[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: Options Tip Market Decline
The market is now more likely to be on the verge of a waterfall decline substantially below
last year's lows than at any point since last October.
As we mentioned in the last update, the tremendous betting on the downside in the NASDAQ-100
options arena was a great indicator of the decline getting warmed up in the wings Thursday.
Ostensibly, the selloff was due to the SARS virus or the GDP Report, but we know what it was
really due to. We discuss this and quite a few other topics in this weekend's
Detailed Comments Page . . . .
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Critical Turning Point At Hand
Thursday saw a standoff between the bulls and the bears. Our dollar-weighted option sentiment
figures showed the extent of the battle as the QQQ players switched to the bearish side. After
being heavily into calls for the last week — and correct on further rally — QQQ put volume soared to
three times that of OEX put volume Thursday and more than twice that of QQQ call volume. It
was certainly an unprecedented display of betting on the put side of the equation.
This may or may not be a sign of a top in place in the market. That's because we have a
relatively limited history for the QQQ options series. But, even so, that limited history
says that when dollar volume in the QQQ soars well above that of the OEX dollar volume —
and twice as much money was transacted in QQQ calls and puts compared to OEX calls and puts Thursday —
it has marked an important turning point: a trading low, high or acceleration point.
The OEX traders are consistently wrong at turns,
but the QQQ traders are consistently right at turns (we think that's because they are
front-running their own program trading). For most of Thursday, the OEX crowd bought calls
on the dip, a strongly bearish indicator, but not an outright sell signal. An outright sell
signal on OEX would have twice as much money going into calls as puts. By the close
they still leaned toward the call side, but didn't register an official sell signal.
Thus, the OEX indicator has not yet spoken with a sell signal on this rally.
The price pattern seems to argue that a sideways pattern here could setup one more rally to
new highs. Money Flow continues to be stronger in the broad market compared to the
blue chips, a very bullish indicator, making it impossible to rule out the possibility of
a breakout on the upside. And, the blue chip S&P 500 Index may need to put in a higher
high while diverging bearishly on its 20-Day Bollinger Band before turning down (it pulled back
from its Wednesday foray into the 50-Day Band — often, a market will attempt
to move back into that 50-Day Band and fail, signaling a final top). The NASDAQ-100 may have
completed a double top by the close Thursday, however. We expect this, our lead dog index, to turn
as much as 2-3 days ahead of the S&Ps, so its action Friday could be a key indicator
telegraphing whether this is the end of the rally or just a pause before a breakout to the upside.
If this March-April rally is another corrective Elliott abc rally within the long 9-month
contracting triangle, we would need one more wave higher (not necessarily to a higher
high, though) to complete the pattern and usher in a waterfall decline to a possible new price low for the
bear market. The risk-reward equation thus argues that being long stocks is a dangerous
position at the moment. If there ever were a time to keep the powder dry, this is it.
Volatility is very low. Periods of low volatility are just the eye of the hurricane, as they
precede large increases in volatility.
As you know, time cycles and the Bradley Calendar argue for a trend change, nominally
a low, right now, and a sharp rally into June-July. But, given the overbought condition
in the market, that trend change is just as likely to be to the downside as to the upside.
We should see the market tip its hand very shortly.
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Heavy call buying in the QQQ options last week and earlier this week tipped
that we would see further strength in the market. And that heavy call
dollar-volume continues in that area as we moved over the midweek hump
and slid toward the end of the week Wednesday.
The OEX traders have not yet gotten overly-bullish — a ratio of dollar-weighted
call to put volume of 2:1 or better — so no sentimental sell signal has been
given.
We have a cyclic and Bradley turning point due either Thursday or Friday, although one
must always remember than projected turning points have to be confirmed by coincident
indicators at all times. The turning point could be a point
of acceleration as well as a high or low.
And, one of the best coincident indicators is sentiment, which
needs to get frothy with emotion to confirm a turn.
We also have to keep an open mind about the turn: those two indicators are calling for
a bottom and although the market has not shown great technical strength, a breakout
from the trading range could send the market soaring on short covering. At this point
we're keeping an open mind and cash at the ready (we cashed in our profits on the spread
position Wednesday as the signal line was briefly broken intraday).
In fact, we think the NASDAQ-100 should be leading the way higher if this is indeed a
breakout to the upside. That it has been relatively weak is another reason to be
cautious. As the market is in now in the neighborhood of all intermediate
tops of the last 9 months at the present time, patience in taking a position is
likely to be rewarded.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Hooking the Bears
The market did a little head fake down Tuesday morning, enticing the bears to buy a
few puts and then took off to the upside, with the S&P 500 ending right at 911.38.
With a top due later this week (Thursday or Friday is our best estimate), the bulls
obviously had a little fun in store for the short sellers for now.
But, while the OEX crowd turned bullish — and bought call options heavily for the
rest of the day — the QQQ crowd was heavily biased to the put side. By the close,
volume in QQQ put options was 137% of volume on OEX puts. Usually, this large a volume of
QQQ puts is a sign of hedge fund positioning for a coming decline.
The NASDAQ-100 did not take the lead on the rally, which is a tell-tale sign that a
market top is nigh. Our favored spread — long the June NASDAQ-100 emini and short
the June S&P 500 emini — barely budged all day as our signal line grew ever
closer to a sell.
However, despite initial weakness, the Semiconductor Index (SOX), which leads even our
lead-dog NASDAQ-100 Index (NDX), has not yet faltered and a drop in its relative performance
will likely be the telltale sign of a top in the making.
Money is flowing out of the NASDAQ-100 Index stocks and into the S&P 500
stocks. If this continues, we'll be taking profits on our preferred spread, but not initiating
a new position until we see the reverse spread showing stronger signs. We would prefer to
see the NASDAQ continue to lead because that is an argument in favor of a bull market
starting in the next month or so (although from lower levels). If NASDAQ continues to
falter, it may be a sign of a much stronger declining phase building pressure — as
in a plunge to the bottom of the 9-month trading range, or below.
Key technical indicators continue to deteriorate here. Watching this market on the technical
gauges makes it feel like being in the cockpit of an large airplane whose engines are
running full bore, but with those gauges flashing red warnings that the plane is reaching a
stall condition. The price pattern of the rally is a classic a-b-c, corrective rally, and
that isn't bullish for a breakout of this trading range.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The market digested last week's gains Monday and appears more likely to have a bit of
upside potential remaining into the turning point due this week. The Semiconductor Sector
remained relatively strong and it tends to lead the rest of the market. Our favored spread
now — long NASDAQ-100 and short S&P 500 — treaded water most of the day as
our signal line started closing the gap (see the SpreadWatch chart links for details).
The spread contract value and its signal line were still separated by over $500 after the close
Monday, so the potential for the trend higher to continue remains alive in that indicator.
It is possible for the market to decline while the spread continues to gain value — that's
exactly the pattern we saw in September as the market plunged toward its mid-October lows.
To clarify a point we made about the small speculators: the large speculators are substantially
short (as of last Tuesday's close, according to the Commitment of Traders Report), while small
speculators are overwhelmingly long. The small speculators are not only wrong at turns, they
are mostly wrong anytime, while the opposite is the case for large speculators. The commercials,
who are now modestly long the market in the big S&P 500 contract tend to be months early in
their positioning. For instance, they moved to a net short position in 1999 about six months
before the bull market peaked. So, those folks who are turning bullish based upon the more
bullish positions shown by the commercials must have a great deal of patience.
OEX speculators also tend to be wrong at turns. Monday's profit-taking turned them slightly
bearish — although, by the close, they had regained a bit of confidence and bought calls.
This is a sign that the rally probably has more to go this week. If the top were
in place, these players would likely have bought more calls on the initial dip. Confirming that
view, the QQQ speculators are very bullish now as they are probably positioning for one
more program trading rally.
Seasonal strength could carry the market higher this week into
the turning point due Thursday or Friday. As well, the US Dollar Index is due for a rally into a Time
Ratio High due, ideally, on Wednesday. Strength in the US Dollar tends to coincide with
strength in equities.
Overall, intermediate term technical indicators remain extremely toppy and the risk of a sharp fall here
is great for equity investors. Time cycles and the Bradley say a turning point is due this week,
but that turning point is looking more and more likely to be a top rather than a bottom.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: Good News/Bad News
The good news is that the monthly market manipulation by options sellers is over now.
The bad news, for the bulls at least, is that they'll be back next month.
The manipulators rallied the market to expire the maximum number of put and call options
as worthless as they possibly could. The maximum pain point for QQQ option buyers was $26 and
they overshot that goal by 82¢.
Now that options expiration is over, this puffed-up market is free to resume its natural trend.
As long as the S&P 500 Index continues to obey the dictates of that falling resistance
line (now at 901.16 on the daily chart), it's reasonable to assume risk on the downside is
— at a minimum — 771.19 by the end of June. That's where the lower channel line
comes into play.
However, a move above resistance could lead to a short-covering panic near term, with a
target on the upside of 1117.03, the upper channel line.
The battle lines are tightly drawn as far as bulls and bears are concerned. But, directionality
is pretty much irrelevant at this point. That's because we've been making money without
caring whether the market zooms, crashes or simply muddles through as you will find by reading
our
Detailed Comments Page . . . .
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
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Stocks: Good Thursday
The stock market closed out the week on an upnote as options expired. Normally,
options expire on the third Friday of each month. This month, however, the third
Friday falls on Good Friday, a market holiday, so Thursday was the last trading
day for April options.
That sea change in the market's relative strength we've been looking forward to has occured. We're talking
about a shift out of the blue chips and into the NASDAQ. If you're following our
SpreadWatch chart, updated intraday on the website, you know that the
NASDAQ-100's relative performance has been zooming higher than the S&P 500's
for the last two days. Since we've been looking for this to happen as a prelude
to a rally in the market, this is a longer term bullish development, but doesn't
preclude the possibility of a steep selloff in the market going into that next
bull run for the broad market.
It does, however, present an excellent profit opportunity while we wait for that
bull run to get going. We'll discuss this and other topics in this weekend's
update for subscribers on Saturday.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Tale of Two Markets
The NASDAQ rose slightly Wednesday, but the broad market tumbled, as investors reacted to
better than expected earnings from the tech sector.
The rally got started on Tuesday evening as the NASDAQ-100 emini futures soared and the
S&P 500 emini futures tagged along for the ride. If you watched the intraday chart
of the spread between those two (plotted as the difference between the S&Ps and the NASDAQ),
it dropped sharply lower on good news for the tech sector. As we've been saying, we do expect
the NASDAQ to outperform the blue chips ahead of the actual market low. That may have started
late Tuesday. However, remember that the NASDAQ outperformed the S&Ps for a full four
weeks ahead of the October low — and both indices tracked lower during that entire
four weeks, so this is not a sign that the market is about to zoom higher.
In fact, there are many reasons to expect weakness — a thrust decline to lows below
the October lows is entirely possible — in the coming days. Refer to the
Weekly Charts section of the website and take a look at the "MID S&P MidCap Index" chart for
the clearest Elliott Wave count that supports a thrust decline to lower lows.
However, if the
NASDAQ-100 can continue to outperform and the June spread can navigate across its 20-day
moving average successfully, we would be looking to buy the spread which favors the
NASDAQ (here we're referring to the daily spread chart which shows the value of the
June NASDAQ-100 emini contract minus
the June S&P 500 emini contract in the Daily Spreads Charts section of the
website as "NQ June 2003 NASDAQ 100 e-mini - ES June 2003 S&P 500 e-mini Spread").
We also want to watch the intraday spread chart, which is shown on the main webpage just above the
Relative Strength table as "SpreadWatch: June 2003 ES-NQ: 1578.00"
— 1578.00 is the link to the intraday chart and is the 10-minute delayed value of the
spread. Our experimental trading signal line, shown in red, should not be intersected by
the white price line — since this chart shows the inverse spread, we want
to see that white line trending lower.
The option manipulators did a great job of moving prices right where they needed them
on Wednesday. The maximum pain theory target — the price at which the pain of option buyers
will be maximized — says that they need to close the April QQQ options at $26. The close
Wednesday was $26.21 (close enough for option work). Nice job, guys!
If you ever blow out as traders, you have a great future in parking lots.
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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If no response, use this one instead:
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Stocks: Almost a Sell Signal
Our intraday OEX sentiment gauge almost triggered an outright sell signal on the close Tuesday
as traders poured 70% more money into upside bets as compared to downside ones. We consider a
ratio of 2.00 or higher (i.e., a point where twice as much money is going into bullish bets)
as a sell signal on this indicator (we never use just one indicator, so a sell signal on one
doesn't necessarily coincide with sell signals on others — it's the confluence of sell
signals that triggers a trade).
At the same time, the VIX indicator reached its lowest levels since June 2002.
This indicator measures the fear factor in OEX options. The very low reading of 25.95 indicates a tremendous
level of complacency in the market — and suggests the possibility of a market poised to
leap off a cliff, rather than soar above it.
However, the NASDAQ-100 continues to outperform the S&P 500 Index very slightly,
causing the spread we took so much short term profit in last week to give back some ground.
After the close, the spread rallied as it has in recent days, but overall has made no net
progress this week. This suggests to us a stalling out of the trend. There may be one more
push up when the market sells off into the cycle low (assuming there will be a cycle
low next week, as the schedule calls for). However, since this spread tends to lead turns
in the market, it's getting late to be playing this direction (long SPX - short NDX).
If we are going to see the market ``fall off a cliff'' soon, we should see the NASDAQ-100
start to take the lead from the S&P 500 Index. That will be a leading indicator that
a bottom is near.
On the other hand, if the SPX-NDX spread pushes back above the upper blue band in the daily chart
(i.e., into the orange outer band),
it would indicate that a very strong decline in the overall market may be at hand, since
that would only occur when money would flow out of the NASDAQ and into the relative safety
of the blue chips. We should not have too much longer to wait to see which it will be.
The US Dollar Index is still a wild card in the equation. Recent weakness in the dollar
has kept foreigners from buying US stocks. The short term decline has clearly not ended
yet and, on the very short term intraday chart, you can see that a triangular trading
range has developed. Since these kinds of patterns are continuation patterns, the preceding
downtrend should reassert itself soon. That can't help US stocks in the short run.
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Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The OEX pit was, once again Monday, sitting on the fence with an equal number of bulls and bears.
Not so in the QQQs (NASDAQ). They bought calls near the close Monday in heavy numbers, suggesting
that they may be planning a run back to last week's highs. Yes, options expire on Thursday, a day
early due to the holiday. And the manipulators are back in force.
Volume was very low Monday, suggesting the option players may be having an easier time
manipulating the market with the low interest from both bulls and bears. Or, perhaps,
everyone was off doing their income tax returns?
The very low volume was matched by a very low VIX reading as it dipped just below the
level it reached at January's low — which just happened to coincide with January's
top price level on the indices.
All this suggests that this market remains dangerous for both bulls and bears. If the
levitators keep prices up artificially this week, next week should be quite volatile on
the downside.
Our decision to take profits in the SPX-NDX spread we had last week turned out to be
good as that spread seems to have entered a go-nowhere trading range, much like the
market indices themselves. If you've been watching the intraday chart of the spread,
you may have noticed that red trendline is now an indicator line. We're working out
the details of a trading system, so just ignore the squiggles of the chart for now.
We do think that a move over the 20-day moving average in the daily spread chart would
be a sign that the spread had entered a bullish phase (here, we're speaking of the reverse
spread where NDX is held long and SPX held short). A bullish NDX-SPX spread would also
be a leading indicator that the broad market is nearing a bullish phase as well. Remember,
however, that this indicator can lead the broad market by several weeks.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: A Tale of Two Kinds of Indicators
We cashed in our profits in the spread trade Friday for a nice profit and are awaiting another entry
point next week. A move over the 20-day moving average in the June 2003 NASDAQ-100 - S&P 500 emini spread
would trigger a buy signal for us.
We, from time to time, emphasize a very important distinction when it comes to the two kinds of indicators
we use to analyze the market:
- Forecasting Indicators project highs, lows and trending moves in the future.
- Coincident Indicators tell us what the market is doing now, not in the future.
When the coincident indicators align with the forecasting indicators, higher confidence
levels in investment positions result. But, when those indicators disagree, a great deal of
caution is called for.
What are the indicators saying right now — and do they agree or disagree?
That's exactly what we discuss in this weekend's
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
The market stopped going down Thursday, although it appears to be more a brief intermission and
not a reversal to the upside. The stock market has been mired in a trading range
for the past 9 months and appears to have no directional bias anymore. Perhaps it's just earnings
season, but the market looks pretty trendless to us. It may just be nervous exhaustion, but
the low volatility readings and lack of discernable economic growth is probably setting up
an exposive run to the upside — once the market does find a direction.
We have a Time Ratio Low due soon, along with a time cycle low and the Bradley Calendar low. It will
be particularly bullish if the market can hold above recent low prices and would argue that
a very substantial rally is building pressure for release late this month and lasting into early boreal
Summer. We will discuss details for this expected low cluster in this weekend's detailed comments.
Our recommended spread trade — long the S&P 500 and short the NASDAQ-100 —
dipped down to just kiss the red support line Thursday, but maintained a slight
upward bias into the day session close. We intend to take profits off the table on a
break of that support line and will be looking to enter the opposite spread trade should the
20-day moving average be broken.
In this weekend's update, we will start looking at stocks which are holding up stronger than
the market. In the very last stages of a bear trend, the new leaders can be found by examining
those stocks which decline less than the market. So, we'll be looking to buy those new leaders
in the near future. We want to be patient about buying, however, because those new leaders often will
sell off hard in the final ``give-up'' stage of the decline.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Fear of Falling
The statue of Saddam Hussein came tumbling down Wednesday — along with stocks as the
market refocused on the still-tumbling economy. Wild trading near the opening sent the
market gyrating wildly, but the direction of our spread trade trended higher all day.
We should probably explain just how to calculate the value of a spread since we were
asked that question in an email today. We'll use the June S&P 500 emini
(symbol ES will stand for the current quote on that contract) and the June NASDAQ-100 emini
(symbol NQ) in this example.
This spread consists of two legs: the long side (ES) and the short side (NQ) in the current
position. A minimal position consists of one ES contract and two NQ contracts for this combination
of contracts (the exchange determines this). To calculate the current value of the spread,
you have to convert the current quote into a contract value in dollars.
Contract value = number_of_contracts × current_quote × dollars_per_point.
For ES, dollars_per_point is $50. For NQ, dollars_per_point is $20.
Now, we're ready to calculate the value of the spread:
Let's say the current quote for ES is 866.75 and the current quote for NQ is 1026.
The long leg of the spread = 1 × 866.75 × $50 = $43337.50.
The short leg = 2 × 1026 × $20 = $41040.
The final step in the calculation
is to subtract the short side from the long side = $43337.50 - 41040 = $2297.50.
The spread value continues to trend up, indicating the overall market direction is down.
Again, we're looking to take profits when the spread value drops below the red support
line shown in the quarter-hourly chart (click on the spread value shown on the main webpage
to display the intraday spread chart and that support line). We are also looking for a reversal across the 20-day
moving average on the daily chart to signal that the market is bottoming and
turning up. That will be our signal to initiate a long NQ - short ES position for the
next rally in the stock market.
We will also be looking to buy stocks which maintain a relatively strong price in the
face of this downdraft. We'll be looking at buy candidates a bit later on.
Note: the DSL line seems to be stable and we're leaving the links in this email pointing
to it. However, the alternate link shown above (clues.dhs.org) can, as always, be used as a fallback.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Idling
The market went virtually nowhere Tuesday as the previous days' failed rally saw no
follow-thru to the downside. Sentiment continued to be too bullish as option
buyers saw the dip as a buying opportunity — not a good sign for the bulls.
The pattern could be a diagonal triangle, a five-wave Elliott structure such as
we've been looking for in this rally, but the very weakest one of all possible five-wave
rallies. If that's the case, we could have another relative new high this week before the whole
pattern collapses back on itself and retests its base around the mid-March lows of SPX 789 and Dow 7400.
News has been moving the market. True, but not in any trendable way. The latest news on the
war sent futures up before the cash market opened Tuesday morning, but, perhaps because of the
failed rally Monday, buyers just weren't hooked. ``Once burned, twice shy,'' as they say.
Our recommended spread maintained a positive bias, but a tightened stop to take profits along
the red support line in the intraday (quarter-hourly) spread chart seems like a good idea.
And, we do have nice profits on this trade. The SPX has been considerably stronger than the
NDX and that has made us money on the spread. We wouldn't switch
to the opposite spread unless we get a good move across the moving average in the daily chart.
Even if the whole market sells off, we could get a signal to switch to the reverse spread (long
NDX, short SPX), which would be strong sign of a bottom forming. In fact, a collapse out of the
pattern down to retest the mid-March lows would be a great setup for a strong rally into
boreal summer, something both the Bradley Calendar and our time cycle predictor are calling
for. Time cycle projections are updated from time to time in the Special Report section of the
main web page.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Waterfall Decline
The US Dollar Index topped exactly where we expected it to Monday morning and
provided the grease for the skids the stock market hit. A waterfall decline started
right after the pop fly short covering rally ended. Sentiment hit overly-bullish
on the intraday OEX gauge to tell us it was a top and not a breakout move in the early
going.
Our recommended spread trade is performing well: five Elliott waves up, followed
by three waves down, then up again. By the end of the day, it was off a few bucks from
Friday, but on an upward trend again. Use a trailing stop loss order to take profits
in this trade. We'll be looking for a break of the middle Bollinger trading band —
see the ma label on
the daily spread chart for this trade available under the Daily Spreads Charts
Menu as "ES June 2003 S&P; 500 e-mini - NQ June 2003 NASDAQ 100 e-mini Spread" — as
a signal to get long the opposite spread, the June NASDAQ-100/S&P 500 emini spread, in anticipation of
the next stock market bottom. That will be our signal that the market is revving up for
a great stock market rally into boreal summertime. Getting into a spread ahead of the
bottom should be mildly profitable (but, never any guarantee of profits) and allow
us to "ride the choppy seas" while navigating the next stock market low.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Intermission Over
The brief intermission rally within the downtrend rejuvenated bullish
feelings last week, but is probably over in the NASDAQ and virtually over in the blue chips.
The two-day rally saw the NASDAQ-100 outperform the S&P 500, but that strength dissipated
on Friday as the relative strength chart on the website shows.
Typically, NDX will outperform SPX in the last stages of a market decline. For instance, in the
four weeks before the October 2002 price lows, NDX went down less than SPX. Virtually all
sustainable rallies over the past decade have been preceded by strength in NDX relative
to SPX. When a rally suddenly appears like last week's with no tipoff from NDX, you have to be
very suspicious of its staying power.
With the sudden weakness in NDX Friday, it appears that the rally in NASDAQ is over. The SPX
may not be far behind, although a brief spike early Monday morning (possibly limited to European
market hours) may occur on last gasp strength in the US Dollar Index.
We discuss this and other topics in this weekend's
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
AOL Users: You Haven't Got Mail!
Due to AOL's new policy of not accepting email from certain senders, we are changing the way we
send out all email with today's update. We are sending this note from a different location in hopes
of confusing them.
Stocks: Consolidation Day
The market gyrated around unchanged for most of the day Thursday as no substantial follow-through
was evident from Wednesday's surge. However, there was a pickup in money flowing into NASDAQ.
If that pattern continues, we may be seeing a sea change similar to the one which occured
in September four weeks before the actual market price bottom in October. Although the
market itself is likely to top out Friday (the top could potentially stretch into early
next week) and head down into late April, a pattern of NASDAQ outperformance on the slide would
be longer term bullish.
So far, the rally has been very disappointing for a wave c. The prior wave a
lasted eight trading days and covered a lot more price ground. Perhaps one of the factors
which has held the market back has been the US Dollar Index, which rallied Wednesday, but
sputtered on Thursday. In terms of Elliott Waves, the stock market appears to have
completed a five-wave up pattern near the close Thursday. That's the minimum pattern we
would expect to see in a wave c and thus the entire rally may have finished on
Thursday before the close.
In any case, the market continues on edge based upon news from the front as the coalition
prepares for house-to-house combat in the streets of Baghdad.
An interesting pattern in the TRIN indicator (Arms' Index), first noticed by Steve Dixon
and posted on the GMSTechStreet.com Discussion Forum, has been that when it closes
below 0.40 and stayed below 0.85 intraday the entire day, the market has been on the
verge of sharp selloffs. This has happened 8 times prior to Wednesday and each time the
market has sold off substantially in the next few days. It happened on Wednesday as well
for the 9th time. Prior occurences, with subsequent S&P 500 point moves, were:
- 8 Sept 1998 — rallied 4, then dropped 43
- 5 Dec 2001 — rallied 6, then dropped 56
- 16 April 2002 — rallied 5, then dropped 67
- 8 May 2002 — rallied 5, then dropped 32
- 17 June 2002 — rallied 9, then dropped 90
- 5 July 2002 — rallied 3, then dropped 126
- 29 July 2002 — rallied 16, then dropped 62
- 18 Feb 2003 — rallied 5, then dropped 40+
Steve calls this indicator SoopaLowTrin. It occurs when there is a buying panic
where fund managers are scrambling to chase a rally, but there is no followthru buying
thereafter, creating a buying vacuum.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
Remember that wave c rally that we had been waiting for? It's here now.
This appears to be the other shoe dropping — the first was the wave a rally
from mid-March that ended with options expiration on March 21. The slide from the 21st to
Monday was a wave b. This wave c should unfold in five waves up and it appears
we are close to completing wave 3 up as of the close Wednesday. Time Ratio projections in the
NASDAQ-100 suggest a wave c high could occur on Friday, followed by a resumption of the
downtrend into late April.
As you are aware, our time cycle model, our Omega Predictor, correctly called
the March 21 high ahead of that event, while the Bradley Calendar had March 28th for a high.
We had been wondering whether this Bradley turn would actually be a double top, with the March
28th date the centerpost between the two highs. That appears to be the best explanation at this
point. If that is indeed a centerpost between the two highs of a double top, Friday would
be the ideal time for a wave c high.
In most cases, market rallies are tipped by outperformance by the NASDAQ-100 as compared to the
S&P 500. In the current rally, this was not the case as the NASDAQ-100 was relatively
weak going into Wednesday morning. This is another indication that the rally is a flash in
the pan, short covering affair that should terminate the upmove shortly.
Our recommended spread trade gave back some of its gains as the NASDAQ took the lead, but it
did not trigger a reversal signal since the spread held well above its middle Bollinger Band.
That middle band, representing the 20-day moving average, is labelled on the daily spread
chart of the June ES-NQ (in the Daily Spreads Charts section of the website). In fact,
that middle Bollinger Band will normally serve as support on a pullback.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://www.marketclues.net/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Minor Bounce in Downtrend
Tuesday saw the market bounce from an oversold condition, helping to define the upper channel
boundary in the intraday S&P 500 Index chart (see website for link). However, it wasn't a real,
old-fashioned Turnaround Tuesday®. Just a minor bounce in the trend channel.
In case you haven't read Bob Prechter's discussion of the tick indicator, excepted from his
Elliott Wave Theorist, we recommend it. It's linked from our main webpage in the
free Elliott Wave International section (you have to be a member of Club EWI, but that's
a free signup). The jist of Bob's finding is that here is a technical indicator which
can be used to measure the ``Slope of Hope'' — that's the mudslide the bear market is
following. In a bull market, it would be climbing a ``Wall of Worry'' and the tick indicator
can also measure that. Very interesting reading.
Our recommended spread trade continues to gain ground. We recommended buying the
S&P 500 Index or SPX and selling short the NASDAQ-100 or NDX. We use the
June emini contracts to track this spread and that spread has a minimum margin
requirement of $1750 (the spread is also updated on our main webpage just above
the Relative Strength table in the Intraday Charts and Indicators section and also
in a panel on the Trading Page). If you took advantage of Tuesday's countertrend
rally to sell your SPX side, you're now short the NASDAQ-100 and in tune with the trend.
Be sure to trail a stop order to cover your short as we move forward — an outright
position is much more volatile than a spread.
If you're still ensconced in the spread position, it helps limits your risk.
On Monday, the spread gained 22%. With the rally Tuesday,
it actually gained another 28% (percentage gains based upon minimum margin requirement).
We now suggest using a trailing stop order on the spread to reverse into
a long NDX / short SPX spread (the middle Bollinger Band, shown on the daily
spread chart can be used for this — when the spread drops below the middle
band, it signals a reversal). The reason we want to reverse into the opposite
position is that the downtrend will likely be coming close to an
end when the NASDAQ-100 starts outperforming the S&P 500. A stop order to reverse the
position (that is, an order to sell the S&P 500 short and buy the NASDAQ-100 long) will
not only sweep those profits into the win column, it will get you positioned for the bottom
that's out there later this month. Back in September 2002, the long NASDAQ-100 / short S&P
500 spread actually turned up four weeks ahead of the October low and proved to be
not only a great leading indicator of an intermediate bottom, but also a very profitable
position in its own right.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Slip-Sliding
The stock market continued to slide down Manipulation Hill — the one made
by those stock market derivatives manipulators to line their pockets leading
into March options expiration. Time cycles point down on a trend basis for the
next three weeks, although we should see at least one substantial countertrend
rally before this slide in the mud finishes.
Normally, the last day of the first quarter is a strong up day for the broad market.
Although the Value Line Index — best barometer of the broad market —
did recover substantially from the early selloff, it couldn't hold and sold off
to close near the low of the day.
Our recommended current trade, a long SPX and short NDX spread, gained over 20%
on minimum margin Monday in the emini June spread. Although we didn't get a rally
to sell our long SPX leg into, we're not complaining.
The market appears to be setting up a good base for the launch of the biggest
bear market rally of the entire inglorious slide of the last three years. Money Flow
remains relative high despite the retracement we're seeing. Accumulation of shares is
taking place on price weakness and that's something that's been sorely missing
from the market for a long time now. We'll be looking at stocks and sectors which
hold up better in the selloff to lead the next big rally. That rally should start
before the month of April is over.
But, this decline isn't over yet: Monday's bounce was an a-b-c affair, which means that in
Elliott terms it was a corrective bounce within a continuing downtrend.
Corn
Corn vaulted higher Monday, but is close to near term resistance. We would like to see
a basing period here rather than what looks to all intents and purposes like one more
swift and short bear market rally. A retest of last week's lows would fill the bill.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Note to AOL addressees: AOL has — without any justification whatsoever — decided
to refuse to deliver email sent to you from our site. This kind of boneheaded decision illustrates
why AOL stock has dropped 88% in the last 3 years.
Stocks: The Dump Following The Pump
Commercial stock market interests pushed the market down last week as the
one-week bear market rally fizzled out. Retail investors had jumped the gun again, turning
bullish far too early in this long term bear market. Of course, that's exactly what
the commercial manipulators had planned when they started this campaign two weeks ago:
pump prices up and then dump stocks to the retail crowd. It's the commercials who
recognized that stocks were enormously overvalued and started short selling them
even before the ultimate top. They have continued to sell stocks short, amassing
huge profits all the way down, ever since.
The Commitment of Traders Report is our window on the actions of these commercial
interests. The government requires them to disclose their positions for the world
to see. On Friday afternoon, the latest report — which reflects positions
held as of the close Tuesday — showed commercials were still net short
the market, although they have been doing a bit of covering in the last couple of
weeks. In the S&P 500, they are net short 188,439 emini contracts, while
in the NASDAQ-100, they are net short 83,428 emini contracts. Some subscribers
have emailed us claiming that the commercials had moved to net long the stock market,
but they had failed to take into consideration positions in the emini contracts —
commercials have been shifting into the eminis because of great liquidity in that
market and the fact that they trade 23½ hours per day from Sunday afternoon
until Friday afternoon.
After more than three years of unrelenting bear trend, even the most stubborn bull should
be throwing in the towel by now, but they're not and they're paying the price. Until the
crowd finally turns bearish, the underlying trend will remain
down in the stock market — and the proper investment position continues to be short stocks.
The end of the bear market will not be marked by fear and loathing — it will
be signaled when the majority of investors have sworn completely off the stock
market. Of course, there are going to be countertrend rallies from time to time
which keep the bullish juices flowing. These will serve one main purpose for the
commercial interests: to distribute stock to the masses.
The Bradley Calendar (Larry Pesavento's rendition shown below) has been able to forecast
every turning point in the stock market for the past year. As you can see, it's calling for
a top now, a low on April 25, with a very big rally to come thereafter into July.
We discuss this coming rally, among other topics, in this week's
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org:777/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
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· ^NYA
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
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Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks:
Thursday started out on the downside, but heavy call buying in the QQQs (as seen on our
intraday table — see Intraday OEX/QQQ History link on the main page)
foreshadowed program trading which pushed the market back up the hill.
We have a preferred Elliott count right now of a wave b which should finish with
a wave c rally into end-of-month and end-of-quarter Window Dressing, ending ideally today
(Friday), but with Monday being the last day of the month — and traditionally a 70%
chance of finishing up — as long as war news doesn't swamp the monthly seasonal, we
could see the market levitated into early next week.
Once the stock market tops out here, we expect weakness for most of April. When stocks
sell down, the bond market should make some sort of a recovery from its recent weakness.
We remind you that TLT and IEF are exchange-traded shares which do well
when the bond market does well and are a good reverse stock market play.
For those traders looking for alternatives to the war-driven financial markets, we direct
your attention to the Corn market, which is coming into a cycle low next week and appears
to be ripening up for a pretty good rally from a deeply-oversold condition. More this weekend.
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^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The market flatlined Wednesday, but the NASDAQ-100 maintained a slight relative
strength advantage as compared to the blue chip SPX (S&P 500 Index) and DJ (Dow Jones Industrials),
a sign that there is a chance that one more rally is possible in the market before it
rolls over to the downside into the next trading low due in April.
The sideways pattern on Wednesday could be a contracting triangle, a pattern which is
considered a continuation pattern preceding the final move in the direction of the trend.
If it is a contracting triangle, the market should gyrate within a narrow band, then
thrust higher to a peak, then reverse and head down with a vengeance.
End of quarter Window Dressing is a very real possibility this month due to the fact that
the market is showing a slight gain for the year. Fund managers who are less than fully
invested and whose funds are showing losses will be under pressure to jack prices of
securities they hold up for the end of quarter snapshot. Thus, expect more price
manipulation in the next few days.
Counterbalancing — and probably dominating — such Window Dressing will be War
Undressing as the Battle for Baghdad starting next week is likely to undo all the manipulators' carefully
laid derivative-based plans for jacking prices higher.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: What To Look For Now
Since the recent rally may have been wave a within an a-b-c rally (an upward correction
within the bear market), we need to consider this scenario. Tuesday's Turnaround action
seems to be consistent with that view. Last Friday would then represent a momentum high,
with an actual price high late this week which corresponds to the Bradley high due then.
Evidence which supports this scenario:
- The NASDAQ-100 (NDX) and Semiconductor Indices showed strength Tuesday. This typically
precedes a rally in the blue chips.
- The retracement from Friday's high was relatively shallow despite being very quick.
- Hedge funds are selling QQQ put options in huge quantities, indicating they are
bullish on the NASDAQ-100. They have done this before and it has led to rallies. They
did so again on Tuesday morning as our sentiment measure on the QQQ zoomed higher on the
put side, which is what we've seen before when hedge funds were selling puts (a bet that
NDX is going higher).
- Oscillators reached an extreme level of overbought on the last rally. Typically, a
higher high in price is needed to register a lower high in the oscillators to generate
a condition of bearish divergence.
Due to this potential scenario, we continue to suggest that if you have to be in the
market, you do so in a spread position (simultaneously long the S&P 500 Index and
short the NASDAQ-100 Index), or in cash. If we do get a price high late this week
and it reveals itself to be a top (as indicated by our various technical indicators),
that would mark a sea change which would allow the long side of the spread to be
jettisoned in favor of an outright short position.
As in the top last week, weakness in NDX relative to the SPX should warn of the
approaching top if this scenario is unfolding.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Pump and Dump Leads to Hangover
After the big options-driven party of the last week, driven by the greed of
derivatives market manipulators who used the excuse of the outbreak of war to mount a
Pump-and-Dump operation on retail investors, the market suffered a substantial hangover
Monday, just as we expected it would.
The NASDAQ-100 retraced almost 3/8ths of its recent run-up, while the S&P 500 Index
was relatively stronger and retraced only about a third. With the NDX weaker than the
SPX, our ES-NQ spread widened to $1175 by the close Monday after moving very briefly
below zero early last week. This signals that there is still an undertone of weakness
to this market. Moves in the NASDAQ-100 typically will precede turns in the broad
market by at least a couple of days, so we are likely to see further weakness in the
market, perhaps after a bounce here. A good buy signal should be given when the spread
between the two indices reverses into one favoring the NASDAQ-100 Index. This spread
is also charted on the main page (NDX:SPX) in the Intraday Charts section — when NDX is weak, the price bars move
down. As you can on that chart, the NASDAQ-100 showed weakness throughout most of last
week, a clear warning that the rally was doomed to fail.
Like a hangover in a person, the market needs to recover from the binging it went
on during the runup to options expiration. One sign that the market has completed
its recovery will be the kind of negative sentiment we saw a couple of weeks ago
just before the binge began. Until then, we suspect the market will swing wildly
intraday with little net progress either direction until the recovery process is
completed. But, there is also a possibility that the market could drop or rally sharply on
news, so we suggest it's a good time for either spreading to reduce risk, or simply
keeping the powder dry.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Pump and Dump Rally Finished
Don't confuse the great profits we've made on short term trades on the long side
over the last couple of weeks with the beginning of a true bull market. This ``perfect'' bear market rally
probably finished Friday as bullish juices were fully reinvigorated to
coincide with quadruple-witching derivatives expiration. Just like last October, the market manipulators
were pushing all their derivative levers to pump stock prices higher. Our last short term
buy signal from our trend stochastic indicator — see the Trading Page — remains in effect as of the close Friday for
the S&P 500, but there are already sell signals in effect for the NASDAQ-100, QQQ, and Dow.
There were a number of reasons why the manipulators needed to rally the market, but
foremost among them has to be the desire to make it appear that the fear of war was
holding the economy back. Now that the war is on, they are eager to energize investor
confidence so that the Wealth Effect of rising stock prices convinces them that their
financial future is bright. And that they need to spend, spend, spend —
both on stocks and consumer items.
But, the war wasn't holding the market back, the economy is still sick and by pumping prices
higher so quickly, they have set the market up for another tumble back down the hill.
We discuss prospects for the stock market and related markets in this week's
Detailed Comments Page . . . .
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks:
War took center stage Thursday along with the first stage of quadruple-witching derivatives
expiration.
Our quote feed was down from the early morning hours, so our intraday data was spotty and our
end of day processing will extend into Friday. We apologize for the delay, but the charts will
not be updated for a considerable period of time.
It took quite of bit of cash to get the market this high — i.e., to make sure all those
puts sold in the last month for March expiration would end up worthless. Now, normally, when
this artificial inflation of stock prices naturally ends with expiration Friday, the hangover
will send prices tumbling down the hill on the other side (next week). The question is just
where the mud will stop sliding down the hill, given the background of war. The next Bradley
turn, a nominal high, is due in one week, but our time cycle model has a peak due today (Friday).
After next week, both indicators point down into turning point lows later in April.
It's thus not necessary to chase this rally and, if it turns out to be the real thing, there
should be ample buying opportunities over the next month. Once the euphoria of victory is
gone, the cold, hard realities of diminished earnings are likely to send the market lower.
And, after all, this is still a secular bear market. Expect surprises to be on the downside.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Crowd Gets Bullish
Sentiment has always been a great guide to the market. It's now broadcasting a
very clear message: this bear market rally of the last week is definitely not
the beginning of a new bull market. Why? So many investors have turned bullish over
the past week that a major turn up cannot have taken place. The latest bit of bad
news for the bulls comes from Investor's Intelligence, whose sentiment surveys
have consistently reported more bulls than bears over the entire 3+ years of bear market.
We aren't likely to see an end to the bear market until the percentage of bearish investors
rises above 60%. Only on rare occasions have the percentage of bears even slightly exceeded
the percentage of bulls.
The bad news this week came in a huge jump in the number of bullish investors from 39.8% to
46.6% — a clear warning signal to anyone willing to listen. In fact, this whole
rally is very likely a large scale pop-and-drop manipulation on the part of brokerages
who have underwater positions in equities. To unload this ``toxic waste'' inventory, they push
share prices up the hill using derivatives which require about one percent or less margin.
The stock market is the only business we know of where consumers rush to buy when retailers
raise prices. Once they've suckered the masses into getting back into the mood to buy,
they unload their shares to the rubes. And, that's exactly what they're doing right now under
the guise of a ``War Rally'' — how convenient for them!
One tool we have for detecting this manipulation is our option sentiment figures. When
they want to push prices higher or lower, the percentage of activity in the QQQ options
becomes a significant percentage of OEX options activity (the latter representing almost
pure speculation). During the last week, we saw high levels of ``levitation'' in the
QQQ options. On Wednesday, dollar volume dropped off to low levels in the QQQs, indicating
that the manipulators were out of the options market now. That's a sign that they've
finished priming the pump and are well into the distributional phase for this operation.
Once the distributional phase is finished, the short selling will begin to drive prices lower.
Another sign that this current rally is running out of gas is that NASDAQ is losing strength
relative to the blue chips. This tends to happen about two trading days before a significant
top in the stock market.
And, time cycles and the Bradley Calendar point toward a top very soon. Our Omega
Predictor is forecasting a top ideally Friday, with a downtrend in effect for
April. The Bradley has a top projection for Friday the 28th ±4 trading days.
It appears it may be quite premature to turn bullish at the present time. After this
pop-and-drop operation is finished, the disappointment created by it may actually
generate a real buy signal — from much lower levels in the indices, that is.
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Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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If no response, use this one instead:
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Stocks:
The market's mighty bounce ran into stiff resistance Tuesday as profit-taking dominated trading.
The narrow range appears to be a wave 4 within the rally and can be seen in the QQQ quarter-hourly
chart, within the final minutes of trading seeing a breakout in wave 5.
This implies very limited upside potential from here.
Once that minor wave 5 is complete, the market will be highly vulnerable to a retracement
of the rally. The most likely support is in the 25.38 price area, shown as wave 2 in chart.
Since that's also the Maximum Pain area for options holders, it's the most likely landing
price for the NASDAQ-100 tracking stock QQQ on options expiration Friday this week.
Note that the Money Flow Line peaked early on Monday
morning and all subsequent trading in the QQQ can be considered distributional. The preceding
accumulation period lasted 2½ days — if the distributional topping period is equal in
time, it should end about midday Wednesday.
If the rally of the last few days is the initial leg up in another intermediate advance, it should
be retraced substantially, especially considering the cycle lows due over the next few weeks.
The Bradley Calendar has another turn due around the end of month, along with ones in early
April, so we don't expect the market to be in a trending mode until we get past the middle
of April. After that point in time it's clear sailing for this indicator. Remember, though, that's
no guarantee of an actual uptrend in the market — it could be a strong
downtrend. However, most other technical indicators point to the April-July period as being
a period of generally rising prices.
The post options expiration period tends to see the excesses created by the manipulators
reversed, so next week could very well provide a lower low than last week's into the turning
point due on the 28th.
The Fed stood pat on short term interest rates Tuesday and failed to move their bias toward easing.
We think this is the absolutely best course of action at the present time. That's because the negative
perception of weakness implied by either a rate cut or a policy change to ease would do more
harm than good psychologically at the present time. The ``no-change'' stance now allows the Fed to push
longer term interest rates lower by buying 3-5-year Treasury debt, which will pump more
money into the system, some of it is undoubtedly going to end up in other areas (including
the stock market). Note that the Fed cannot just rev up the ``printing presses'' to create
money. To get the money into circulation, there has to be demand for money. Just lowering
the overnight interest rates is no guarantee than anyone will actually be interested in
borrowing and the added liquidity may simply sit unused in banks (which it has for the most part).
