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Showing posts from September, 2008

Disappointing volume - not oversold either

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You would think one of the worst one-day losses would bring about some interest on the part of traders or at least push markets into oversold territory - but neither happened. The former you could argue against with a sizable surge after days of limp volume, but volume was well off the frenzy of a couple of weeks back when the background news turned into the forefront news. More worringly, none of the markets turned oversold and breadth indicators remain frothy, especially the Summation Indices. NYSE has a stochastic reading smack bang in neutral territory; there could be a lot more selling to come: Bulls might have found one of Oasis of hope - the Transports; an important leading index from a bottom I now return to my vacation... Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

On vacation

Gone quiet for the next two weeks while visiting family. This volatility needs to dry up before we can define some boundaries. -eom- Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Kudos to TraderMike

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Another day of link-love, this time from TraderMike , brought a second spike in blog volume. If you are interested in an article I wrote on blog volume and market reversals you can get it here . -eom- Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

One more week?

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Yesterday was a whopper for the bulls, but there may be enough squeeze room for a retest of the week's lows next week. Why? Looking at the weekly spread of indicators, other than the VXN there hasn't been the broad level of confirmation typical of a weekly bottom - particularly from the Call-Put Ratio. Obviously, based on my prior post none of these need to drop to levels where typical bounces occur, but it would be more comforting to have at least 3 of the 5 at historical bounce zones. Next week could be the week which does it, but this could mean another week of losses. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Mahalo to the Kirk Report

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Speaking of blog traffic and capitulations . A big Thank You to Charles Kirk of the Kirk Report ; 90% of my traffic yesterday was from his link: -eom- Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bad Breadth - or is it? Fear overblown...

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As TraderMike noted, many of the indices have yet to reach short term oversold levels on full stochastics which suggests any rally from here will likely get sold off. Mike also reported on the capitulation spike in the VIX and the T2108 indicator, the latter broke the '20' barrier typical of bottoms. Also contributing to the malaise is some lackluster breadth levels. iBankCoin reported on the relatively high value in the number of S&P stocks above their 50-day and 200-day MAs - the latter in particular. The shift in character of these indicators from 2006/07 to late 2007/08 reflects the move from bull to bear market; in bull markets fewer stocks break these moving averages before buyers get antsy about missing the next leg of the rally - in bear markets there is no such willingness to jump in so greater number of stocks give up these key moving averages. There is no shortage of warnings about Wednesday not been a bottom; InvestorPlaceBlogs were unconvinced even with th

Where next for the S&P?

Since the short to intermediate term picture is so mixed; oversold in the short, yet strangely overbought in the intermediate, I decided to take a step back and look at the monthly chart. There is evidence the S&P is shaping some form of cup-and-handle pattern, or at least a handle which will evolve sideways if not higher. For this to be true there are three watch areas. The first, 1,264, was blown away this week. The next, 1,177, is the scene of the current fight with the index getting close to this low yesterday. The third is 1,090 which will be the last chance saloon for the pattern. As I prefer to use the candlestick real bodies to define my anchor points, those who use all price points would have the three watch areas at: 1,273 (Busted), 1,179 (current test), and 1,084 (Next). Obviously slightly different to the above values but in combination can be considered support bands. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock a

Bad.. could have been worse... may yet be...

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Some indices fared better than others. The NYSE is undoing much of the hard work it did when it broke past 2000 highs; a test of those highs at 7,202 would look the most logical area to seek support. As TraderMike noted , there is still much work to do before markets see a bottom, although the T2108 indicator he watches is a few points shy of hitting the 20% mark typical of oversold bottoms. The rich NYSE Summation Index remains a concern however, but at least the VIX closed over 30 (and may gap higher today to confirm at least a top in this indicator): The $TICK capitulated (a short term bottom) For a broader market recovery we will need to keep an eye on Tech, an early leadership group in a market bottom. Small cap participation will also be important to pull the broader markets higher. Yesterday's NASDAQ action was unusual in there was no major violation of 2008 lows, although it did manage this on a closing basis (which in many ways is worse). Unfrotunately, the Nasdaq Summatio

Weekly review of Stock Charts

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Well - I think Monday will be a down day, but is there anything to add from the Stockchart.com ers from last week? Yong Pan headed the list with an interesting mix of 3 neutral signals and 5 bearish ones. The prior bullish signals disappearing into the wind. Interesting to see the VIX relatively overbought even after 2-days of gains. Monday should see the VIX spike higher but maybe Monday will also be a gap down and rally???? Hard to say until the first 30 minutes of trading play out and a playing field is set. This second chart isn't so good for bulls; note CPC and percentage of stocks above 50-day MA: Will the S&P reach lower channel support (c1,160)? Maurice Walker had talked of this on Thursday: That push lower on the Qs, finetuned the divergence on the 60-minute chart and allowed the MACD in that timeframe to break its down trend. We are extremely oversold here and I expect the divergence between the MACD, RSI and the price chart to play out. Now that the MACD downtrend

It's a non-news day.

