Clinton asserted that “This is the worst recession in 50 years,” and he wanted to jam through a $20 billion package of pork barrel spending (mostly to reward campaign contributors).  Congress wisely said no.  When I think back on that, I realize that $20 billion is such a cute little number compared to the size of the “fixes” that have come since then.
With Bush 43 in 2001, it was tax cuts, although he could not get all he wanted right away and had to do another round in 2003.  With Barack Obama in 2009, it was the American Recovery and Reinvestment Act, with $831 billion in stimulus spending (see why $20 billion is a cute little number)?  They all seem to do it. 
Investors generally don’t like hearing that things are worse than previously believed, and that creates a depressing effect on stock prices during a first year.  Generally speaking, 2nd term presidents do not spend very much time blaming the immediate predecessor, or finding things wrong, and so investors don’t get frightened away as much.  But as noted previously, that difference in stock market performance between 1st and 2nd term presidents generally goes away by the end of the 2nd year.
Every instance is different, and these charts just show what the average behavior has been. 
Tom McClellan
Editor, The McClellan Market Report
www.mcoscillator.com
(253) 581-4889 

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Past performance is not indicative of future results

Tuesday, November 8, 2016

charts: FTSE brexit vs DJIA election Comp

Courtesy of Worden Bros.
Courtesy of Worden Bros.
If you look at each chart within the blue rectangle, you will see a very similar price pattern.
The BREXIT vote was on June 23,2016.

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Monday, November 7, 2016

Chart: ChaikinAnalytics - DIA

Courtesy of ChaikinAnalytics.com
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Saturday, November 5, 2016

charts: SPY vs MMF & Bullish %


Description of Funds used in the above charts
SPY -  ETF proxy for the S&P500

RYFXX - (money is parked here when not invested) - The U.S. Money Market Funds seeks to provide security of principal, high current income, and liquidity.


RYNVX - (long fund) - Intended for investors who expect the S&P 500® Index to go up and want accelerated investment gains when it does so. However, there is an increased risk of accelerated losses if the market declines.

RYURX -  (short fund) - Provides an alternative to shorting individual stocks.  A potential portfolio hedge against market declines due to its inverse correlation to the underlying benchmark.

Comments
The charts are all from March 2009 to the present.
The scale on the MMF chart was inverted to correlate highs and lows with the SPY.  When investors and traders sell their positions, that money gets parked in the MMF until they reinvest it.  Back in March 2009 when the stock market bottomed, investors and traders had been selling their positions for months.  The MMF had grown to approximtely $1,370.0Bil.  When the stock market reversed and started to go up, investors and traders took their money parked in the MMF and put it to work in various funds, the amount of money in the MMF gets reduced.   You can see this in the chart.  Several highs and lows in the SPY was pointed out with blue vertical lines for lows and red vertical lines for highs.  As you can see the highs and lows in both are similar, since the MMF scale was inverted.
Currently the MMF is about $450Mil and the lowest amount since March 2009, indicted by the red circle.  This maybe concerning that highs have been made with larger amounts in the MMF. 

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Thursday, November 3, 2016

charts: Fear & Greed Index

Courtesy of CNN/Money
Courtesy of CNN/Money
Today the Fear Index reading is 15, pretty low. 
When you are in the 80+/- range you are generally near or at OB and you wait for sell signals to suggest RISK OFF. 
When you are in the 20+/- range you are generally near or at OS and you wait for buy signals to suggest RISK ON. 

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Wednesday, November 2, 2016

Sam Stovall told CNBC...

By Business Insider - Sam Stovall told CNBC

One metric has accurately predicted the outcome of every presidential election since 1984 — the strength of the S&P 500 Index.
And right now, the S&P 500 is pointing to a Donald Trump victory on Election Day.
Bloomberg and CNBC noted this week that the stock market's decline does not bode well for Hillary Clinton, the nominee for the incumbent Democratic party.
"Going back to World War II, the S&P 500 performance between July 31 and October 31 has accurately predicted a challenger victory 86% of the time when the stock market performance has been negative," Sam Stovall, chief investment strategist at CFRA, told CNBC.
When stocks are going up, the incumbent party tends to win the White House. But the S&P 500 is down 2.2% since the last trading day of July.
Still, this election has hardly abided by historical standards. And the downturn in the stock market could actually be a result of election anxiety.
"This time around if the Democrats retain the White House, I will come up with two responses," Stovall told CNBC. "One is that history is a guide but never gospel, and two, the negative performance by the market could be a reflection of the worry of domination that a Democratic sweep would bring."
As Business Insider's Elena Holodny noted this week, when it comes to markets, the past does not predict the future.
Daniel Clifton at Strategas Research Partners gave Business Insider additional context about this indicator earlier this year:
"Intuitively, this trend makes sense. If the economy is weakening, stocks should be declining and the incumbent party will likely suffer. Moreover, should it look like a new party is to take control of the White House, the change in control could add uncertainty to investors until the new President gets his or her rhythm."
"In fact, we have found that 'open' election years, a year in which no incumbent is up for re-election have been tougher for stocks than presidential reelection and non-presidential election years. Interestingly, stocks have rallied in the past two (and rare) instances when a political party has received a 3rd term."
"The S&P 500 increased 30 and 27% respectively in the year after Harry Truman won in 1948 and George H.W. Bush won in 1988. Sometimes the devil you know is better than the devil you don't know."
Other unconventional indicators have also indicated a Trump win on November 8.
An artificial intelligence system that has correctly predicted the past three presidential elections as well as the Democratic and Republican primaries said Trump will likely win, and a professor who has accurately predicted the outcome of every presidential election since 1984 came to the same conclusion last month based on a model he developed that uses a series of true/false statements to determine who is best positioned to take the White House.
And after the FBI announced that it's reopening its investigation related to Clinton's use of a private email server during her time at the State Department, the polls started tightening, putting Trump within striking distance of Clinton.

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chart: SPY Monthly signals

Courtesy of eSignal
A certain amount of caution should be demonstrated at this point.  Watch your charts for any signals confirming or not confirming the caution light.

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Tuesday, November 1, 2016

chart: SPY vs 10DMA Highs-Lows



The 10DMA of Highs - Lows has made a lower low today, red circle.   Up until today, the 10DMA of Highs-Lows was potentially setting up a positive divergence with the SPY.  But after today that scenario does not exist.

This along with the previous post of weaker Buying Pressure may be evidence of a stock market that is trying to go lower.  Maybe after a short bounce in a technically OS stock market.  
How low though is not known.   See the previous post of the Buying Pressure.  On that chart you will see several times when the market did go lower, before and after a bounce.

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