Thus, the Fed's goal of pumping up the money supply has to be implemented by
putting money into circulation by other means, namely purchases of longer term government bonds. When
the Fed purchases those bonds on the open market, they inject money into the system and do
pump up the money supply. The sellers of those bonds then have a choice of reinvesting those
funds in other vehicles, including the stock market. And, as we all know, a rising stock
market floats most boats. It may be several months before the Fed's actions kick in strongly. That
notion dovetails with our estimate of a major stock bear market bottom late in the year.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
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Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Celebrating Gulf War II
Stock market investors celebrated the quick victory in Gulf War II Monday
by sending stock prices rocketing higher.
Wait . . . hold the presses! Now, we're being told that the war hasn't started yet.
The crowd must be so anxious to buy that they're jumping the gun and buying on
the rumor. Does this mean they are planning to sell the fact? Yep, it's very likely.
Traders are loving this market, especially those using our Trading Page signals.
After last week's big jump in the Dow, which netted almost 400 points profit, the short term system gave
another buy signal Monday morning and was ahead another hundred or so by the close. One
way to use these signals is for short term spreading against a longer term position.
For instance, if you're short the S&P 500 Index in a longer term bearish position, you can
initiate a spread trade and buy the NASDAQ-100 on a shorter term buy signal from the
trend stochastic. In the case of the current market's action, that spread trade not only
protected your longer term position, it turned a nice profit on its own as the NASDAQ
raced ahead of the S&P 500.
We have been investigating additional spreading opportunities and you can view the
results on our Daily Spreads Page, linked from our main page. We have added Dow Jones/Value Line
and S&P 400 MidCap/S&P 500 spreads today. For more information on spreads, including
the number of futures contracts required for exchange margin requirements, you can
visit the Chicago Mercantile Exchange or Chicago Board of Trade websites and navigate
to their spread information pages. Or, use our Search Links Page form on the
main webpage. Enter spreads as a search argument.
As for Tuesday, it's likely to be a typical Turnaround Tuesday® because the rally
has moved the market into nosebleed territory again — and above the Max Pain
levels at which option players as a whole lose the most money. Our expectation is for prices to drift lower
to neutralize speculators' equity positions for the rest of the week.
Just a quick note for the long term: if this rally is the kickoff to a wave E rally in a
very large contracting triangle starting at last July's low, it isn't bullish longer term.
In fact, it may mean that after the next major high (due June or July), the market would
plunge into Christmas 2004 and probably would see the Dow around 3500. We only give this
possibility a 1-in-4 chance of being realized, but it's definitely a gloomy scenario to
consider. On the bright side, it implies the market could rally into the 9000s on the
Dow before turning down again.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Pros Put It To the Schmoes
Last week, the Pros on Wall Street really put it to the Schmoes — just as they
do almost every month in the week ahead of options expirations. The Schmoes
(small speculators) had happily been buying put options — bets the market would
continue to fall — right into last week's low. We said that the ocean of puts provided a protective
barrier against the market continuing to fall. Indeed it did!
When the Pros decided they had enough Shmoes on the hook, they reeled them in by raising
stock prices. With their puts plummeting faster than they had risen, the Schmoes not only
sold their puts (as evidenced by the heavy dollar volume in put options), they turned bullish
on the ``rally'' and decided to buy stocks! That's why they're Schmoes and not Pros. It won't
be too long before they'll be begging the Pros to sell them their puts once again. Only this time
it will be the April series.
Last week, we were looking for a trading range and that's exactly what we got. The
S&P 500 rose 4.38 points — +½% — the Dow three times as much, the
NASDAQ-100 almost 5%. But, the broad market actually lost ground on the week as the Pros
concentrated their buying power in the easily-manipulated, headline NASDAQ-100 stocks.
Now that the Pros have decimated the put options of the Schmoes, what do they have planned
for an encore? The answer will be found in this week's
Detailed Comments Page . . . .
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Popular Indices:
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Stocks:
The Bradley Calendar turn seems to be lifting the gloomy mood on Wall Street, causing
Wednesday's short-covering rally to extend into Thursday. Of course, as Mark Fowler
mentioned last week, a two-day rally tends to occur 4-8 trading days before options
expiration as the pros ``put'' it to the schmoes they sold those puts to. Wednesday
marked the seventh trading day before this month's options expiration. This cat-and-mouse
game usually ends up as you'd expect: the mice get trapped and are forced to sell their
rapidly-depreciating puts. After the small speculators have been thoroughly taken to the
cleaners, the pros are likely to do what comes naturally: take the market down again and
sell them those puts again — at inflated prices, of course.
One sign that's what was happening Thursday was provided by our intraday options figures: heavy call buying
in the QQQs relative to the OEXs is an indication that the pros are using them to manipulate the market
higher. You can follow those intraday figures on the website using the
``Intraday OEX/QQQ History'' link. On Thursday, QQQ call options saw $1.52 worth of buying
pressure for each dollar of puts. But, more importantly, QQQs registered 69% of OEX call volume,
very heavy volume for this option where volume typically runs around 10-15% of OEX call volume.
In case you're wondering, we're still short the market as we have been for over a month.
We'll send out email if we change our position (that is, we'll send email if you've added yourself to the
Notification List — see the link entitled,
``On Update: Notify Me By Email'' on the Special Reports header bar on the
website main page to add yourself to the list).
Breadth was poor despite the rally. On the NYSE, 2376 issues advanced and 917
issues declined, for an advance-decline ratio of 2.59. That's very poor for a Dow
up 270 points. Even among the high-flying small stocks of the NASDAQ, only 2215 stocks
advanced versus 937 which declined, for an advance-decline ratio of 2.36. Again, that
is a very poor ratio considering the NASDAQ-100 jumped over 59 points (6.1%). This
rally is clearly a bear market oversold bounce that is likely to be completely retraced
before long.
As far as the broad market was concerned,
the rally did very little to help: the S&P 600 (SmallCap) Index rose only 2.89%,
the Value Line only 3.25% and the NYSE Composite only 3.08%. Without participation
by the broad list of stocks, this rally cannot last long.
The rally seems to have just about run its course as the NASDAQ approaches a short
term resistance line on the intraday chart. But, look for weakness in the NASDAQ to
precede weakness in the blue chips.
The bond market provided a ready source of funds to buy stocks (and QQQ call options)
on Wednesday as it tumbled sharply on profit-taking. Many institutions are overweighted
in bonds compared to what their asset allocation models say they should be, so they
will be selling into any rallies in the bond market. This pile-up of cash is likely
to (eventually) end up in the stock market over the next few months.
This rally is a good lesson in how to use Bollinger Bands. If you examine the daily
charts of the various indices, you will notice that the decline into Wednesday sent
prices plunging into the outer set of bands (the outer bands are shown in orange, representing
the 50-day trend, while the inner light blue bands represent the 20-day trend). One
rule of Bollinger Bands says that when a market breaks through a band — in this
case, the inner blue band, it can bounce back into the bands in a countertrend move,
but is very likely to come down to retest that band again later on. If, on the retest
of that blue band the market fails to punch through it again, it indicates the trend
is slowing and possibly reversing. So, we will look for the market to come back down and fail to punch below
the blue band. That will mark a lower risk buying opportunity to cover shorts and
go long the market for the expected 35-40% rally coming up in April-July.
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Stocks: Support Only 700 Points Lower
The crunch in stocks continued on Wednesday, with the weakest performance coming from the European
markets. The FTSE-100 in London closed just above the lower, 50-day Bollinger Band. The last
time the FTSE was this weak (on 21 Jan), it broke through that lower band and continued lower,
making a low 10% lower six trading days later. However, the thrust decline has almost reached
its minimum target. The possibility that it could chop sideways here in a wave 4 is
high and a Time Ratio Low due 24 March could provide the final wave 5 bottoming timeframe. Note
that the minimum target is near — with the Dow target 700 points lower, it's hard
to think the FTSE will be able to hold these levels.
The Dow managed an oversold bounce in the afternoon, but the downtrend remains very strong.
Sentiment improved a bit, but still isn't at levels we'd like to see for a bottom just yet.
There is a confluence of key support polytrendlines below the Dow which may come into play
in the near future (see daily chart of ^DJI linked above). We say may because the market
could be forming a low right now — we're right in the middle of the Bradley Calendar
turn due Thursday ±4 trading days and the 9-month cycle due also right now. But, it's
a good idea to look at where solid support lies ahead of time in case the market goes into
freefall, which can happen at these significant cycle lows.
The yellow support line connects
the key lows of 1987, 1990 and 1994. It currently lies just below 6800 and is rising at about
0.02% per trading day.
The violet support trendline is currently around 6751 and is rising
slightly faster at 0.22% per trading day. That violet line was once a very key resistance line
to the market. It was formed by connecting the pre-1987-crash high of August 1987 with the January
1994 high. The reason this line is so key is that once the market broke out above it, the Great
Bubble of the 'Nineties was underway. It should provide support on the retest from above
(a resistance line which is broken becomes support on a retest from above). It has taken over
seven years for this retest of the breakout, but it appears we are close to it now.
The final polytrendline we want to discuss today is the green one. It was formed by connecting
key lows in 1996, 1998 and 2002. It thus represents the underlying Bubble trend —
and subsequent collapse. It currently is at 6811 and falling at the rate of 0.055% per day.
It will cross under the yellow trendline on the 18th and under the violet trendline on the
28th. Those line intersections will occur in the 6750-6800 price zone, so we should look for
that area to provide support. Needless to say, but we'll say it anyway, is that if the market
fails to find support in that strong area where three support lines intersect, there is only
air below. The implication is that the most massive crash in history would occur if the
market breaks that support zone. The next chart support area is around 3600.
On the other hand, if the market holds those support lines — and we do think it will
— the rally to follow will be coming off multi-year support levels, which is very bullish.
In fact, we estimate the rally would see the Dow rise at least 35% in the next four months. Not
too shabby for a bear market rally, in fact.
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· ^HUI
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Sector Performance Since:
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Stocks:
Stocks paused briefly in a tepid Tuesday turnaround, saw their shadow and headed underground
again. There's a great lack of fear in this market which is needed for an intermediate
low of any significance.
However, there's a lot of protection against downside risk that has been purchased. Earlier,
we mentioned that twice as much money had gone into OEX puts in February and March than had
gone into calls. At the suggestion of a reader that the QQQ options might be a more significant
measure, we totalled up those options and found that 11 times as much money has gone into
puts as calls! That's a huge amount of downside protection. However, in the month of March by itself,
only 1.3 times as much money has gone into puts as calls. They were obviously very bearish in
February, but not as much in March.
In the OEX, about the same ratio of dollars (1.38) went into bets on the downside as bets on the
upside in March. We like to see that ratio around 2 to mark a good bottom. On Tuesday, it was
in line with the month as a whole, arguing that everyone is looking for a bottom and isn't worried
about the dip.
However, Paul Desmond of Lowry's Reports was quoted on CNBC as saying that Monday's
90% down day (90+% down volume and 90+% down prices) is typical of a bottoming pattern. But,
he also pointed out that 70% of market bottoms will see at least six 90% down days. We can now
look forward to 5 more down days like Monday — perhaps.
Although we have a Bradley turning point due Thursday, ±4 trading days, and a 9-month
cycle due next week ±10 trading days, the final stages of an intermediate low in the
market can do considerable price damage. For instance, the last two weeks of the previous
9-month cycle low saw the Dow drop 1800 points. And, the landing before that saw a 2000-point
decline. If the low is two weeks out, that would put the Dow down to around 5500-5700 by the
end of March. Thinking about buying? Don't. Not yet, anyway. Think short.
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^SPX
· ^IXQ
· ^NDX
· ^SOX
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· ^MID
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· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
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Stocks:
The market slid to the bottom of its recent range (and dropped slightly below it on some
measures) on Monday. We're looking for a 9-month cycle low in the near future and the
breakdown in the strong stocks, such as Dell, is a sign that that low is approaching.
But, it's not here just yet, so being short the market is still the way to bet.
But, despite the slide, options sentiment reflected a somewhat sanguine outlook for
most of the day. There was no real panic, no rush for portfolio protection, suggesting
that such protection (in the way of put options) had already been purchased and is in place
protecting portfolios on the downside.
One interesting phenomenon of this decline is that most world stock markets have already
dropped well below last year's lows. But, the US markets, despite a persistent decline
in the US dollar which should be a negative for the stock market, are holding
above those lows. This suggests that there is more strength under this market than many
bears give it credit for.
Did you know that the real definition of inflation is, ``an abnormal increase in available
currency and credit beyond the proportion of available goods, resulting in a sharp
and continuing rise in price levels'' (American Heritage Dictionary)?
In other words, it's not the rise in prices
everyone assumes it is, but an abnormal rise in available currency and credit. The
government has subtly redefined inflation as an increase in the Consumer Price Index.
Why? To mask the abnormal rise in money supply — and the debasement of that fiat money.
Interestingly, the rise in the money supply in the Great Stock Bubble was ``only'' 258%
in a time when the Dow rose about 1000%. Normally, a deflated measure of the Dow uses
the CPI as a deflator, but if the money supply itself is used as a deflator, guess where
the Dow would have to be to get back to the 1982 low? About 2800. Interestingly, the
NASDAQ-100 has in fact been deflated by a percentage decline in that general neighborhood,
down about 79% from its Bubble peak exactly three years ago Monday. We suspect that the Dow
will play catch-down at some point over the next decade.
The bond rally is running out of steam. Despite the big decline in stocks Monday, bond
prices barely moved to a new high. And, the US Dollar Index actually held support within
last week's range. These are signs of a bottom ahead in stocks and the US$ and a top ahead
in the bond market. And, it's all coming in a week with a Bradley Calendar turning point
due Thursday ±4 trading days.
We are going to tighten up our buy stops on short positions and will be looking to buy
the S&P 500 Index soon. The rally should be sharp and quick, as a bear market rally
should be. In fact, rallies in bear markets are actually quit a bit more profitable in
the short run than rallies in bull markets. But, we don't have a buy signal just yet.
Should be soon, though.
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· ^IXQ
· ^NDX
· ^SOX
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· ^MID
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· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
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Stocks:
Stocks turned up after a horrid Employment Report Friday morning. Is this surprising
strength in the face of bad news the all-clear
signal that a new bull market has already begun? We are at the beginning of a major Bradley
Calendar turning point and it's just possible that the low occured Friday morning. However,
forecasting indicators like the Bradley must have confirmation from coincident indicators.
We discuss this and other topics in this weekend's
Detailed Comments Page . . . .
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^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
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8 Apr 1999
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Stocks:
Although there are definite signs of a bottom forming, it's not here yet.
The Money Flow figures are beginning to show that some money is coming in
on dips, but that can be a long process with false starts before the ultimate
price low.
The nervous stock market traded within a narrow range on Thursday. Such consolidations
near the bottom of the larger range are typically followed by further dips to new lows.
