December 21st, 2014
It’s that time of the year with just four days to Christmas Day, and at long last the Santa Claus Rally seems to be on its way. But don’t count your chickens before they are hatched, but the last three days have been encouraging:
I have always recommended that one should have three scenarios, “Up, Down and Sideways” and let the Market tell you which one it is on. We had another “V” Bottom two weeks ago and inside three days this past week we are back up to essentially the old highs.
The previous Leaders and Glamour stocks I call Canaries are not leading except for FB and LNKD:
The VIX has fallen back from nearly going into Oscillation, but we are without a reasonable cushion, and the VIX can go either way, though the feel is that it is headed down which is good for the Market:
The concept of looking at the % of stocks in the Top, Middle and Bottom four buckets is proving interesting and we shall see if the pattern of a couple of months ago are repeated again to confirm there may be value in the concept:
…And here is the sharp fall followed by the quick recovery in a matter of ten trading days…but now what’s next?
Let’s look at the latest set of charts I have introduced you to, to get a flavor of which way the wind is blowing.
The next three days should give us a clue of which factors rule the roost at a point of indecision such as this is. Good luck to you all and Happy Holidays to all of you around the globe at this holiday time! Thank you for your support.
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!
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.
Fortunately the Volatility Index VIX is quiet, so there is room to play until one gets really cautious again:
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.
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:
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:
Enjoy your weekend. Best Regards,
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.
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.
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:
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:
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:
%B for the S&P 1500 is still strong at 0.82, but we should now expect a decline based on the above:
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:
Lastly, here is the chart of the Accumulation:Distribution Ratio with the NASDAQ now in Overbought Territory and expecting a correction:
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.
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!
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:
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:
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:
If the pullback in the S&P 1500 has %B stay above 0.7, the Market will remain healthy, otherwise watch out below:
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:
…And a month later we are into a very Strong move with %B above 0.5 around 90% for days:
The Jobs Market Report added to the enthusiasm and kept the Market up with yet another Month of >200,000 jobs, which is encouraging:
…And here is the long term view from 2011 to now:
Enjoy and Best Regards,
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:
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:
The Canaries are half strong and half sluggish, but holding at their support levels and higher:
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:
This next chart shows the tremendous sell off we had on 10/1/2014, and the following charts show the slow recovery until yesterday:
Here is the struggle to recover the following nine days:
…And here is the Rally attempt two days ago after more struggle:
This next chart shows the Utter Turmoil the Market Indexes have been through with the Bears in Control until today:
This chart shows we should be into “Safe Territory” with %B by tonight:
Here is a chart of the S&P 1500 showing more turmoil in %B below the Bandwidth:
Twelve Drummers Drumming continues to show it is a good short term measure of Rallies and Fades, and also Turmoil:
Finally, the S&P 1500 must hold at 440 and above or we head down again: