Ian Woodward's Investing Blog

Stock Market: All Eyes Looking for a Santa Claus Rally

December 6th, 2014

I used this Picture six years ago to kick off the Santa Claus Rally, and we have a repeat this past week!

Santa Picture

The Bounce Play off the “V” Bottom has been very impressive with 30 Trading days up, so we had the expected pullback and Pause to Refresh this past week.

Santa Indexes

Fortunately the Volatility Index VIX is quiet, so there is room to play until one gets really cautious again:

Santa VIX

The Accumulation:Distribution Ratio couldn’t maintain the high number of 3:1 and so it has backed off with expectations to go to stalemate at 1:1 sooner than later.

Santa abcde

With 30 consecutive trading days up, it was high time for a Pause to Refresh and it was an easy call to make which I did last week:

Santa Pat

The Twelve Drummers Drumming History over the last two years has now established the longest run at 30 Trading Days, so this will become a valuable yardstick to bear in mind for future long rallies:

Santa drummers

Enjoy your weekend.  Best Regards,

Ian.

Stock Market: Pause, then Santa Claus Rally

November 29th, 2014

I hope you all had a Happy Thanksgiving, and now after a Pause to Refresh we should expect to start the seasonal Santa Claus Rally.

Thanks Picture

The Market Indexes have been very strong coming out of the “V” Bottom and with 30 Trading Days of progress, we are now overdue for a correction and a Pause to refresh before we begin the Santa Claus Rally.

Thanks Indexes

The Twelve Drummers Count has now reach 30 and we have not had a rally like this since January 2013, so the odds favor some form of a correction before we see the traditional Santa Claus Rally:

Thanks Drummers

I have added three columns to give us more insight of how the strength moves up and down the Buckets Ladder.  I show the tally for the bottom four, middle four, and top four buckets which clearly show when the bias is up or down for an Early Warning:

Thanks Buckets

To prove my point, the next chart shows that we reached a Top 4 Bucket count of 82 all of 19 trading days ago on 10/31/2014 and have slid down the count as shown:

Thanks Bucket Count

%B for the S&P 1500 is still strong at 0.82, but we should now expect a decline based on the above:

Thanks Percent B

This next chart shows the progress in the past 30 Days after reaching a bottom, and as I suggest it is now time for a correction:

Thanks Pat

Lastly, here is the chart of the Accumulation:Distribution Ratio with the NASDAQ now in Overbought Territory and expecting a correction:

Thanks AccDist

Net-net, play the odds of a small correction before we start the usual Santa Claus Rally, but realize we are into New High Territory.

Best Regards,

Ian.

 

Stock Market: “V” Bottom Market Has Fangs

November 9th, 2014

A Month ago we had utter turmoil in the Market and now we are into New High Territory.  Be careful as this market has Fangs!

V Picture

After a “V” Bottom, this Market has been very strong and all Indexes are back into High Territory; this market can go higher but is due for a Pause:

V Indexes

The move this month has been remarkably strong coming off a “V” bottom, and now the rally is 16 Trading days long, so a bit long in the tooth:

V Pat

In the last two years, there have been only five occasions that the rally has been higher than 16 days, so we must look for a correction soon:

V Drummers

If the pullback in the S&P 1500 has %B stay above 0.7, the Market will remain healthy, otherwise watch out below:

V Percent B

Five weeks ago we were in the depths of a 10% correction and potentially going lower, but to our amazement we pulled out with a “V” bottom:

V Pies at bottom

…And a month later we are into a very Strong move with %B above 0.5 around 90% for days:

V Pies at Top

The Jobs Market Report added to the enthusiasm and kept the Market up with yet another Month of >200,000 jobs, which is encouraging:

V Jobs

…And here is the long term view from 2011 to now:

V Jobs 2

Enjoy and Best Regards,

Ian.

Highland Fling or Snakes & Ladders Market?