The NASDAQ remains stronger than the blue chips just as they have been since September.
In fact, the NASDAQ-100 is attempting to breakout above the red trendline in its daily
chart. That red polytrendline was formed during the last stages of the Great Stock Bubble of the
'Nineties by the significant lows of 1998, 1999 and 2000. It was decisively broken
in October 2000 as NDX headed for an 80% decline off its all-time high reached in March
of that year. A significant support line which is broken on the downside becomes
strong resistance when the market approaches it from underneath — and that's what
we're seeing right now. NDX first tested it from underneath just a couple of weeks ago (21 Feb)
and initially backed down. However, the second probe about a week ago was able to
punch above it for two trading days before the market dropped back. It's clear that that
long term cycle envelope is still presenting tough resistance, but the ability of the
market to hang tough and keep testing, along with the obvious relative strength being
shown in the NASDAQ compared to the blue chips, is significant and suggests that when
NDX is able to break free from the influence of that cycle, it could have a clear shot
at much higher levels.
Short term considerations could see much lower prices over the next week or two. But,
that would very likely represent the best buying opportunity of this century — so far,
at least — for intermediate to long term investors. Great opportunity lies ahead
for those with patience.
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^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
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Stocks:
The market put in an oversold bounce on Wednesday, but option players took the opportunity to
buy more puts than calls. The QQQ action was relatively heavy on both sides (puts and calls)
and, to us, seems to indicate most players are going long volatility. What that means is they
are buying both kinds of options in the hope that the market gets more volatile, time premiums
expand and they can sell their options for a profit. The ideal scenario would have the market
either soar or plunge (preferably, both in sequence) to drive volatility up.
As much as we hate to admit we agree with them, that's exactly what we think is going to happen
as we near the 9-month cycle low due very soon. It could happen as early as next week with the
coincident Bradley turning point due anywhere from this Friday to the Wednesday of options expiration
week.
Mark Fowler, a professional trader, put forth an alternate scenario Wednesday afternoon:
``(A bidirectional move) would fit an option expiration pattern that seems to happen every month:
a straight up move lasting 2-4 days, covering 50 S&P points and starting between 8 and 4 days
prior to the Friday expiration day. I assume it is the pros taking money from the schomoes who buy
way out of the money puts for "cheap" prices only to see them go to zero almost every time.
Hoping the Aprils are the series that pay off when we dive to a low the last week in March
or first week of April.''
We think the overridding event here is the Iraq War. The pros aren't likely going to be able
to stand in the way of — or manipulate the market — in the face of something that big.
In any case, the pros seem to be setting up for an increase in volatility.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: The Waterfall Picks Up Speed
The market dipped again Tuesday and there was a notable lack of buyers lining up to buy
stocks. They're on strike and likely to be on the sidelines until some minor issues, such as the
fate of the country of Iraq and its inhabitants and ruler, reach a resolution.
The 9-month cycle should continue to pressure the market lower until next week or the
week afterward — barring an early resolution to the Iraqi situation. The FTSE
daily chart has an overhead resistance line shown on it that appears to be the
envelope for that cycle. Until we can get a breakout through that line, we'll have
to assume the cycle has not landed yet. The next Bradley Calendar turning point falls
within the time period on either side of the Ides of March, making it a very important
turning point.
There's a bit of uncertainty about the exact time for the landing of that 9-month cycle.
It would have ideally landed in June of last year, but the market continued to a
lower low in July. The question of whether it bottomed on schedule or landed late
by a month remains. If it has been shifted by a month, we could very well see
the mid-March low only represent a way station on the path down.
The NASDAQ-100 continued to hold up better than the blue chips on Tuesday. That
pushed the NDX/SPX spread up to near a new high. This is good and bad. It's good
because it means the high tech sector continues to outperform the blue chips —
which is long term bullish. But, it's bad because we had been looking for the
NASDAQ-100 to drop back and bottom ahead of the blue chips to give us a good
buy signal for the coming bull market. Since the NASDAQ has been so much stronger
than the rest of the market, it's possible this outperformance will continue
even as the Dow and S&P 500 fall below their recent lows. That would be
extremely bullish on the outlook for the bull run to follow this next low. And,
that can't be all bad.
Finally, the Australian market is exhibiting bullish divergence as it attempts to
find a bottom. That chart is indicating we're close to a low, but not there yet.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: Reversal of Fortune
The market rallied early, but reversed down within the prior range on Monday. After several
days of a weak rally (weak because Money Flow didn't confirm the rise), a sharp selloff was
to be expected. Any market which can't attract buyers at higher prices is destined to give
up the rise.
We're now moving into the end of the Bradley Calendar turn window and the fact that the
market has shown weak technicals throughout the window tells us it's a topping zone.
The next turn is due mid-month (the Ides of March) which will likely be a significant
low point, possibly the end of the first leg down of this secular bear market. At the
ripe old age of 36 months off the March 2000 high, this bear market leg will slightly
exceed the 1929 Crash in terms of time.
Both OEX and QQQ options traders favored calls on Monday, but the volume in QQQ calls was
relatively light compared to OEX call volume. In prior sessions with QQQ dollar-volume
near equal to OEX dollar-volume, the relationship has often appeared predictive, with the
assumption that hedge funds were front-running program trades in the underlying stocks by
buying huge quantities of call options. Light
volume days, however, seem to be associated with more speculative traders, so we conclude
the hedgies were on the sidelines on Monday, taking no big directional positions in the
options. It's bearish that the OEXers were favoring calls in the face of a declining
market.
The NDX/SPX spread was relatively volatile Monday as it peaked early at -1610, then
dropped sharply to -2150, still within recent sessions' range, but confirming the
reversal in the tech stocks. Since the techs have been in a relative strength rally
since September, a correction there is overdue — and should provide a good buying
opportunity for the coming rally — likely at some point in the next two weeks.
Note that the March futures will expire on the 3rd Friday of March and the standard rollover
date will be the 13th, 1½ weeks from now. The next contracts expire in June 2003. Those
contracts should, in fact, be used for new positions this month to avoid paying extra commissions.
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Format for printing.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Intraday Option Dollar Volume Page Available
Due to requests from several of you (thanks for the feedback), we have added a page which lists the intraday OEX and QQQ option
dollar volume statistics. You will find that link just below the existing sentiment links
on the main page. Note that if you have activated the spreadsheet option, the page will
contain data in csv format for ease of importation into a spreadsheet; otherwise,
in normal mode, the data will appear in HTML tabular format.
Stocks:
Hedge fund activities moved the market up and down on Friday. In the early going, they pushed
the NASDAQ higher, but later in the day, pushed the market down again. Otherwise, there was
little if any discernible trend as the market waited for the Iraq War to be resolved one way
or another.
Friday was a transitional day as the market sets up for a very volatile March. We have a stock market low
due in mid-March from time cycles, and bullish long term signs continue to point to higher prices ahead.
That rally, however, could come from considerably lower levels, of course.
Read more in our
Detailed Comments Page . . . .
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: An Hedgy Market
Hedge funds played games with stocks Thursday in a trendless market. These daytraders
are moving the market up and down intraday with virtually no participation from longer
term investors. One sign of this activity is in the QQQ options, where hedge fund activity
tends to correlate with heavy dollar volume relative to the more traditional OEX options.
Thursday's QQQ action revealed heavy call buying and it was no surprise that the NASDAQ-100 —
the index which the QQQ shares track — showed a positive bias for the day.
But this is a market set on simmer and the lack of significant volatility means the Bollinger
Bands, on an intermediate to long term basis, are pinching down, reflecting the narrowing
range of trading we've seen. Money Flow has been diverging bearishly, suggesting that
a cathartic selloff into the cycle low due in mid-March is the most likely conclusion to
this low volatility regime. That plunge would be a head fake to the downside, washing out
the weak hands and providing a buying opportunity for long term investors similar to the
plunges we saw in 1991 at the commencement of Iraq War I, and at the panic lows of the late
'Nineties, which led to new highs in the indices. We probably won't get to new highs on
all indices, but we won't say it's impossible. We do agree with Jim Cramer, who said on
CNBC-TV that a 30% rally from lower levels is an entirely reasonable expectation following
a plunge to Dow 7200.
We are within the time frame of a Bradley Calendar turn and a new moon due this weekend.
Events in Baghdad are barrelling toward a conclusion and we're patient to wait for the
market to tip its hand. In this weekend's update, we'll take a look at the indicators which
are pointing toward an end to the trading range we've been in since last July. We'll also
take a look at the oil market, which appears to be setting up some opportunities.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
While the market continued lower on Wednesday, Sentiment grew more bullish
for the OEX options pit as call buying picked up steam. At the same time, QQQ traders
grew more bearish. Since the QQQ traders tend to be right and the OEX traders wrong,
this is not a good development for the bull camp.
Another sign of weakness and the overall market downtrend was evident in the declining
value of the NDX/SPX spread as it continued
to fall from last week's high. Looking at it from the opposite point of view, the
SPX/NDX spread (calculated using the e-mini March futures contracts for the S&P 500
and the NASDAQ-100) has been gaining ground since its recent closing low last Thursday at $1760. That
spread finished Wednesday at $2430. We expect that the coming major low in the stock
market will be signaled after the spread reverses course, just as it did before
the October low.
Additional signs that the Iraq War is heating up helped grease the skids Wednesday in
the stock market, but the OEX figures make it appear that most traders are gearing up
for the ``inevitable'' rally following the commencement of the war. Certainly, such a
rally is very likely if history is a guide. However, it may not be a long-lasting
rally because it is so well-advertised. Since the 9-month cycle is due very soon —
the Ides (15th) of March has been our best guesstimate — we certainly wouldn't
want the market to rally into that important turn date. A rally into an expected cycle
low is a sign that the cycle has inverted — a high where a low should have been.
Perhaps the Bradley turn date, due ideally today (Thursday), may have occured Friday — 4 days early
but within the expected ±4 trading day leeway usually afforded Bradley turning
points — implies a continuing decline into the middle of March turning point on the
Calendar. The mid-March period is expected to be a market low similar to the September
2001 and July 2002 lows and very likely to see the Dow and S&P 500 falling to lower
lows than either of those prior lows. On the other hand, we hope the NASDAQ-100 Index
will remain above its prior lows to confirm the beginning of a new cyclical bull market.
The great bull market in oil continues. We'll be looking at that market in this weekend's
update to see how to take advantage of the coming retracement of recent price highs. Oil
is being inflated not only on fears of war, but also on the very real prospect that we
are nearing the production crest for oil and will have mostly more costly alternatives
to consider in the future. This is something Bushy alluded to in his State of the Union
address. He should know — his family has been in the energy business for generations.
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Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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If no response, use this one instead:
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Stocks: Consumer Capitulation
The consumer seems to be in the capitulation stage right now. The one-month drop in confidence
of over 14% was the highest since the 9-11 downing of the World Trade Center.
The market initially reacted to the downside, but something stopped the decline. Interestingly,
it appears to be another case of QQQ buying power that turned the market and sent it soaring
higher into the closing bell. We have noted on prior occasions that when the QQQ option dollar
volume exceeds that of the OEX (and these figures are updated every ten minutes intraday on the website),
the market often subsequently makes a move in that same direction. For example, when dollar
volume in QQQ calls is high relative to both QQQ puts and OEX calls, the market will often
turn up sharply within the next few trading hours.
We saw a lot of that kind of activity in the runup to the November Congressional Elections.
That surging stock market undoubtedly helped the Republicans attain majority rule in the
Congress. Are the Republicans again in the market, moving it higher? That's one explanation
(and one we suggested would be the Republican game plan over the next year to assure
four more years control in the White House). It looks like it's at least a good working
hypothesis.
If the bears have to fight the headwind of the Administration, we suspect they will
ultimately have to cover their short positions at much higher stock prices, so since
we're within 2-3 weeks of a major time cycle low in the stock market, taking on
aggressive short positions is not recommended. However, light short positions are
probably the best way to bet until the bottom is confirmed.
With tonight's set of stock charts, we are adding Bollinger Bands to help those
who trade individual stocks on a daily basis. There's quite a bit of good information
which can be gleaned from Bollinger Bands for buy and sell signals, so we hope this
will help.
We've also added actual price points for the bands, shown as of the current day to the
right of the latest price points. The abbreviations are as follows:
- UB = 50-Day Upper Band
- ub = 20-Day Upper Band
- ma = 20-Day Moving Average
- lb = 20-Day Lower Band
- LB = 50-Day Lower Band
As for what's ahead, we have a cycle high due now, a Bradley turn due now, and a
war that appears to be getting very close to being kicked off in Iraq. In fact, this
weekend brings the New Moon, the most likely time for an all-out air attack to soften
up the country. The initial air attack is likely to be overwhelming to the Iraqi military
and should convince most to surrender without a fight. We wouldn't be surprised if it
were the first war to begin and end on the very same day. With this mix of news and
technicals, the markets are likely to be extremely volatile over the next few weeks.
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Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Website Addition
We've added the NASDAQ-100/S&P 500 emini futures spread to the page in
the Intraday Charts section just above the Relative Strength Table.
Stocks:
Stocks rallied very early on Monday, with the London market almost tagging the upper
line of its ascending wedge pattern in its final wave up. And, in the US, the NASDAQ-100
showed a similar pattern: morning strength but an afternoon selloff. The NQ-ES March
spread rallied from -1832 at Friday's close to an intraday high near -1471, then dropped
sharply to form a low at -1865, and closing at the low. Since the NASDAQ had been
leading the charge up the hill with the London market showing a very clear upward wedge
pattern (bearish), it's very possible that we've see the reaction high now and that the
waterfall wave 3 decline is underway. But, we haven't got
a confirmed high in place just yet because the London market closed within the wedge and NASDAQ
closed within the range of the last two days. Still, this is nail-bitingly close to a
top and if you have to have a position in this market, it seems prudent to have a short
position (or long the SPX/NDX spread — the inverse of the one we're watching for
signs of strength).
Sentiment was mixed, with the OEX pit well into the overly-bearish zone
and the QQQ traders slightly bullish, but on very light dollar volume. In this situation
we have to side with the put buyers and expect further decline ahead.
Time cycles call for a top this week, and the Bradley says to look for a turn also
(ideally, that turn would come on the 27th ±4 trading days by most estimates).
The winds of war are blowing and its a very nervous market. The relative weakness in
NASDAQ isn't yet at the critical stage — normally, NASDAQ is considerably weaker
than the blue chips at a significant high — but the weakness in the spread trade
is a strong warning to the bulls that we're heading lower very soon.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Stocks finished on an up-note last week as we expected. But, the time of war
draws near. With the uncertainty of war, the future path for stocks looks
exceedingly volatile. Yet, we have a clear path ahead that has elements which
are both bearish and bullish. How to navigate the shoals? Subscribers, please follow the link to our
Detailed Comments Page . . . .
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[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The stock market treaded water Thursday as buyers went on strike ahead of the coming
war. The NDX/SPX spread, however, continued to move higher, rising $234 per the minimum futures
position (our benchmark for this spread is 2 March NQ emini contracts held long for each March
ES emini contract held short). The relative strength of the NASDAQ-100
continues to punch higher and it is now strong enough to say that the bottom is likely
behind us — in other words, the mid-cap NASDAQ-100 Index continues to gain strength
relative to the blue chip S&P 500 Index.
The relative strength chart of this spread (see the RS_NDX_SPX daily chart on the website)
illustrates this phenomenon. An examination of it gives us an insight into how we might
profit from the coming market low. Since the bottom in relative strength in September,
the NASDAQ-100 has been leading the way higher. That bottom preceded the actual market
bottom by about two weeks. The chart also shows that the last peak in relative strength
occured on December 2, coincident with the price peak in the market. Even with the
recent rally, that peak has yet to be exceeded.
Since we expect the overal market itself to peak very soon — as early as Friday, but as late as
the first week of March — and to tumble into the cycle low due in March-April, we
should expect the NDX/SPX spread to decline as well — just as it did in December.
In fact, the spread may just tread water. But, it is likely that the spread will turn
up ahead of the actual market price low, giving us an good signal to initiate a position
in the NDX/SPX spread ahead of the actual market low.
Once the bullish trend higher is confirmed, the short side of the spread can be liquidated and
turned into a long position.
For instance, here's an example using mutual funds:
When the NDX/SPX spread turns up (watch the relative strength charts for this), an investor could
buy the double-strength NDX mutual fund RYVYX (Rydex Velocity 100) and simultaneously buy the
reverse-index, or bear, fund RYTPX (Rydex Tempest 500) to initiate the spread position —
long the NDX, short the SPX.
Once the bottom is confirmed, the short side of the spread RYTPX can be liquidated and
invested in a long position (the RYTPX can be sold and the proceeds used to purchases shares
in either RYVYX or another bull fund).
As far as this current market is concerned, it appears the last couple of days of pullback represents
a consolidation in preparation for another rally. That rally should be the last one of
this upward correction. We'll be looking to sell the rally once it finishes, expecting a
waterfall crash to cycle lows due in March and April. With complacency in great abundance,
this is definitely a market "cruisin' for a bruisin'".
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by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Note: corrected typo, changed 864 to 884 in text where it refers to 62% retracement level.
Stocks: Baiting the Trap
The market rested after three rally days Wednesday. The S&P 500 Index hit the 38%
Fibonacci resistance level (854) on Tuesday and is resting before attempting to test
the very significant 50% retracement level of 869 in coming days. Since we're counting
this rally as an upward wave 2 correction in a bear market, and 50% retracements are
standard for second waves, it's very likely that the market will top at 869
and enter a crash wave 3 to the downside very soon.
So, the market continues setting a very big trap for too-bullish investors. And, in the
process, it's eating up most of the time premium (and intrinsic value) which had built up on
most February put options. A 50% retracement would be fairly close to the Maximum Pain Theory
level of 875 (884 is the 62% retracement level, which is even closer to Max Pain). Option
short sellers can sometimes do some amazing things to move the market, but the underlying
bear trend is so strong that we would not hold out for the higher index value. The tension
in this market is building for a release to the downside just as soon as can be.
That's also evident in the London FTSE, which fell back into its wave b of 2 trading range Wednesday.
We still think it's possible it could test overhead resistance by Friday, but there are no
guarantees that something won't come out of the blue to trigger the cataclysmic decline
which lies ahead.
Longer term, we are beginning to see evidence
that the individual investor is turning bearish — after three long and grinding years of
bear market. However, there's
considerable leeway for further deterioration in long term sentiment. A crash into time cycle
and Bradley lows due in March and in April would go a long way toward pushing sentiment
to an extreme from which the next bull market could emerge.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: The Trap is Being Set
The market rose Tuesday. What you're seeing here is a trap being set just like last May.
Investors, who had grown too bearish, are being taught a lesson in how a head fake is conducted.
The rally this week is simply short-covering and option short-seller manipulation as the ``tail that
wags the dog'' beckons investors to buy into a trap. Right now, sentiment figures are
returning to neutral on our OEX options ratio, so while the trap is being set, investors have not
yet entered the cage.
All of the indicators we respect are not confirming this rally. One of the signs we'd like
to see to confirm the rally is a pickup in Money Flow into the market. We are not
seeing that and, in fact, we are seeing bearish non-confirmations from all of our money flow
indicators (except for the new NYSE Composite which is too new on the scene to have any
historical validity).
Breadth is very poor if this is the kickoff to a powerful bull market. On the NYSE,
winners edged out losers by less than a 3:1 ratio — a very mediocre reading. If this
were a true bull market getting underway, we'd expect to see at least a 9:1 ratio for a
couple of days. Obviously, this is just an oversold bounce in a strong bear market.
Of course, things aren't outright, short term bearish — yet. The NASDAQ is still
outperforming the blue chips and that argues for at least 2-3 more days on the upside.
When the small stocks start underperforming, it will be time to look for the next
leg to the downside to get started in earnest. And, the best way to play the downside
is to enter a spread trade, whether that's using mutual funds, stocks or futures.
By entering a spread trade, you are entering a balanced position — both long and
short. Your timing doesn't have to be perfect because at a major turning point in the
market, the spread will tend to be much less volatile because of its balanced nature.
Once the top is confirmed, you can then ``leg out'' of the bull side of the spread,
leaving your position net short.
After reading John Bollinger's tutorial yesterday and his comments concerning the
utility of 10-day and 50-day bands, we changed our charts to reflect his recommended
configuration. The dark blue bands represent the 10-day, light blue bands the standard 20-day,
and crimson bands the 50-day. We also are using his recommended standard deviation
values of 1½, 2 and 2½, respectively. On the quarter-hourly charts, the bands are
2½ hours, 5 hours and 12½ hours.
The FTSE-100 on Tuesday crept ever closer to the polytrendline ceiling we show arcing overhead in that chart. It broke out
of its wave b consolidation trading range and is headed for stiff resistance overhead. Once
it tops out, the potential for a severe crash remains until at least the Ides of March, and
possibly even longer. The reason we are watching the FTSE-100 is that it is leading the
US indices by about a week — at the January top, the FTSE topped six trading days before
the S&P 500. It should continue to act as a canary in the mineshaft (i.e., expiring and
falling over before the US market peaks). However, we don't think the lag will be as much as
six days, but much less this time 'round.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
The US markets were closed Monday, but open everywhere else. In London, the FTSE-100
remained within its two-week trading range, which has a ceiling just below the 50%
retracement of wave 1 down out of the long contracting triangle (3706). There are a number
of factors which suggest that this wave 2 rally could potentially reach the 62% retracement
level of 3780 by Friday the 21st. The overhead polytrend resistance line connecting significant
rally highs comes into that price area on Friday, a date which not only represents a Time
Ratio High projection, but also options expiration in the US and the next Bradley Calendar
turning point. although the rally could top below that price (the 3754 area is also likely
to present significant resistance to the rally due to an internal Fibonacci relationship
within wave 2).
The Australian All-Ordinaries Index put in a tepid rally Monday, bouncing from a deeply
oversold condition. New lows can't be long in coming from this very poor bounce.
One thing is clear: this market is taking no prisoners. It's bound and determined to
drag in as much sideline cash as necessary to get its job done. Then, wave 3 to the
downside should get started, a crash.
We have been showing you spread charts in the last few weeks, but we need to briefly discuss
the bands shown on the charts. These are Bollinger Bands. The light blue band on the
daily charts is the standard 20-day band, while the large red band is an 80-day band
for a longer term perspective. As with standard price charts, Bollinger Bands give
a statistical view of the market — where price is in relationship to where it
has been relative to its recent volatility. When prices break through the 20-day
band, it often means that a new trend in that same direction has been confirmed and
that prices will continue to push higher or lower. After pushing up near the top of
the band, a failure to push through it often signals a reversal down. We will be
discussing how to use the bands for entry signals in conjunction with spread positions in future
installments. In the meantime, if you aren't familiar with Bollinger Bands, John Bollinger
provides a tutorial on their use on his website at
http://www.bollingerbands.com/services/bb/intro.php
and we suggest that as a good starting point.
With options expiration just four days away, put short sellers are pumping like mad
to inflate the market in order to make those options expire worthless so that they
can pocket the premium they received from the sale. This is eerily-reminiscent of the action last
year during options expiration in May. That wave 2 rally pushed the S&P 500 Index
up about 50 points in an impressive 8-day surge — but which paled in comparison to the
subsequent 330-point wave 3 cliff dive into July. Will history repeat itself? Maybe
not exactly, but it sure looks like it will rhyme.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Monday is a holiday on Wall Street, but the financial circus will return on Tuesday in the US.
World markets are on their own Monday, but should be fairly firm given Friday's rally.
Our recommendation last weekend of a trade returned over 50% in just three days last week.
Read about it and how this is a great risk-control strategy that every investor should be
familiar with on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Breaking Down
The market broke through the bottom of the (deceivingly) bullish descending wedge pattern Thursday morning
and thus confirmed that we could be approaching a waterfall declining phase (so far, it has
been more of a dripping faucet kind of decline). On the quarter-hourly intraday chart for
the S&P 500, the angle heading downward of the short term support is now sharply increasing,
so the cycle low still lies ahead with a corresponding overhead resistance line also rolling
over.
For the past week, our sentiment numbers have reflected conditions which have led to bottoms
in the past. However, although this has been our best indicator, there are rare occasions
where it will be wrong. And, this appears to be one of them. Sentiment indicators indicate
the majority is bearish, which is usually a good time to take an opposite position. But, in
the middle of a trend, the crowd will be right. This appears to be the middle
of the downtrend and figures that normally argue for a bullish position are simply confirming
that the crowd is short — and correct.
Adding to the evidence in favor of the bears,
our spread trade, which had been long (bullish) the NASDAQ and short (bearish) the S&Ps,
broke down out of its rising channel Thursday morning after stalling out near the upper
resistance line of the channel on Wednesday, signaling that the NASDAQ-100 was beginning to
underperform the blue chip S&Ps. That's always been a bearish sign that more price
weakness lies ahead. We are referring to the intraday NDX:SPX relative strength
chart on the main page in the Intraday Charts section.
Money Flow has, since midweek, been growing ever more bearish as rallies are heavily sold into.
The buyers may have a lot of cash to invest, but they're not putting it to work on dips and
that failure to support the market is likely to lead to additional weakness in the future.
We'd rather be on the team that is willing to pull their weight. Right now, that's the bear team.
Consequently, we liquidated our stock position and are officially selling rallies short. Your
approach to this market is up to you (cash, short or bonds are three alternatives to
consider depending upon your risk tolerance). If we do get an opportunity, we will look
to buy stocks or initiate another spread position like the last one, which worked out very
well. And, to that end, we have inaugurated a spread chart section on the website. Under
the Daily Futures Charts link on the main page, we have added a link to Daily
Spreads Charts. Initially, we only have the NASDAQ-100/S&P 500 spread trade we
discussed earlier in the week (long the e-mini NQ and short the e-mini ES in a 2:1 contract
proportion). The chart scale shows the difference in contract value between the long and
short sides of the spread for a minimum position (long 2 March NQ contracts, short 1 March ES contract).
The difference at the close Wednesday was $-2562.50, which is reflected in the vertical scales.
Note that the absolute number (in this case, it's a negative number and shown in red) doesn't
matter — it's the day-to-day directional change in that number that counts. The long side of the
spread is first with the short side of the position subtracted from it. You want the line
to move up from left to right, indicating your profits are growing.
As you have seen, spreads can be very profitable if you can simply determine which of
the two securities (the two legs of the spread) will outperform. This is, in fact,
the basis for the concept of hedge funds, which traditionally don't bet on the direction
of the market as much as the relative performance of securities. By being simultaneously
long and short related securities, profits can potentially be made by betting on the
security which outperforms — even if both sides are falling, as has been the case
recently with the NASDAQ-100 and the S&P 500.
We will add additional spread charts later on. And, we will discuss additional
strategies which will help identify good spread trades.
Much of what we've learned about spread trading comes from Joe Ross, who has
traded spreads for many years both on the floor and off the floor at various exchanges.
He is the author of Trading Spreads and Seasonals, an excellent book in which
he details many strategies for trading spreads. Joe also teaches traders at occasional
seminars — he tells us that his next seminar will be in Houston on Feb. 22-23, then
again in Houston on Mar. 8-9. After that, the next one
will be in Atlanta on March 22-23. You can reach Joe's website at
Trading Educators for
more info if you're interested.
Right now, we favor the short side of stocks and look to sell rallies and to initiate
good spread trades to minimize overall directional risk as compared to outright bullish
or bearish positions.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://66.69.200.116:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Stocks continued to drift lower on Wednesday, hammered by a statement by a US government
official that North Korea now had the capability to deliver a nuclear warhead to the West
Coast of the United States. Whether that was, in fact, a true statement, is unknowable at
the present time, but it cast gloom over the market for the rest of the day and buyers
decided to sit on their hands another day.
Our featured spread trade this week held its ground well. This is probably a good day
to go into a bit more detail about the trade. We'll use the e-mini futures as a real-world
example:
For those who aren't aware, we suggested that the NASDAQ-100 Index (NDX) was likely to outperform
the S&P 500 Index (SPX) — and the Dow Jones Industrials Average. By buying the NDX
and selling short the SPX, a spread position can be created which may be profitable while
reducing overall risk.
Of course, you can't directly buy and sell short the indices. However, there are a number
of trading vehicles which allow you to. In the futures, the March NQ contract (the ticker symbol
may vary: at Xpresstrade, it's EN3H, and on our charts, it's NQ_H3) represents the NASDAQ-100.
And, the March ES contract (ticker symbol @ES3H at Xpresstrade) represents the S&P 500.
The NQ contract is valued at $20 per NDX point; the ES contract has a value of $50 per
SPX point.
According to the margin requirements for this spread trade set by the exchange (the
Chicago Mercantile Exchange or CME), for each ES contract you should hold two
NQ contracts. In other words, if you were to enter a spread like we suggested, you
would buy 2 NQ contracts for every 1 ES contract you sell short. We will assume you
entered the minimum position: long 2 NQ contracts and short one ES contract.
On Tuesday, the NQ side of the position closed at a value of $38,860 (971.50 ×
$20 × 2 contracts) and the ES side closed at a value of $41,462.50 (829.25 ×
$50 × 1 contract). On Wednesday, the NQ side had a closing value of $38,300, a loss
of $560 as the index fell 14 points. But, the ES side also fell 12 points.
That meant that our short side of the spread actually gained value ($600). So, on
a day when both indices fell, we still ended up with a slight paper gain of $40. Not
nearly as fun as Tuesday, when the spread gained on both legs of the spread ($540 on
the NQ side and $362.50 on the ES side, for a total of $902.50 on Tuesday). But, for
a position whose margin requirement is only $1773 (at Xpresstrade), a paper profit of
$942.50 represents a nice gain on a relatively lower-risk position than an outright
bullish or bearish position on the market.
As far as the overall market direction is concerned, we are likely to see a rally
get started very soon. With options expiration just a little over a week away, it
is not likely (but it is possible) that all those put buyers are going to get to
keep their profits. The normal behavior would call for option market makers to buy stocks,
lifting their prices enough to allow the maximum number of put options (as well as
call options) to expire worthless on the 21st day of February. With a neutral
trend, we suspect they will be able to. Given a war surprise, all bets are off.
If we do get a confirmation of a rally, we plan to buy back our short ES side of the spread
and look to sell short at a higher level when the rally runs out of gas. That will allow
the long side of the spread to gain on the rally — at the cost of increased risk by
holding an outright bullish position.
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
Tuesday's market continued to swing within a narrow trading range much like last week's
market. It truly is a market for daytraders, who control risk by not being exposed to overnight
gaps in price and are quick to take profits or losses.
However, we've recently discussed another technique which may be appropriate for this market.
That technique is technically called ``spreading.'' It simply means that one security is
purchased and another (related) security is sold short. The combined position is called a spread.
Since the beginning of the year, the NASDAQ-100 has declined 1.29%. In that same period of time
the S&P 500 has declined 5.75%. A spread trade where equal dollar amounts of the NASDAQ-100 are bought and the
S&P 500 are sold short would have returned a profit of 4.46% in a period where the market
was generally on the downside. The NASDAQ-100 trades as a stock under the ticker symbol QQQ,
while the S&P 500 trades as a stock under the ticker symbol SPY. Alternatively, futures
contracts are available for both in maxi (ND and SP) and mini (NQ and ES) contract sizes —
suitable only for very experienced investors, of course.
On Tuesday, the NASDAQ-100 rose by 0.17% and the S&P 500 fell by 0.79%. For the day, the
spread position (long the NASDAQ-100 and short the S&P 500) gained 0.96%. It's not everyday
when both sides of the spread gain money, but it's very nice when it happens.
Note that in order to realize the percentage returns cited, you would have leveraged each
side by 200% (this is the maximum leverage afforded in the cash stock market). In the futures,
much higher leverage is available of course.
The market continues to build a substantial base for a rally. Once it does start, it will
be wise to lift the short side of the spread in order to participate fully in the rise. This
is called ``legging-out'' of a spread. Once the rally becomes mature, the S&P 500 can
be sold short again at a higher level to reinstate the spread.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Monday looked like a holiday as stock traders, both sellers and buyers,
decided to sit on their hands for a while and see how the situation in Iraq
turns out. All of the stock market indices closed the quiet session slightly higher than last week.
The NASDAQ-100 Index, which had been trimmed by 80% off its all-time highs as recently as
last October, has recovered better than its cousins, the Dow and S&P 500. That's one
reason we think we're closing in on the beginning of the next bull market — and why
the NASDAQ may very well have already put its low in. At the end of the 1982 bear market,
the Dow bottomed in August — nine whole months after the bottom in NASDAQ.
On the whole,
however, it's likely that this trading range, now almost 7 months old, will last into the
middle of the year, at least for the headline Dow. The market has been having a lot of trouble making up its mind about
the future course of business — the longer this period of indecision goes, the stronger
will be the move once it does end (and that move is likely to see a head fake in the downward
direction before the real trend higher gets established). Right now, the market is telling us
that the crowd is
tipped too far to the bearish side of sentiment. Dollar volume in OEX puts is exactly
twice the dollar volume of calls, reflecting the fact that the average investor is pretty
discouraged with the market and expects further decline ahead. The market is prone to doing
just the opposite, of course.
Last weekend's analysis, if you happened to have missed it, can be found on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: That Seventies Show
These past few months of sideways stock market trend remind us more than ever of the
market of the 1970s (hence the reference to the FOX-TV show). That decade
saw the market drift sideways in a trading range to work off the excesses of
the 'Fifties and 'Sixties. However, it is interesting to note that, despite the
initial plunge off the 'Sixties high into the early 'Seventies, the market was
able to retest the old high before plunging again into the 1974 low. There are
enough similarities here for us to entertain the notion that a bull market move
to new highs is not out of the question yet. The chart below illustrates the
long term view:
We discuss this and other topics on this weekend's
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org:777/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
Great fear continues to grip the stock market, as evidenced by huge volumes in puts on the NASDAQ-100
ETF known as QQQ. For the last few days, total dollar volume in the QQQs has dwarfed the OEX —
volumes on the order of a half a billion dollars per day. The trades have apparently been done by
a large Wall Street brokerage house as bullish bets on the QQQ to close between 45 and 55 at a
specified time in the future. The QQQ closed Thursday at 24.08, so the initiator of this position
apparently expects the QQQ to double in the future.
There are probably two key points here:
- When you see transaction volumes which cumulatively total more than a billion
dollars within a week in a high technology stock index, you have to suspect that someone
with the wherewithal to make a big bet is making a bet on the future. It appears they
are making a bet that the market will go up. There is always the possibility that whoever
is making this bet will be wrong.
- The fact that the put seller is able to find the depth of put buyers to take on the
other side of this trade gives you an idea of just how bearish the buyers are. This is
bullish from a contrary point of view.
Note that on the OEX daily chart, we have noted a fresh buy signal from the ``WC'' indicator.
Right now, we have a market that is unable to break down or rally up. It's under
compression and true volatility has declined very sharply. The option volatility measures (VIX and QQV)
are much higher than historical volatility, which is a bullish indicator. Although there
is a huge pool of cash built up on the sidelines, it appears unwilling to take a
stand in stocks. At some point in the future, this cash is likely to come back in.
Given the experience with the last war in Iraq, that cash is likely to come back in
just as soon as the war breaks out.
Money Flow continues to hold up despite price weakness, particularly in the QQQ and SPY
where surges in buying pressure occured on the close Thursday. We remain long stocks here,
but would not hesitate to switch to bonds and/or cash in a flash.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
If you don't like the direction the stock market is heading, just wait a while and it
will change. The market has been stuck in a narrow trading range for the last eight
days, touching the bottom four times (including Wednesday) and the top three times
(including Wednesday). Obviously, this is a market searching for direction and not
finding any.
Some of the positives we've been pointing to over the past week failed to appear
on Wednesday's rally. Money Flow diminished along with bearish sentiment. Those
two had been propping the market up, but with the poor performance Wednesday, we
have to be alert to the potential for the trading range to break down.
The US Dollar Index turned up sharply (and the Euro plunged), and that factor probably
provided much of the support for stocks. Although the dollar turned down late in the
day, it does appear that a trend change to the upside for the Dollar (and a trend change
to the downside for the Euro) has occured and should be supportive for stocks.
Secretary Powell's presentation before the UN held center stage early Wednesday and provided
a positive backdrop for the market as it appeared to strongly support the case for coalition
action to disarm Iraq. However, statements by an intransigent French ambassador appeared to throw a
bucket of cold water on the market later in the day with his suggestion that even more
inspectors are needed. We suspect that the French — and many others — might change
their attitude just as soon as Saddam Hussein obtains missiles capable of delivering their
chemical, biological and nuclear payloads to Paris. Powell made the choice clear: live with
a growing cancer in the MidEast, or excise it now.
As for the stock market, if it can't get some momentum going soon, we'll probably move
back into cash and/or bonds (TLT and IEF are bond shares which make excellent proxies
for the actual Treasury bonds).
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
This market is looking more and more bullish by the day. Despite the selldown to the bottom of the
recent trading range on Tuesday, it held there very well — and even closed on an upnote.
Money Flow remains very positive as volume declines on dips and rises on rallies.
And, Sentiment is very supportive, with the OEX numbers showing traders are well
into overly-bearish territory — and NDX traders are throwing huge amounts
into bets the market will crash here. Another of our ``lead-dog'' indices, the Semiconductor
Index, held above its prior low, a strong sign of strength. All of our trading oscillators
are in buy mode right now, as well, as well as exhibiting bullish divergence. We
certainly would not want to be short this market right now because it looks as if it's
poised to explode on the upside.
The US Dollar Index dropped sharply on Tuesday, which probably stimulated a lot of
foreign disinvestment in US stocks. But the entire decline was well-contained within
the last week's range and US investors are stepping up to the plate to buy stocks near their lows,
suggesting that as soon as the Dollar moves back up, stocks will follow.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
It's clear that sentiment has hit an extreme in the NASDAQ-100. On Monday, QQQ bears poured
over 100 times as much money into puts (bets the market would decline sharply) as calls.
Now, either they know for a fact that the market is about to crash or they're a contrary
indicator that says the market is about to head higher.
We've noticed that on some occasions, heavy volume in those QQQ options can be predictive
of future market action. And, in fact, other sources have mentioned that QQQ program traders
sometimes ``front-run'' their futures program trades by taking a position in the options
market. So, it is possible that program traders are taking a very big position in the
options because they know for a fact that they are going to initiate some very large
program trades in the near future.
On the other hand, option traders tend to be caught on the wrong side of the trade
more often than not. That's been our experience over the last 12 years of following
the OEX dollar-weighted option figures. So, Monday's gargantuan put purchases may
actually fall in that category. The other technical indicators suggest as much,
with a cycle low due in the current timeframe and the market primed for a short
term rally, as we've discussed in recent days.
In any case, these lopsided figures suggest to us that we are probably looking at
a contrary situation, rather than program traders front-running their own programs.
Our working assumption here remains that we have a very oversold market which wants to
go up — for now. Money Flow remains very constructive as those money flow lines in the various
intraday charts show rising trends as money comes into the stocks even as prices appear to
be bumping along a cycle trend channel bottom. Obviously, it's a very nervous market poised
on a knife edge, expecting the war with Iraq to breakout any day now. With absolutely
incontrovertible evidence that Iraq is harboring weapons of mass destruction, it's
almost certain that the US will have the blessing of the UN to move on Iraq in the
near future. When that happens, expect an initial dip, then a strong rally as it becomes
clear that the war will be very brief.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
www.marketclues.net Still Down
Our DSL service is still undergoing construction by SBC — does SBC also do highway construction? That
would explain why it takes forever for roads to get built/repaired. Use clues.dhs.org (see above) instead
for now.
Stocks: What is the Market Telling Us Now?
While we sometimes attempt to forecast the market, we also remind you that forecasting
the market is not necessary for profitable investing. What is most important when making
investment decisions is keeping an open mind and listening to what the market
is trying to tell you. That's why we have developed a multitude of technical tools which help
us decipher those messages and why we've made them available on our website for you to use.
Last week, the crowd was bearish and the market went down. But, is that what the
market was really saying? Or, is the market really sending us a more bullish outlook
for at least the short term? For subscribers, we discuss the message we're hearing on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
The market is bumping along a bottom here as it appears that those QQQ program traders are
enjoying the neutral trend by pushing the market up on Wednesday, then back down again on
Thursday. The dollar-weighted option figures we track on our website indicate that their
moves are a good leading indicator for short term moves in the market. When QQQ dollar volume
is high (relative to the OEX figures), the market is very likely to move in the direction
they're leaning: down when put volume is high and up when call volume is high. In other
words, the QQQ figures are predictive when total QQQ dollar volume exceeds OEX dollar volume.
While those program traders seem to have control of the market now, it's only because of a
completely neutral underlying trend that such control is possible. Once the market starts
trending, we doubt even the QQQ traders will have any choice as to which direction to send
the market. Until that day, however, it does appear that by watching the intraday option
trading via our website, short term traders have an excellent leading indicator for market
direction.
The NASDAQ-100 has been forming a rounding bottom trend channel on the quarter-hourly chart.
This is almost exactly the same pattern it formed at the October lows. If it continues to
follow the channel, it should accelerate higher in the week ahead.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
DSL Situation
We're betwixt and between: Covad has a brand new line to try to work with, but SBC (your
friendly neighborhood phone company which can't shoot straight), as per standard operating
procedure can't get it to work at all, is flummoxed again. For now, use the clues.dhs.org line
to access our website.
Stocks:
Stocks put in a good bottom and rallied Wednesday. That was surprising to the bears who
expected a crash from these levels, but not surprising at all to Market Clues subscribers
who have been reading our market calls. Still, all we do is try to listen to what the
market itself is trying to tell us — something almost anyone can do if they put
their mind to it. You can read our interpretation of what we're hearing by going to our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
The big jump in Money Flow into the blue chips Monday (see the
SPY 15-minute chart)
gave us advanced warning of Tuesday's turnaround rally in the stock market. Now, this rally could be
(and has been by various commentators) rationalized as a short-covering
affair ahead of Tuesday evening's State of the Union address, but perhaps the shorts have
detected at least a short term trend change in the wind? We suspect we'll get the standard
50% retracement rally in the market before any substantial further waterfall decline in the market.
That's especially likely given the deeply oversold condition and the propinquity of that monthly
seasonal we call the Monthly Buying Spree. Thursday begins that monthly seasonal this time 'round.
In tune with our comments on the
Detailed Comments Page
after the close Monday, we have added intraday charts showing the relative strength of the
NASDAQ-100 Index (NDX) as compared to, respectively, the S&P 500 Index (SPX) and the
Dow Jones Industrials Average (DJ) to our Intraday Charts section. You will find these two
charts directly above the Relative Strength Table on the main page at the website
(links given above near the top of this message).
Covad: An Improvement in DSL Service?
We have been informed by our Internet Service Provider that they will be switching our DSL
line back to Covad in the near future. That should be an improvement to the
reliability of that line if our prior experience with Covad is any guide. However, during
the switchover, expect more downtime. Please use the clues.dhs.org link should you
encounter problems accessing the website (as always).
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
The market slipped on a banana peel known as the US Dollar Monday as that currency
continued to lose favor among non-US investors. Confidence in the US is a very
important factor in worldwide stock prices and current attitudes are leading investors
to sell stocks and ask questions later.
The inability of the world's greatest economy to recover from recession has investors
worried that the recession will soon turn into something much bigger: a deflationary
depression as envisioned by Robert Prechter in his book Conquer the Crash. Add
the fact that stocks are at nose-bleed levels of valuation — priced for perfection,
as it were — and you have the ulimate resolution to a 6-month shelf of distribution:
a thrust decline with little reaction to sell into.
On the other hand, there are growing signs of a substantial rally developing out of this market
on the very near term.
