Still too many stock market bulls markets minyanville’s wall street math puzzles printable


The stock market held firm last week despite threats of a government shutdown but hopes for new tax cut legislation encouraged the bulls. The economic data did not move the markets but comments by Fed Chair Janet Yellen reassured investors.

The stock market looked like it was going to resume its decline Wednesday but the selling was met with good buying that may have been nervous short covering. Most of the major averages like to Spyder Trust (SPY) topped out around August 8th and have just declined twelve days from their highs.

The market deterioration was first evident in the small cap stocks as the iShares Russell 2000 (IWM) peaked on July 25th so it has been correcting for twenty-four days. At the recent low of $134.12 it had dropped 7% which is a fairly normal correction convert rmb to usd. By comparison the SPY was only down 2.8% from its high to last Monday’s low.

The Russell 2000 A/D line dropped below its WMA on July 28th and then broke its uptrend on August 2nd. IWM then rallied back to its 20 day EMA which provided a good opportunity for Viper ETF traders to buy an inverse ETFs. IWM is still well below the declining 20 day EMA and it formed a doji on Friday.

The daily A/D line has moved back above its declining WMA but is still below the stronger resistance at line b. A move above this resistance would be the first sign that it is trying to bottom. The weekly A/D line (not shown) has turned up but is still below its declining WMA.

This excellent chart from Doug Short details all the meaningful corrections in the S&P 500 since the start of the bull market funny quotes about life. In 2014 there were two corrections of 5.76% with a 19.39% in 2011 after there was an impasse over the debt ceiling and the US credit was downgraded.

The 3.2% correction in SPY last March-April was not severe but it did last 37 days. If you look at the average length of corrections during the bull market the average was 70 days. The shortest was the 19 day decline of 5.76% in 2014 with the longest the being the 157 day decline in 2011.

Not many investors are getting nervous as in the latest AAII survey the bullish % dropped 6% to 28.1%. It is still well above the low readings typically seen after meaningful corrections. It is above the 23.8% reading from May. At the early 2016 low it dropped below 20 usd to ntd. The bearish % rose 5.5% to 38.3% but it is still below its April 6th high of 39.6%.

The CNN Fear & Greed is at 27 and in fear territory but was 17 a week ago. The T-Bill yields are reflecting some nervousness over the debt ceiling but there seems to be a high degree of complacency. According to Investors Intelligence 33.6% of financial advisor are looking for a correction but 48.1% remain bullish.

All the major averages were higher last week as the small cap Russell 2000 was the strongest up 1.45% , double the gain of the S&P 500. The Dow Industrials were up 0.64% while the Nasdaq 100 gained 0.55%. The weekly A/D numbers were strong with 2126 stocks advancing and just 944 declining.

So what does the advance/decline analysis tell us about the stock market’s major, intermediate and daily trend? The monthly A/D lines have made new highs in July which means the major trend is still positive and all A/D lines are well above their WMAs.

The weekly chart of the NYSE Composite shows that it has turned higher after testing the 20 week EMA exchange rate for indian rupee to us dollar. A weekly doji sell signal was generated three weeks ago. It is still below the prior week’s high at 11,891 with near term weekly support at 11,670.

The NYSE A/D line has turned up from its WMA but is still just below the former uptrend, line b. The weekly A/D is still well below the August 4th high. The daily NYSE A/D held firm last week and is the only A/D line that has broken its near term downtrend.

The PowerShares QQQ Trust (QQQ) shows a gradual weekly decline from the late July high but it has held well above the rising 20 week EMA at $138.78. There is more important support, line b, in the $135.52 area.

The weekly Nasdaq 100 A/D line rose slightly last week and is still above its rising WMA and support at line c verizon troubleshooting number. The weekly OBV formed a significant bearish divergence (line d) at the July high that was confirmed by the break of support at line e.

The Spyder Trust (SPY) moved above its declining WMA on Friday but closed below it on Friday. Despite the rebound last week the SPY is below the daily downtrend, line a. A strong close above the high at $247.57 would be positive mxn to usd. There is minor support at $243.55 with stronger at $242.

