Wednesday, March 31, 2010

03.31.10 - Slow Loppy Trade

Internals are flat to positive.  The trend is higher, but internals aren't giving a strong reason to ride that train on this last day of the quarter.

Tuesday, March 30, 2010

03.30.10 - Negative Biased Range Trade

Not much to comment on today.  Internals are leaning negative even though the SPY found support near its 5-dma/ S1 level.  The falling VWAP is now proving resistance.

Monday, March 29, 2010

03.29.10 - Positive Range Trade

The market is loping along higher on mostly positive internals.  Price has seen a little pressure after tagging the top of its recent congestion zone, but appears to be finding support around the rising VWAP.  New highs participation could be stronger...  [Google is having trouble posting my graphics, apologies!]

Sunday, March 28, 2010

ETF Rewind - Week 12 (3/26/10)


(Click Image to Enlarge/ ETF Rewind Glossary)

Most of the major indices posted their fourth period of gains last week, leaving the S&P 500 higher by another +0.5%.  However, the last two days of the week did reintroduce a modicum of volatility on geopolitical news events -- that may well be a function of how far and fast we have risen throughout the month.

Economic reporting for Week Thirteen of 2010 features the big Friday Jobs report, as follows:
Have a terrific weekend!

If you are interested in a significantly more thorough version of this weekly summary, consider taking a look at Market Rewind's nightly ETF Rewind Pro service. In addition to coverage of nearly 200 ETFs across twelve major asset classes, you will find three model portfolios, daily market signals and commentary, pairs trading and various powerful portfolio management tools.

Never Investment Advice: Prior Weekly Summaries: ETF Rotation Models

Friday, March 26, 2010

03.26.10 - Reject! Uncertain Market Vacillates

Looks pretty toppity, doesn't it? What started out as another "boring" up day turned into our second reversal. It's being attributed to the Korea news, but it looks pretty technical to me as we hit yesterday's mid-line. Apologies for the late post.

Thursday, March 25, 2010

03.25.10 - Catapult Launch

All but a few tick bars have been above their pivot today and other internals are very strong.  Although SPY $118/ June-ES 1,175 provided initial resistance, that 1,200 level is an obvious and strong magnet.

Wednesday, March 24, 2010

03.24.10 - 5-DMA/S1 Holds after Weak Housing

It's still hard to get used to such small reactions, isn't it?  The VIX is up over 5%, and yet price is down only a fraction and the Financials are actually ahead.  The strong dollar probably isn't helping much today.  At the end of the day, looks like a range trade so far.

Tuesday, March 23, 2010

03.23.10 - Still Chugging Along

The market looks set to post new highs after flirting briefly with the rising five-day moving average.  Internals continue to firm up.  Leadership sector performance is a bit mixed as we retest the am highs; however, with the transports lower and consumer staples outperforming the discretionaries.  Breadth could be stronger as well.

Monday, March 22, 2010

03.22.10 - VIX back under 17

The "Magic Monday" effect has markets trading higher once more for a quick recovery off of S1, and internals are steadily improving for a stealth trend-day.  However, new 52-week highs is not showing much breadth in new participation.  [Weekly ETF Rewind]

Sunday, March 21, 2010

ETF Rewind - Week 11 (3/19/10)


(Click Image to Enlarge/ ETF Rewind Glossary)

Markets had moved higher for so long, that Friday's small dip dissipated highly senstive overbought readings.  However, momentum had been waning towards the end and several intermediate indicators now look ready to cross.  Indeed, by the looks of things this Sunday afternoon, the sell-off may well carry over to Monday's open on prospects of the Health Care Bill passage.  In the end, however, it was a mixed week overall with the S&P 500 finishing higher by +0.4% even as the Small-Cap weighted Russell 2000 finished lower by -0.5%. Economic reporting in Week Twelve of 2010 features housing data, as follows:
Have a terrific weekend!

If you are interested in a significantly more thorough version of this weekly summary, consider taking a look at Market Rewind's nightly ETF Rewind Pro service. In addition to coverage of nearly 200 ETFs across twelve major asset classes, you will find three model portfolios, daily market signals and commentary, pairs trading and various powerful portfolio management tools.