October 23rd, 2014

As I write this on Thursday Morning, the Rally suggests we are into a Highland Fling for now!  We had a great Seminar which offered these two alternatives:

Highland Picture

The Market Indexes had all produced a “V” Bottom and were either headed down for a retest of the lows or continue up.  This morning’s strong Rally suggests we go higher before we pause to refresh:

Highland Indexes

The Canaries are half strong and half sluggish, but holding at their support levels and higher:

Highland Canaries

The BRIGHT spark in all of this to and fro is that we had an Eureka on Tuesday and as you can see from the chart below we also had an  ~Kahuna, with it only being off by 0.016 of a point…Close Enough for Government Work!  At the seminar I hammered on the need for an Eureka and two Kahunas within a week, and it seems as if our wish is coming true for a Rally to take off:

Highland Nasdaq

This next chart shows the tremendous sell off we had on 10/1/2014, and the following charts show the slow recovery until yesterday:

Highland Pies 90

Here is the struggle to recover the following nine days:

Highland Pies struggle

…And here is the Rally attempt two days ago after more struggle:

Highland Pies struggle2

This next chart shows the Utter Turmoil the Market Indexes have been through with the Bears in Control until today:

Highland Turmoil

This chart shows we should be into “Safe Territory” with %B by tonight:

Highland Pat

Here is a chart of the S&P 1500  showing more turmoil in %B below the Bandwidth:

Highland Turmoil2

Twelve Drummers Drumming continues to show it is a good short term measure of Rallies and Fades, and also Turmoil:

Highland Drummers

Finally, the S&P 1500 must hold at 440 and above or we head down again:

Highland 1500

Best Regards,

Ian.

Ticket for Staying on the Right Side of the Market

October 4th, 2014

Finally the Market Indexes took a drubbing, first on 9/25 and again four trading days later on 10/01, which then produced a reading of “90” for the % of Stocks in the S&P 1500 with %B <0.5.  We have not experienced such an oversold reading since June of 2012, 28 months ago.  The last straw of an excuse to slam the Stock Market was the Ebola Breakout potential only to be saved  by the decent Jobs Report on Friday which once again produced ~ 250,000 Jobs in September.

I hope this Blog Note is timely for you as I have broken new ground on the 15 Year History of when the S&P 1500 gets slammed hard, where Grandma’s Pies and “Bucketology” are the key tickets for staying on the right side of the Market.   Of course we will cover all of this at the HGSI Seminar in Sunny Palos Verdes in two weeks time, where Ron and I look forward to seeing old and new attendees for three days of intense learning.

Grandma Picture

The Market Indexes peaked ten days ago, sold off with the Ebola scare and bounced back up from an oversold situation with the decent jobs report on Friday, which frankly saved the day for now for the Bulls.

Grandma Indexes

The Canaries are marking time and waiting for the Markets to show the direction rather than leading them upwards:

Grandma Canaries

As expected, the VIX behaved counter to the Market Indexes, rose for ~10 days and then fell back to the comfort zone of around 14:

Grandma VIX

Note how %B for the S&P 1500 has meandered down these past ten days with a decent bounce on Friday.  We are by no means out of the woods:

Grandma Pat

Bulls and Bears have had a good fight trying to get control…the Bears have it for now, but a further couple of up days are needed before the Bulls can have confidence that they are back in the saddle.  However, Oversold can also become more oversold should panic set in, so be very careful:

Grandma Indexes2

Here is Grandma’s Pies in all its glory showing you the split for the S&P 1500 stocks where 90% of them are below the middle Bollinger Band of 0.50, and only 10% are above.  My good friend Chris White has done a great job for me to show us at a glance the behavior from day to day:

Grandma Pie 90

So you might ask, “What has happened since then?”, and here is that picture.  A reasonable Bounce Play, but hardly enough to feel comfortable:

Grandma Pies

The Ball is currently in the Bear’s court.  To feel comfortable that the Bulls are back in control requires %B to have risen to where the arrow is, and then head higher:

Grandma Pat2

Those who have followed me for all these years will see that I have given you Manna from Heaven.  Newbies will have to fathom this out for themselves, but I will cover this for those who attend the Seminar in two weeks time.  Net-net, don’t expect recovery in less than a week!

Grandma Stats

I’m no Soothsayer, but here are two possible scenarios for the immediate future based on the Fear of the potential Ebola Breakout on the one hand and the decent Jobs Report on the other:

Grandma Scenarios

The next two slides show the latest results in the Jobs Report that came out this past Friday, with close to 250,000 for September:

Grandma Jobs1

Grandma Jobs2

Well, there you have it, the whole nine yards.  Enjoy and keep your powder dry.

Best Regards,

Ian.

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Disclaimer: Commentaries on this Blog are not to be construed as recommendations to buy or sell the market and/or specific securites. The consumer of the information is responsible for their own investment decisions.