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| StatTrader |
 Posted: Sun Jul 22, 2007 1:30 pm Post subject: Outlook 7/22/07 |
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Member Of The Month! April
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Looking at the graph of the SP-500 below, we can clearly see the breakout (above the red trend line) at the beginning of last week. As so frequently happens with breakouts, the SP-500 has retreated back toward its the broken trend line. Therefore this is still a bullish setup that ideally will finish with the SP-500 bouncing off the trend line and continuing its climb upward during the coming week.
Since the market tries to fool us every once in a while with false breakouts, breakouts that fail with the stock or index free falling through the trend line, we look to see whether the breakout is supported by volume.
The graph below is the ratio of the 10-day exponential moving average (ema) of volume on up days versus the 10-day ema of volume on down days. The rally that took us from mid-March through late April saw this ratio surge. The rally in mid-June saw the ratio surge. This latest breakout which took the SP-500 to new highs, hardly saw this ratio move at all. Clearly then, this breakout is not supported by upside volume.
Looking at weekly volume breadth (calculated by making each day equal the sum of the volume breadth from the previous 5 days where volume breadth is the difference between upside volume and downside volume) we see that the 30 day moving average of the weekly breadth surged in support of the rally leading into late April but you can't see the latest breakout. On the plus side, it should be rising this week which is generally supportive of the markets.
Then there is the measure of upside volume as a percentage of total volume. The graph below show both the 10-day (blue line) and 30-day (pink line) moving averages. The trend appears downward for both; not supportive of the markets.
On the other hand, the breadth statistics are supportive of the market. The weekly breadth moving average hit lows that are consistent with longer term market lows and should be rising this week. Supportive of the market.
The daily breadth statistics likewise will be rising and supportive of the markets at least through Thursday of this week.
The CBOE Equity Put/Call ratio tends to move inversely to the markets. The 10-day (blue line) moving average indicates that we just came off a market high. The 30-day (pink line) is just starting to rise but is at a level that is consistent with a market top. Since the 30-day is not shooting upward, this indicator isn't a screaming bear, but it is definitely NOT supportive of the markets.
One of my favorite indicators for determining market strength is the McClellan Summation Index (MSI). As you can see, it had a nice little peak in late April and has been generally falling since. The first couple of weeks in July were positive, but this indicator has resumed its fall. A falling MSI is definitely bearish for the markets.
To further the case for the markets being weak, the percentage of stocks trading above their 50-day moving average was at 80% in late April. Even though the indexes are higher, only 50% of stocks are now trading above their 50-day moving average. I.e. in April 4 out of 5 stocks were rising, now only 1 out of every 2 stocks are rising, fewer stocks are participating in the rallies.
We have some mixed signals. A case can be made for the bears and one can be made for the bulls. End result...
Be very careful out there, |
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| gugaplex |
| Posted: Sun Jul 22, 2007 3:06 pm Post subject: |
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Investing Manager
Joined: 01 Jul 2006
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I'm thinking that the sub-prime crunch is gonna finally catch up to the markets and cause a nice correction soon. This week should be very telling...
If a correction becomes evident, look for it to mimic the one we faced in the summer of 2006 in duration and severity. S&P 500 should trade to its 200-day MA... |
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| Grimreaper |
| Posted: Mon Jul 23, 2007 2:43 am Post subject: |
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CFO
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| gugaplex wrote: | I'm thinking that the sub-prime crunch is gonna finally catch up to the markets and cause a nice correction soon. This week should be very telling...