Never Investment Advice: Prior Weekly Summaries: ETF Rotation Models

Friday, March 19, 2010

03.19.10 - Five-Day Broken/ MACD Looks to Cross

Quad Witching has provided the volatility needed to break the winning streak.  SPY has seemingly found support near $115.75.  In as much as I'm distrusting of that support based on very weak internals (it's easy to see an eventual move to the low $115s) -- it would be typical of recent action to ramp into the close, so I'll respect that support for now even as I'm disinclined to switch long.  Oh, and I have no idea what they are talking about on CNBC, volume has been huge -- the re-balance trade may be contributing.  [Add:  Note that I forgot to adjust for going Ex-Dividend, but I think comments were still good.  Seems that support held and Tick is attempting to repair.]

Never Investment Advice

Thursday, March 18, 2010

03.18.10 - Energy Weighs on the Market

Well, the Financials and Semi's aren't helping the bulls much either. Internals are seeing a slow deterioration along with price. I can't call this, nor do I foresee, a break down by any means (heck the VIX is hardly budging), but this market needs a rest!  Maybe the real question is whether we see a retrace that survives the final hour?!

Wednesday, March 17, 2010

The Gambler's Fallacy

It's more of a mathematical curiosity than anything else, but check out the odds of 14 successive up-days below, the record for which looks to get set by the SPY today. Less than one tenth of a percent ex-ante -- repricing or not, if that's not a pot of leprechaun gold for the bulls on this St. Pat's day, I don't know what is!

But what really stood out to me in this quick study, was the dramatic bullish bias shown this last year with over 60% of days ending higher as compared to 53% since the SPY's inception seventeen years ago in 1993. We've all seen it as green bars on our charts, but there it is documented in black and white.

This strong bullish bias significantly increases the odds of successive runs over a "fair" 50/50 flip of the coin. However, what are the independent odds of another up-day tomorrow? This is the "Gambler's Fallacy" -- looking forward it's just like day one all over again. Well, coins don't have any memory, do traders?


Notes: Observations are non-overlapping. For the curious, the previous record of 12 days, set in 1995, was followed by two mild down-days with new highs ensuing within five, and then a fairly range-bound trade for about a month-and-a-half before the market continued its ramp higher. Also see - July Flashbacks.

03.17.10 - Day 14 Higher for SPY

The market is putting in a solid trend-day follow through to yesterday's FOMC inspired launch.  While internals look very strong, the SPY is seeing strong mid-day resistance at its second pivot of $117.20.

Tuesday, March 16, 2010

March FOMC Statement Markup Comparison

Blue-lined markup comparison of the March versus January FOMC statements below. Also see past Fed-Day reactions on this site, and prior statement markups here. It would appear that the focus here is on continued stabilization and a reiteration of its in-place stratagems and TARP unwinding schedule, including the requisite Hoenig dissent. [Click Graphic Below to Enlarge]

03.16.10 - Quiet Trade Ahead of FOMC

Internals are showing bullish trend-day strength, but with the FOMC reporting today, we can expect significant noise at 2:15, followed by a trend-trade in either direction.

Monday, March 15, 2010

03.15.10 - Pullback to 5-dma

Today marks the beginning of either a mild retrace or a choppier consolidation range, in my opinion. Because this is only the first minor test, buyers have been quick to put in a floor and have subsequently bid price back up to the rising five-day moving average. While this reaction may bring us into the low-SPY $115s, the VWAP at that same level could provide initial strong resistance with down volume and the AD line as negative as they are. Note that tomorrow is an FOMC day.

Never Investment Advice

Saturday, March 13, 2010

ETF Rewind - Week 10 (3/12/10)


(Click Image to Enlarge/ ETF Rewind Glossary)

Did I say the market looked extended last week?  The S&P 500 finished the week higher by +1.1%, and equities have now put in their strongest continuous mark-up in years -- take a look at that RSI chart below!  As far as we have come, there is strong evidence that this move has even more room to run.  Week Eleven of 2010 includes a heavier economic reporting calendar featuring an FOMC announcement, as follows:
Have a terrific weekend!

If you are interested in a significantly more thorough version of this weekly summary, consider taking a look at Market Rewind's nightly ETF Rewind Pro service. In addition to coverage of nearly 200 ETFs across twelve major asset classes, you will find three model portfolios, daily market signals and commentary, pairs trading and various powerful portfolio management tools.

Never Investment Advice: Prior Weekly Summaries: ETF Rotation Models

Friday, March 12, 2010

Comparison to July 2009

The mean-reverter in me is having flash backs to July of last summer.  The technical parallels are fairly significant.  In both cases, price tagged major support on the second leg of a "w" bottom, which then prompted sustained moves higher with only minor pauses along the way that flushed out shorts and refreshed the energy of the trade, as follows:


As extended as we are here in time, my point is not that we will see a complete repeat of that epoch -- but rather that -- in as much as we are overdue at least a minor retrace, this move could have quite a way to go.  That's another way of suggesting that I'm not going to get too over-committed one way or the other until that next leg reveals itself. 

Since the NASDAQ and Russell have already put in their second legs higher, perhaps a non-confirmation by those more motivated indexes will be the signal to be more aggressive with shorts. Either way, there should be ample time to observe in the S&P: 1) multi-day price resistance/ range flattening; and 2) increasing noise and divergences among short-term measures.

Never Investment Advice

03.12.10 - Consolidation under VWAP

After an easy gap fill, internals are marginally negative, but there is no real sign of potential breakdown yet as price consolidates under the VWAP.  In fact, the VIX is continuing to decline.  Keep a close eye on that slight edge in down volume and cumulative tick for any change.  If it does break, it could be fast as overbought as we are.

Thursday, March 11, 2010

03.11.10 - Heavy Range Day

Internals are fairly heavy today and it's the first time in a long while that I have seen a break in many of the daily-bar momentum elements that I track.  While price is hanging in there, at this time I see a lower high and low and am looking for that overdue back-and-fill to occur.  The market has been so resilient though, we'll just have to see.  I will also note that we are sitting on border-line "non-normal" levels of stretch from the intermediate mean.  This can be a good time to keep it small on either side until a cleaner break is observed.

Never Investment Advice

Wednesday, March 10, 2010

February 2010 Rewind - Grecian Formula

Hey Gang, sorry this is a bit late getting out.  I know many of you are religious about archiving these -- which is precisely their purpose -- so here it is in shortened form.  Early February was all about fear of a sovereign debt domino effect on the prospect of a default by Greece.

However, by the end of the month after clean tag of the S&P 500's 200-day ema, a significant snap back rally ensued that has pushed well into mid-March.  This move left the S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices higher across the board by +2.85%, +2.56% and +4.46%, respectively.  With ramifications of the exchange of private for public debt put on the side for now, equities continue to string together a record ratio of up days.  Will this year-old bull market ever turn "gray" -- or was the pause that refreshes just the "formula" we needed to continue the "march" towards SPX 1,200?

Sentiment: Positive
Volatility: Low (VIX 19-27)
Direction: Mixed to Positive



The Style-Box was calculated using the following PowerShares™ ETFs: Small-Growth (PWT), Small-Value (PWY), Mid-Growth (PWJ), Mid-Value (PWP), Large-Growth (PWB), and Large-Value (PWV). The Sector-Ribbon was calculated using the following Select Sector SPDR™ ETFs: Materials (XLB), Industrials (XLI), Energy (XLE), Staples (XLP), Discretionary (XLY), Financials (XLF), Technology (XLK), and Healthcare (XLV). The Standard & Poors 500, Dow Jones Industrial Average and NASDAQ 100 may be traded through ETF proxies, including the SPY or IVV, DIA and QQQQ, respectively.

NASDAQ 100 Driving Well into 2007 Price Range

03.10.10 - Ground Hog Day Double Down

Today's trade is mimicking yesterday's with a trend-like play higher followed by a rollover breakdown.  While today's roll could ultimately be more serious for the bulls, so far price has bounced at the daily pivot/  overnight levels.  That said, volume continues to build towards the highest level in weeks, so I can't assume this corrective retrace is over and done with.  It's just one of those days where day-trading predominates.

Tuesday, March 9, 2010

03.09.10 - Steady Rise to 1,150?

