Bears May Have Dodged A Bullet

cougar

Good morning. Saturday arrives after a week that saw new 52 week highs for the SPX, but extreme lows on volume and daily range. Daily range topped out at a mere 11 points on Thursday while approaching all-time low territory at four points on Monday. Before the open Friday the Commerce Department reported that Retail Sales rose in the month of February by +0.3%, above the consensus for a decline of -0.2%. The market was in the mood to celebrate a new 52 week high and futures were putting buying pressure on at the open. The SPX promptly responded with a gap up setting the high of the day at 9:54. The next eight minutes covered 80% of the day’s trading range and 26 minutes after the high of the session came the low of the session at 10:20. The rest of the day was mostly a tight range choppy session with a test of the low of the day at 3:32 and then a mild bounce limping into the close. If you missed the six point move around 10am, you missed the day. Volume was once again heavily distorted by the action in Citi which again provided a quarter of the SPX volume. Looking beyond the Citi aberration, volume was extremely low. The session was significant in one regard: The index gapped up to a 52 week high and then closed lower. Historically, this is not a good sign going forward. But the gap was not large and the move down was not a hard sharp rejection; so we’ll have to wait to see what next week brings. But days that gap up and then close below the open have been a bit rare lately. August 28th and September 29th are good examples; both led to pullbacks. The week gained a mere 1.08% and the trading range was a tiny 18.5 points, a 1.63% trading range; one of the smallest weekly ranges in several years. The week of January 11th was similar; a 1.66% range. Such small weekly ranges often lead to range expansion the following week; the week after the January 11th snoozer was a 5.3% range, all downward. But next week is options expiration week so it’s not easy to guess which way this will go. The last Opex weeks that were significantly down weeks were in May and June; it has been awhile. Outlook for Next Week Next week promises to be one of the more interesting weeks, especially when compared to the recent narrow range low volume affair. We have the upcoming FED announcement, options expirations, and it is the week following an NR7 (narrow range) week. (Actually, it is the narrowest range five day week since October 8th, 2007 – an interesting date because that was the all-time high of the SPX.) While I think I’ve been clear that I expect a pullback here, let’s take some time and list off some of the reasons. 1. Low volume, low trading range, low volatility are all symptoms of a topping pattern. We’ve certainly seen this the last week. A breakout should be accompanied by higher-than-average volume, which would show conviction that prices belong up here and that the markets are heading higher. 2. The four week RSI of the major indices has passed 80. This almost always leads to a week of declining indices. See chart. 3. Our five week rolling average shows a 7.26% gain over the last five weeks. This average last hit 7.24% September 14th; the following two weeks gave back 44 points. 4. The Emerging Markets ETF (EEM) has consistently led the SPX. The EEM set the 52 week high on January 11th; the SPX on January 19th. But the EEM is lagging here, well under the January high while the SPX is setting a new high. I think this divergence is noteworthy and shouldn’t be overlooked. The Dow is also lagging behind. A true breakout should include the Dow as well as the EEM. 5. We have a new moon this weekend. For whatever reason, when the moon is new or full and we are at the extremes of overbought or oversold, the market often reacts. See chart.

cougar

Good morning. Saturday arrives after a week that saw new 52 week highs for the SPX, but extreme lows on volume and daily range. Daily range topped out at a mere 11 points on Thursday while approaching all-time low territory at four points on Monday.

Before the open Friday the Commerce Department reported that Retail Sales rose in the month of February by +0.3%, above the consensus for a decline of -0.2%. The market was in the mood to celebrate a new 52 week high and futures were putting buying pressure on at the open. The SPX promptly responded with a gap up setting the high of the day at 9:54. The next eight minutes covered 80% of the day’s trading range and 26 minutes after the high of the session came the low of the session at 10:20. The rest of the day was mostly a tight range choppy session with a test of the low of the day at 3:32 and then a mild bounce limping into the close. If you missed the six point move around 10am, you missed the day.

Volume was once again heavily distorted by the action in Citi which again provided a quarter of the SPX volume. Looking beyond the Citi aberration, volume was extremely low. The session was significant in one regard: The index gapped up to a 52 week high and then closed lower. Historically, this is not a good sign going forward. But the gap was not large and the move down was not a hard sharp rejection; so we’ll have to wait to see what next week brings. But days that gap up and then close below the open have been a bit rare lately. August 28th and September 29th are good examples; both led to pullbacks.

The week gained a mere 1.08% and the trading range was a tiny 18.5 points, a 1.63% trading range; one of the smallest weekly ranges in several years. The week of January 11th was similar; a 1.66% range. Such small weekly ranges often lead to range expansion the following week; the week after the January 11th snoozer was a 5.3% range, all downward. But next week is options expiration week so it’s not easy to guess which way this will go. The last Opex weeks that were significantly down weeks were in May and June; it has been awhile.

Outlook for Next Week

Next week promises to be one of the more interesting weeks, especially when compared to the recent narrow range low volume affair. We have the upcoming FED announcement, options expirations, and it is the week following an NR7 (narrow range) week. (Actually, it is the narrowest range five day week since October 8th, 2007 – an interesting date because that was the all-time high of the SPX.) While I think I’ve been clear that I expect a pullback here, let’s take some time and list off some of the reasons.
1. Low volume, low trading range, low volatility are all symptoms of a topping pattern. We’ve certainly seen this the last week. A breakout should be accompanied by higher-than-average volume, which would show conviction that prices belong up here and that the markets are heading higher.
2. The four week RSI of the major indices has passed 80. This almost always leads to a week of declining indices. See chart.
3. Our five week rolling average shows a 7.26% gain over the last five weeks. This average last hit 7.24% September 14th; the following two weeks gave back 44 points.
4. The Emerging Markets ETF (EEM) has consistently led the SPX. The EEM set the 52 week high on January 11th; the SPX on January 19th. But the EEM is lagging here, well under the January high while the SPX is setting a new high. I think this divergence is noteworthy and shouldn’t be overlooked. The Dow is also lagging behind. A true breakout should include the Dow as well as the EEM.
5. We have a new moon this weekend. For whatever reason, when the moon is new or full and we are at the extremes of overbought or oversold, the market often reacts. See chart.

Cobra

可惜没有图。

sfbayarea

X中国陆军

sfbayarea

可惜没有图。
Cobra 发表于 2010-3-14 22:09

Here is the link:
http://www.marketspath.com/nightlyreport/

Cobra

sfbayarea 发表于 2010-3-14 22:16

收到，谢谢。Service好贵啊。NND。

sfbayarea

收到，谢谢。Service好贵啊。NND。
Cobra 发表于 2010-3-14 22:22

老蛇辛苦了, I could see you spend about 3 to 4 hours to prepare your daily report, especially the weekend one. why not charge a service fee, I will gladly be your service subscriber.

Cobra

老蛇辛苦了, I could see you spend about 3 to 4 hours to prepare your daily report, especially  ...
sfbayarea 发表于 2010-3-14 22:34

    收到，谢了。周末的通常远远不只4小时。平时，现在倒是快很多，难得超过3小时了。

cartier

jeff110

cougar

回复 7# Cobra

免费night report的统计数据或许有用