If a correction becomes evident, look for it to mimic the one we faced in the summer of 2006 in duration and severity. S&P 500 should trade to its 200-day MA... |
If the subprime crunch reigns soopreme....here's one that looks like they will git punished just cause they's subprime...BUT!...it appears the fokes runnin the show are purty slick cause they just got a stake in FICC and convinced the shareholders at FICC ta take da $4 dallahs. Dat was a purty good buy ifn ya axe me. Not as good as I woulda dunn of course...I coulda got FICC fer $2 dallahs ifn they just left it alone.  Anyhoo, it looks like RDN is a hedge fund lookin fer value...and that play on FICC wasn't too chabby. When financial plays get "too risky" according to da money runners on Wall St, I bet RDN will be somewherest betwixt $24 n $30 dallahs....jot that down!   In the meantime....watch da Reaper fund turn HMB around before it gets noticed as a great value play....which will be 3 to 5 years from now at 6.50. That's how it werks ya know.  |
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| StatTrader |
| Posted: Tue Jul 24, 2007 11:23 am Post subject: |
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Member Of The Month! April
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| The market close today BELOW the trend line confirms the bearish case. The run-up last week is now technically a failed breakout. |
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| Grimreaper |
| Posted: Thu Jul 26, 2007 1:33 am Post subject: |
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CFO
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| The trooly funny thing is dat da hedgies got themselves trapped. By last report there is $40 billyun short da mawkets. We know that ainna the little guy. Da Reaper say it be da hedgies placing a counter bet agin the underlying positions that are a core of their holdings....which also happens to be "highly leveraged" and marked to some new criteria ov value insted of being marked to market (true value). This phenomenon was brung about becuz da Bushies totally disregarded everything in their quest to hide da trooth from America. Basically, any strong rally from here will be nuthing more than the chorts being forced to buy positions to cover (like wit BIDU....nice!)....which of course takes the hedge off their core holdings....which of course sets the stage for an even deeeper correckshun than is already inevitable. I think this is the most excitin time in da mawkets since Oct 2002! Why?...cuz there are plenty of stocks that'll quadruple+ in the next 3 years whilst AAPL, GOOG, RIMM, n AMZN lose 70% ov their value in the next 3 years. Kewel!....ainna? |
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| Im Not Warren Buffett |
| Posted: Thu Jul 26, 2007 11:04 am Post subject: |
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CFO
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For once, a coherent point. Mark to model is a sham in almost every case...
In other news, the credit default swap market is acting up, and I think Primus (PRS) is getting ripe for buying. |
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| Grimreaper |
| Posted: Thu Jul 26, 2007 11:27 am Post subject: |
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CFO
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| Im Not Warren Buffett wrote: | For once, a coherent point. Mark to model is a sham in almost every case...
In other news, the credit default swap market is acting up, and I think Primus (PRS) is getting ripe for buying. |
Sheeeyot...I "knew" the point long ago... back when TOL was at 29.50 and BLDR was at 17.50 and you said the werst was over. So I knew it then, which means I doan hasta acknowledge it now that it is suddenly "coherent" to ya. You are acknowledging it now simply becuz it is obvious. So tell me how you play on makin $$$ in da mawkets agin?  If it is obvious to somebody like you I may well be gettin ready to change my mind...so watch out!  |
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| gugaplex |
| Posted: Thu Jul 26, 2007 12:14 pm Post subject: |
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Investing Manager
Joined: 01 Jul 2006
Posts: 580
This Month: 1
Location: USA
15130.80 e$
Net worth: 110,780.30
Portfolio Value: 95,649.50
Monthly Return: -20.98%
Trades this month: 0
Churn Rate: 0.00%Items
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| Correction is nearing an end. S&P should trade to 200 day MA and then make a big move up. Start looking for bullish picks like OVTI and BRLC... |
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| Grimreaper |
| Posted: Fri Jul 27, 2007 1:43 am Post subject: |
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CFO
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| gugaplex wrote: | | Correction is nearing an end. S&P should trade to 200 day MA and then make a big move up. Start looking for bullish picks like OVTI and BRLC... |
Doan be sooprised ifn BRLC goes da way of MOVI, HDTV, or werser yet  TWTRQ  OVTI is fine...balow 9. Maybe looka da chit dat goes on toppa da TV set....and not da set itself. Check out how crappy UTSI is. Here's Reaper logic Since everybudy sees AAPL, RIMM, and CSCO at multi year highs they's thinkin sooner or later AAPL n RIMM are gonna come up with a grossly overpriced device to sell to the ave idiot that will bring reality into yer living room through yer TV n compooter....plus it's only gonna cost ya a mumphly fee which is twice what yer paying now!....but trust me....it's gonna be werth it! As a result, this setbox maker to the cable TV providers (UTSI) is goin out wit da Bushies....and is being priced accordingly. When it gets to the point where UTSI (the stock) gets priced where there is more value in the metal components they have in the setboxes they make than in the stock price itself... BUY THE STOCK! Ta me dat looks like sumwherst balow $2 dallahs anna fisty cent.  Meanwhile, back at da ranch: Jim Cramer sssplains da reazun fo his whoopsaw on da mawkets....but reassures everyone that "things are OK"...."stick wit teck like AAPL, RIMM, AMZN, HPQ, CSCO....stick wit energy like COP, XOM, ....stick wit the stocks trading between $80 n $120"....like COP n XOM Thanks Jim! |
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