Friday, April 18, 2014

U.S. Stock Market - No One Rings the Bell At the Top

In my February 14 post I was looking for a top in the Nasdaq 100 index. Let me remind you the updated chart:

                                                          source: www.stockcharts.com

History repeats but the pattern has changed. Since February 14 the index have gone up a little bit but then....gone down and today it stands about 3% lower than in February 14.

What next? Of course everything could happen but the chart below is a sort of a ringing bell:

                                                                                      source: www.stockcharts.com

The grey area behind the index is the chart of Chaikin Money Flow indicator. Without going into details, this indicator shows whether money goes into stocks or out of stocks. As the chart shows, ahead of any major correction the Money goes out of  stocks - the slope of the indicator is decreasing (green lines). Looking closely at the chart you can see that a major correction is probably on because, despite the top in stocks, the indicator is very close to zero! What is more - due to the extended divergence (which started in May 2013) this could even be the topping pattern of the whole bull run.
The bell is ringing something big.





Wednesday, March 19, 2014

Gold Sector - Consolidation Stage at the Moment

There was quite much a hype in the media about gold sector recovering. Well, as most of my readers know, I am a gold bug so a little bit of my input on that subject would be justified.
But no. I have chosen to be on the sidelines.
Now, when the PM market pulled back quite strongly, here is the appropriate chart:


                                                                              source: www.stockcharts.com

As you see, there is not too much to say about PM market. Simply put, this market has done really nothing.
Hmmm....maybe not so fast. It has done something - it is not going down which is a very big PLUS.
As can be spotted in the chart, gold, miners shares and juniors shares  - all of them are in the consolidation stage. This stage started in April 2013 so its duration is about one year.
As the theory says, the longer the consolidation stage the more powerful is the the exit from that.
In my opinion this a very good time to focus on finding the best plays in the sector in the expectation of the the break up from this consolidation.
Otherwise, when the pattern is the opposite (break down), well....we'll have to wait for another opportunity.

At the end - one of the older charts.

                                                    source: www.stockcharts.com

As you see, the relation between gold and silver is still intact. Silver behaves a little bit better than gold, which is the same pattern as in the late 2008. This indicates that the possibility of the break up is relatively high.

Friday, February 14, 2014

Looking For a Top In the U.S. Stocks

Yesterday the Nasdaq 100 Index made another high at this bull market cycle (which started in March 2009 - yes, it has been nearly five year old bull!). But looking at the advancing and declining issues this high does not look impressive at all:

                                                                                source: Simple Digressions

As the table shows, although we have seen the new high, the number of the advancing issues is still lower than at the previous two peaks (the same with the difference between new high and new low). The only impressive thing is a volume, which is quite high.
Now, let us look at the chart showing the developing Nasdaq 100's top in 2007:

                                                                              source: www.stockcharts.com

And then this same index in 2014:

                                                                          source: www.stockcharts.com

Well, as for me, some similarities are noticeable. I am very curious what the on-coming sessions show  - with the main question being "Is is a developing top ?".

And the last - below is the chart of NYSE Bullish Precentage - presently it is not reacting to the rally in U.S. stocks. Simply put - the rally is not supported by the optimism (as previously). This is not a good sign for the bulls.


                                                  source: Investor Intelligence and Simple Digressions

Tuesday, February 4, 2014

VIX Indicates a Search for a Short Term Bottom

Yesterday's session on Wall Street set a record on VIX volume. Having in mind that VIX is a risk measure, I can conclude we saw a Fear yesterday.
Chart:

                                                         source: www.stockcharts.com and CBOE

Of 2,382,752 contracts which changed hands yesterday, 1,850,206 were call contracts. It means that a lot of traders were hedging their positions against further U.S. stock market losses.
In the past, such a heavy trading was a good indicator of the short term bottom in the S&P 500. If this story repeats again, we should see a bottom within a few days.

Monday, February 3, 2014

Transportation and Industrial Averages - No Changes

Do you remember the chart of the month in my post published at the end of November 2013 ? If not,   here is the link.
But let us look at it again. Has anything changed ?


                                                                    source: www.stockcharts.com

I do not think so. As you see this is still intact.

Saturday, February 1, 2014

Gold and Silver - Still In Down-Trends

In my last piece on precious metals ( here ) I was looking for a bottom in the sector. Well, while some tough speculators are probably betting heavily on this bottom, this is still an open matter.
Let us look at the chart below:

                                                                          source: www.stockcharts.com

Both silver and gold are still in their technical down-trends - which is still an argument for the metals sellers.
On the other hand, the big argument for the goldbugs is that both metals are above their bottoms recorded at the end of June 2013.







Thursday, January 30, 2014

Facebook - Similar Situation To the Broad Market


Yesterday I published the charts showing the actions of the so-called Smart Money.

Today let me show how the Smart Money perceives the shares of Facebook. I guess this is a right time for that due to the latest report published by this company. It is not my intention to elaborate on the Facebook's financial results but only on the market action.

Firstly Smart Money's actions:


                                                                   source: Simple Digressions

As the chart shows, although Facebook shares are up 57%, Smart Money has been selling heavily in the reported period (down 32%).

Now Big Money's action:


                                                         source: Simple Digressions

Big Money started to correlate with the broad Smart Money index in October 2013. Since that time the Big Money index has been falling. As you can spot, the most impressive movement was at today's session.

Conclusion: Facebook shares are another example what Smart Money does. The late stage of the bull run on Wall Street is being used by the big players to sell as many shares as possible.