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Nothing to see here, move along: I have a post on the S&P and its relationship to the 200-day MA over on the Zignals blog . Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Transport Watch

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A solid one-day gain on heavy volume for many indices will have given bulls something to cheer. There wasn't a whole lot of technical change, other than a few moving averages were breached (once again) to the upside in what has been a tough whipsaw period. The one index which caught my attention was the Transports - for the Dow theorists. The DJ Transport Index closed just shy of declining resistance dating back to May of this year. There was a stochastic crossover, but the signal occurred above oversold levels. Trend strength is (very) weak - so the odds of a break are not very high, but if it was to happen then Friday would be a good day for it. Keep one eye on it at least. Futures point to a flat open as of 6 am ET. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Stage set for a bounce; GLD and Tech

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While the intermediate and long term charts point towards further declines, in the short term there appears to be tradable bounce opportunities; chiefly in tech and Gold. Richard Lehman's charts show indices in the mid-range of downtrends. His chart for GLD has longside merit over an intermediate time frame: What of Tech indices? On the daily time frame we have bullish harami crosses. In the Nasdaq there is an obvious support level around 2208 with upside targets of converged resistance and/or the 50-day MA: With the Nasdaq 100 the descent is steeper so declining resistance would appear to be the more logical target than the 50-day MA: All bets are off if the stop levels are taken out (especially on a closing basis) Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

NYSE still not oversold....

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You would think with a 3.6% loss in a single day the market would reach oversold levels. Unfortunately not. Also compounding the problem is the lack of oversold conditions in the NYSE Summation Index: Having said that I would expect a bullish divergence in the Summation Index but it's likely not to occur until it gets into the -600 to -800 range. If there was no bullish divergence and the Summation Index continued its push higher it will create a situation where the indicator is overbought and the NYSE is stuck in a decline; setting up a crash scenario. Damned if you do...damned if you don't. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bottom or not to Bottom?

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Babak over at Trader's Narrative made a good case for a bottom (at least in the Dow), although current closing resistance could put in a spanner in the works over the short term: But Richard Lehman remains cautious There are some mighty strong influences on the trends these days, making them challenging to decipher, to say the least. Today's action rocketed upward, then back and then upward again, but not breaking any of the overall downtrends I can see. There is a bit of room before the downtrend lines get hit, but that resistance should be felt soon. The Fannie-Freddie takeover was a relief, and caused lots of short covering, but not what you would exactly call good news overall for where things are. That's why I believe this spike will end up being contained within longer term downtrends. The VIX was actually positive for much of the day, despite a healthy rise (indicating the smart money felt it would reverse back down soon), but I see the Sept VIX futures closing at a

Tim Sykes earns $70K for August

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Tim's earnings started well ($15K in May) and have just soared since. His rough breakdown is as follows: The caveat for his trading earnings is the (relatively) small account he trades with; but his advertising and stock alert revenue is outstanding. The only thing I don't understand is the lifetime profit of $1,956 when membership costs $2,000; presumably the difference is after fees (which makes this figure even better). If you look at his traffic you can see this success was achieved over a very short space of time Congrats Tim! Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Weekly review of Stock Charts

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In light of the Fannie Mae / Freddie Mac bailout which has Dow futures up a staggering 230 points we will get an idea as to how much momentum bulls can build in the face of last week's selling. So how did the stockchart.com crew view last week's action? Yong Pan tops the list. His summary has two new neutral signals and two new bull signals. The bearish areas in the market are slowly evaporating. Certainly the bullish stance will pay dividends today (for those lucky to get in on Friday's close. Also watching for a Zig-Zag reversal; a higher close Monday would set this up nicely: Worrying trend of following along the lower Bollinger Band on the monthly; note failed test of mid-line in May. Maurice Walker puts his faith in the Aroon: I have been warning you that September is more and more becoming an extremely volatile month, and this year seems to confirm that. During August, the volume on the daily charts was shrinking, and now in September we have increasing volume reve

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