After a small down-side gap fill, equities have continued their relentless upward march in trend-like fashion, now breaking R2 with the SPX homing in on its prior highs.  Although momentum continues its incline, I see participation is a little weaker today in terms of new 52-week highs.  However, I don't foresee a clean break of the prior S&P500 highs (add: say SPY $115) on the first go given OB staus even as the index finally begins to catch up with its small- and mid-cap brethren.

Monday, March 8, 2010

03.08.10 - Heavy Trade "for a Monday"

Overbought conditions seem to be weighing the S&P 500 down a bit considering it's "Magic Monday"; although you wouldn't notice that looking at the Quad-Qs.  Internals meanwhile are running in range-day fashion.  With no catalysts in sight, I am therefore neutral (intraday) to just slightly bearish (daily bars).

Never Investment Advice

Sunday, March 7, 2010

ETF Rewind - Week 9 (3/5/10)


(Click Image to Enlarge/ ETF Rewind Glossary)

A better than expected jobs report pushed overbought conditions to extremes, leaving the Weekly ETF Rewind looking as extended as I have ever seen it.  While this may be suggestive of an imminent pause or retrace, it is also emblematic of the persistent strength that this market has shown, and I'll frankly be more surprised than not if we don't see a near-term breakout of the S&P 500 to match its major index brethren at new bull-market highs.  In fact, the strong week left the S&P 500 (SPY) and Russell 2000 (IWM) higher by +3.2% and +6.1%, respectively.

Going into the one-year anniversary of the bear-market reversal, Week Ten of 2010 includes a somewhat lighter economic reporting calendar where retail sales promises to play a prominent role, as follows:
Have a terrific weekend!

If you are interested in a significantly more thorough version of this weekly summary, consider taking a look at Market Rewind's nightly ETF Rewind Pro service. In addition to coverage of nearly 200 ETFs across twelve major asset classes, you will find three model portfolios, daily market signals and commentary, pairs trading and various powerful portfolio management tools.

Never Investment Advice: Prior Weekly Summaries: ETF Rotation Models

Friday, March 5, 2010

03.05.10 - Sandbagged Back to Prior Highs

... and indeed the Small-Caps (IWM) are well above.  How glad am I to have hedged into today's numbers?  All trend-day indications remain in place even though we are flat lined at the mid-day.  I'll likely be more interested in reestablishing shorts sometime early next week.

Thursday, March 4, 2010

03.04.10 - Price Higher : VIX Higher

For the second day in a row we are seeing a combination of higher S&P prices and higher VIX readings.  My prior studies have suggested this to be bearish.  Although price is recording an inside day so far [correction -- lower low, lower high], it's curious to see apparent accumulation just under the pivot/VWAP even as price continues to get pushed back on each and every test.  What will happen when that sell supply gives out?  Most indicators are slightly negative, but up and down volume are really fairly evenly matched so far.  The daily bars certainly suggest a waning of upside momentum, we remain short-term overbought, and it's hard to imagine catching a bid into the jobs report -- but still a difficult call on this sideways trade even as I hold net short.

Never Investment Advice

Wednesday, March 3, 2010

03.03.10 - Russell 2000 at Recovery Highs

Quite a power move.  Did I mention we are short-term overbought?  Color me net short at the half.  Well, in spite of the mid-day pause, I'll grant internals are still very strong.  Watch that multi-day trend-line support carefully now.

Never Investment Advice

Tuesday, March 2, 2010

03.02.10 - Gap Holds on Strong Internals

But note that this puts us firmly in overbought territory and certain "leading" sectors are actually lagging badly, including the Semi's (SMH), Transports (IYT) and Discretionaries (XLY).  It would appear to be the Financials (XLF) and Energy (XLE) that are holding markets up.  The VIX, remarkably, is below 19.  In fact, it continues to fall even as price is being challenged by its own VWAP.  I'll be keeping a close eye on that multi-day up trend line. [Add:]  I forgot to mention that I see stronger intermediate-term resistance near SPY $113.50.

Monday, March 1, 2010

03.01.10 - New Month Trend Day

Although the SPY has found some intermediate resistance at R2 ($111.90), internals are otherwise looking very healthy and the VIX now lies in the low 19s.  Short-term daily oscillators are looking a little overbought, so momentum will have to be especially strong to carry this forward.