The daily S&P 500 A/D line closed just above the declining WMA and is now testing the downtrend, line b. If we get further positive A/D numbers this week the WMA could start to bottom out. A break below support at line c, would be negative. The weekly A/D line (not shown) has turned higher and is holding well above its rising WMA.

The SPDR Dow Industrials (DIA dropped to monthly pivot support at $216.20 before bouncing 1 usd in euro. The downtrend on the daily chart is still intact. The Dow A/D line has moved back above its WMA but is still below its downtrend.

The week started off with a surprisingly weak reading from the Chicago Fed National Activity Index but Tuesday the Richmond Fed Manufacturing Index came in better than expected. Wednesday’s flash reading on the Purchasing Managers Composite came in at 56 above the consensus estimate of 54.3.

New Home Sales and Existing Home Sales were both quite weak but it is a volatile series so month to month readings are not as important. Durable Good orders were expected to be weak and they were as they dropped 6.8%. Aircraft orders were down 82% in July after rising 227% in June.

This Monday we have the Dallas Fed Manufacturing Survey followed Tuesday by the S&P Corelogic Case-Shiller Housing Price Index and Consumer Confidence. The preliminary reading on 2nd quarter GDP is out on Wednesday along with the ADP Employment Report.

The Chicago PMI report and Pending Home Sales are out on Thursday us dollar to british pound chart. On Friday there is the monthly jobs report as well as the ISM and PMI Manufacturing indices.

Yields fell again last week as there were few hints on Fed policy by Fed Chair Janet Yellen in her comments last week. The jobs report may increase the odds of a rate hike before the end of the year.

The weekly chart shows a range between resistance at 2.427%, line a, and support at 2.096%, (line b). The weekly starc- band is at 2.010%. The weekly MACD analysis is still negative but shows a loss of downside momentum. A week or two of higher yields could turn it positive. The last two weekly signals, points 1 and 2, have worked out well.

Hurricane Harvey gave crude oil a boost on Friday but it still closed lower for the week binary search in c. The weekly signals are very mixed as the recent rally has just taken prices back to former support, line a. This is consistent with a down trending market. The OBV has plunged over the past few weeks as it failed to move above its declining WMA on the recent rally.

The Herrick Payoff Index (HPI) uses volume, open interest and prices to gauge money flow and is often a focus of my mentoring sessions. It is acting more positive as it has broken its downtrend, line c, and is above its rising WMA. The daily technical studies are looking more positive so the strength of a further rally will be important.

What to do? The slight improvement in the technical readings last week suggests we might see an end to the correction in the next few weeks. That is in spite of the fact that it has not lasted long enough or corrected enough to meet typical requirements.

The positive daily closes in the major averages on Friday could easily be reversed with a sharp market decline. This makes me cautious about new positions until the A/D lines have started new uptrends with their WMAs clearly rising.

Viper ETF traders are still trading the short side of the market using inverse ETFs but have been taking quick profits when they occur australian us dollar exchange rate. Since early in the month we started taking profits on long positions because of the increased risk. There should be signs of which sectors will be the new market leaders before the market turns higher.

There were not many new weekly signals in last week’s stock scan for Viper Hot Stock traders. In situations when the market’s weekly trend is positive but the daily is corrective I typically reduce the number of positions until both trends are in agreement.

I am cautious given the lack of strong new bullish signals and negative seasonal bias in late August and in September. The apparent complacency of many investors and some Wall Street pros is also not a good sign. Therefore I would not recommend any aggressive changes in your portfolio until the market outlook turns more bullish.

If you are interested in following the analysis of the A/D lines I hope you will consider a subscription to either the Viper ETF Report or the Viper Hot Stocks Report. Each service includes two 4-5 page reports each week where I teach you about the markets as well as provide specific buy and sell advice.

If you have not read it yet you may want to download a copy of my eBook. As part of the sign up process you will also be added to the email list for the free Viper Reports. I send out market commentary and technical tips several time a week. Additional market comments are also often posted on the Viper Report Facebook page.

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