How do you profit from a rally in a bear market and, perhaps, make money being both
a bull and a bear simultaneously? Subscribers, for an explanation, follow the link
to our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
Fear returned to the minds of investors and traders on Friday as the market
tumbled down the slippery slope. Our short term sentiment gauge finally registered
a degree of fear which should lead to a rally, but the bounce is likely to be more
of an opportunity for short sellers to get a good opportunity rather than anything
longer lasting.
We discuss what's ahead for subscribers (including trial subscribers, of course) on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org:777/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
The stock market bottomed early in Thursday's session and started the retracement rally (counter to the downtrend)
we were looking for. This is a trading rally which should see a price retracement of 50-78%
of the initial decline and should provide some fun for traders while it lasts. The bond
market fell, also as expected, due to traders taking profits on their bond gains.
The rally should be expected to be an a-b-c affair, with the current rise wave a,
wave b a substantial pullback, and wave c a sharp rise. Overall, the
market has completed wave 1 down with Thursday's low and is now in a wave 2
rally. Wave 3, potentially a devastating crash to below the October low, could
follow the end of this wave 2 rally.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
Wednesday was a consolidation day as stocks staged a minor bounce and then turned south
again into the close. But, a more substantial bounce is likely warming up in the wings. The timing and
rally potential of the bounce is discussed on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page ("http://www.constant.com/~bcarver/sub.html") for details!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Stocks:
The market continued to slide down the slippery slope Tuesday, but appears to be closing in on
a turn to the upside very soon. We're counting this as wave 1 down in a five-wave decline
that should carry the market well below the October lows.
The turn to the upside will be counted as wave 2 and should represent a low-risk opportunity
to short sell this very, very overvalued stock market. That opportunity could come later this week.
For now, our bond holdings are doing well as a safe haven from the carnage ongoing in the stock market.
Wave 2 is most likely to recoup about half of wave 1 losses before the market
turns south in a devastating wave 3 ``crash.''
Wave 3 down during February is likely to be considered a ``crash'' by most stock investors.
Why is the market falling apart during this seasonally up-biased period? Lack of confidence.
Investors are losing confidence in the US dollar, in the President, and in the stock market.
As Bush said Tuesday, ``This is a bad movie and I'm not watchin' it.'' Neither are investors.
They'd just as soon sit on their hands until stocks are much, much lower.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
A Forecast for Real Estate in 2003:
Read this excerpt, taken from "The Economy" section of the Elliott Wave Financial Forecast that explains our — Elliott Wave International's — current view of the real estate market. The recently published January edition of the Elliott Wave Financial Forecast puts the events of 2002 into context and looks ahead to market action in the coming year.
Market Holiday Monday
US markets are closed Monday, but will reopen Tuesday.
Stocks:
Stocks tumbled last week as the seasonal uptrend failed and disappointed stock investors.
After reaching the week's high on Monday, the market reacted negatively
to better than expected earnings news during the remainder of the week.
We don't pay attention to the news itself, but to the market's reaction
to the news. A sea change has evidently occured now that the market punishes companies which
even outperform estimates. It was only weeks ago when the market would reward companies
which disappointed only slightly — and positively fell in love with any company
which surprised on the upside. This is a sign that the underlying trend has reversed
to the downside.
The top the market made last week is likely to be retested — eventually —
but we don't hold out much hope that higher highs are imminent. The downtrend, however,
is likely to setup a great buying opportunity when we reach the Ides of March (March
15th), and investors can look forward to a good rally for several weeks thereafter. Unfortunately, that
rally is likely to be yet another bear market rally. These periodic rallies are actually
very profitable affairs while they last, but they don't last long before giving way to lower lows. The
long term buy and hold investor is being taught a very important lesson in market dynamics.
It's unlikely that the majority are going to stick it out through the entire bear market
before swearing off stocks entirely.
We assess the risks and the potential scenarios further for subscribers on our
Detailed Comments Page . . . .
If you haven't taken out a paid subscription yet, it's easy to do either with your credit card or
by check. Visit our Subscription Page for details ("http://www.constant.com/~bcarver/sub.html")!
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org:777/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
DSL Unreliable
If you try to use the www.marketclues.net address and are not seeing a response, or a
very slow response, it's because our SBC tin cans are being blown around in the breeze, so use the
clues.dhs.org address instead to get to the website. Thank you for your patience with
19th Century technology (we don't have much left, however). The only thing stopping us from shorting
SBC is that they are a monopoly and mostly own the government.
Stocks:
The stock market rallied back as we said Thursday morning before the opening and the overall
pattern of this rally is falling into place exactly as we laid out in the FTSE-100 chart (the
market has moved up along the dashed green line). If it continues to follow that roadmap,
look for prices to generally trend higher from here.
But, danger lies ahead, Will Robinson — and soon, as we explain in our
Detailed Comments Page . . . .
In that link above, we give a very specific, detailed scenario for how the market is likely to move over the next
couple of weeks and how you can extract profits at this critical juncture and get positioned for
a very big move directly ahead. We're sure this
information will come in very handy for your shorter term — and your longer term — investment decisions.
If you're not a subscriber, that link above won't work, unfortunately. Might be a good time to make
a very small investment by subscribing to Market Clues. Go to
http://clues.dhs.org:777/sub.html for details now!
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
European Intraday Charts
We have added an intraday chart of the stock market in Great Britain (Dow Jones' Great Britain Index) to the MyClues
page (links above) and, since our quote vendor is no longer supplying us with French CAC and German
DAX quotes on an intraday basis, we have switched over to charting the Dow Jones French and German intraday
indices. The European markets have been leading the US market in recent months,
so early birds in the US can catch the European action overnight and in the morning with our new intraday charts.
The chart of the Great Britain Dow is especially important to pay attention to because it is tracing
out a pattern almost identical to the FTSE-100, the significance of which we have discussed in prior updates.
Stocks: Correcting the Rally
The market retraced a healthy chunk of the New Year rally so far on Wednesday, but held above key
chart support. Yesterday, we suggested short term traders take profits and
look to buy the dip. It looks like the latter part of that strategy may be possible very soon, but
keep in mind that we are dealing with a terminal rally phase within an overall market pattern
that has been under construction since late July. Once this upward, bear market corrective rally is over,
the next move is likely to smash all bullish positions — there is likely to be no stock that won't
go down, in fact. Further discussion of short term considerations for subscribers continues on our
Detailed Comments Page . . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Sell the News
Traders bought the rumor of tax relief, but selling on the news was relatively mild and consistent
with a pause in the rally and not a total end to it. As we have suggested, the current rally should
bear close similarity to the previous October-November rally. And, during that prior wave c,
the market put in most of its gains very early on, then spent a longer period of time simply
consolidating the gains, moving sideways in a trading range. Since we've covered a significant
fraction of the width of the triangle pattern (over 50%), a consolidation into next week is
likely, then a final rally to the intermediate top in the market. Investors should hold here
while short term traders should take profits and look for a dip to repurchase.
It's too early to sell this market short.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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In a study of previous bear markets, Elliott Wave International notes that
Even The Worst Bear Markets Have Rallies.
Stocks: Wave e Rally Feasts on Bears
The wave e rally continued on Monday, despite some early attempts by the bears to sell
it short. The bulls are having a great time as they give us re-runs of the October-November
rally. Unfortunately, the rally will give way to a waterfall decline that takes away well
more than twice the profits the bulls are reaping in this rally.
The OEX traders are growing bullish, but have not yet reached the overly-bullish
stage (2.0 or greater on the call-put ratio), nor have we seen bearish divergence on this
key indicator. Thus, the short term trend remains up.
The key to taking profits on our bullish positions will be recognizing the top when it
comes. And since the next top will usher in that waterfall decline, we can't let our
guard down. We look at how the internal wave structure of the current rally is unfolding in our
Detailed Comments Page . . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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DSL Link Down
As of Friday morning, our DSL link (www.marketclues.net) went down due to an area-wide power
outage. After power was restored, the link failed to come back up and SBC has been notified of the problem.
The alternative link above (clues.dhs.org) should be used to access the website until SBC fixes the
DSL link.
Stocks: Protecting Against Event Risk
After our very timely asset shift from bonds into stocks last week, most investors should now
be thinking about protecting against surprises which might send the stock market tumbling.
This week we discuss ways which not only protect stock portfolios from event risk, but also
virtually guarantee a profit on both the portfolio and the hedging instrument.
We also present our 2003 forecast for the stock market. Although the market is likely to
trend sideways for the year as a whole, it should do so within a wide-swinging trading range which is
likely to offer larger profit opportunities for intermediate term investors than
even the best of bull market years.
Looking out over the next few weeks, we project a likely price high for the current
rally — and emphasize the downside potential/risk that will follow this next peak. Subscribers,
follow the link to read more on our
Detailed Comments Page . . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Party On Into 2003
The stock market had a nice party Thursday as it celebrated the promise of a new year.
As we told you it would, the cessation of tax loss selling released a lot of pent-up demand and
the sideline cash poured back into the market. After selling our TLT shares on
Tuesday for a very nice profit (the TLT tracks the Treasury Bond and represents
a defensive position which normally will rise when stocks fall), those shares fell over
3% from our sales price just since Tuesday morning. And, our new purchases of the
Dow Industrials, S&P 500, S&P 600 Small Caps, NASDAQ-100 and other index products
soared in value on Thursday.
The year is getting off to a great start, following our very profitable 2002. 2003 looks like
it will be even better. If you haven't subscribed yet, be sure to do so — you could have
made back the cost of a five-year subscription just on the first day of 2003!
Click
here to subscribe via PayPal (you can use major credit cards through the PayPal service).
Or, click here
for instructions on how to pay by check.
Subscribers only can continue on to read our
Detailed Comments Page . . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Happy New Year!
Investors closed out 2002 on a slight up note despite procrastinators' tax loss selling
in the final hours. And, our clearest index as far as patterns is concerned also put in
a nice gain on the last trading day of the year (see the
FTSE-100
chart for details on the exact wave count and the path we have projected for the next couple
of months in this leading index).
We have now sold our interest-rate sensitive shares (TLT) and are invested in
the stock market via market index ETFs (Exchange-Traded Funds), which we expect will
rise if the rally we envision unfolds as anticipated. The cessation of tax loss selling
Thursday, along with an improved attitude
among investors, is likely to lead to a nice rally for the next few weeks. After the
next rally top, however, we expect some fireworks on the downside, which we will be
discussing in more detail in this weekend's update. If you are a new subscriber, you
can catch up on our current market analysis on our
Detailed Comments Page.
For now, however, the market is closed for New Year's Day and we'll be back with our
next update after the New York close Thursday. Everyone, please have a safe and
happy New Year's and look forward to an exciting and potentially very profitable
2003.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]tepartners.com")
If no response, use this one instead:
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Interesting reading:
In a study of previous bear markets, Elliott Wave International notes that
Even The Worst Bear Markets Have Rallies.
Looking for a personal approach to learning about Elliott wave analysis? Read Robert Gordon's essay "Elliott Wave for the Masses." Robert Gordon, an experienced Elliottician,
considers his discovery of Elliott waves in 1995 the most important event in his 62 years of investing.
Lessons from the fall of an empire
by Harold James, offers a chilling view of the remarkable similarity to today's Empire
to one of two thousand years ago.
Stocks: 2002 Grinds To An End
Bargain hunting lifted stocks slightly Monday, but there was little eagerness on the
part of buyers, who are, most likely, more interested in which New Year's Eve party
they'll be attending than to which stocks to buy.
Sentiment remains bullish in the OEX pit — that is, most players there
are not bullish, which in a contrary way is bullish — where almost twice as much money
went into downside bets as upside ones Monday. However, the QQQ bulls are out in
force now, pouring over five times as much money into calls as puts. In
fact, those QQQ bulls spent twice as much money on calls as their OEX
cousins did. Normally, the dollar volume in OEX options dwarfs the QQQ variety,
so there are some very big bets being placed in NASDAQ rebounding from its
funk next year.
Unfortunately, we are going to have to see better accumulation before biting
for a long side (bullish) position. We will probably be buying on Tuesday for the
scheduled 2003 rally, but
only if the market is showing some backbone first. If you haven't already, you can read our further
comments on our
Detailed Comments Page . . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Tax Selling
The stock market declined last week on the back of tax loss selling and the hangover
from the previous week's Quadruple Witching options and futures expiration. Overall,
though, there was a pronounced lack of buyers, so prices simply sank under the pressure
of mild selling pressure.
Don't believe the nonsense you read from the Associated Press, though. They blamed
the rise in oil prices for the triple-digit loss in the Dow, claiming that stock investors
feared inflation would ``ripple through the rest of the economy, driving prices . . . higher.''
If only it were so — a whiff of inflation
would absolutely send the market soaring! What the market fears is deflation and that's what
higher oil prices are reinforcing. A rise in oil prices draws cash out of the
pool of money available for discretionary spending and thus lowers demand for other goods
(absent increased borrowing, of course). If supply remains constant while demand falls, the result
is deflation, not inflation. That's also why bond prices rose alongside oil prices,
by the way. If investors really feared rising inflation, they would have sold bonds down as well.
At the very least, however, the AP is good for a nice laugh.
For other analysis you won't find in the local paper (or much of anywhere else, for that matter),
follow the link to our
Detailed Comments Page . . . .
Our normal weekend commentary on other markets can also be found at the link above.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Boxing Day
The market gave the bulls and the bears a challenge Thursday. Initially, it rallied right up to
key resistance, then turned down, losing all the gains and then some. Finally, it closed virtually
unchanged on the day. Most markets around the world were closed for the holiday, but Wall
Street probably got what it deserved for being open on a holiday.
But, the action on the street was quite easy to understand if you look at one of our
intraday charts which shows a trendline which has accurately tracked the market since
the October low — and continues to track support and resistance. Details are on our
Detailed Comments Page . . . .
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: Investors Find Presents Under the Political Tree
Both the Republicans and the Democrats eagerly proposed presents for investors this
holiday season: cutting or eliminating double taxes on corporate dividends, accelerated depreciation and cutting or
eliminating capital gains taxes on stock held long term. While these are enough to
lift the markets over the next few weeks (possibly as high as to within hailing distance of the 10,000's for
the Dow and above 1100 for the S&P 500 — and even to a brand new all-time high record on the
Value Line — they aren't going to be enough to levitate earnings.
But, in the spirit of the season, it's the thought that counts and anything that reflates
the market is bound to have some trickle-down effects on the real economy (if only to
re-inflate the late, great Bubble in price-earnings ratios).
This doesn't change our forecast for the market at all, as we discuss further in our
Detailed Comments Page . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The start to a holiday-shortened week saw a pronounced slowing of trading following last
Friday's Quadruple-Witching expiration of stock options, stock index options, stock futures,
and stock index futures.
This week is not only a holiday-modulated week, but the ideal low timeframe for a
time cycle low (Christmas Day) and a Bradley Calendar turning point (the 30th).
What that means is that we are likely to see little trend during the next week.
And, given the likelihood of a rally in the final wave within an Elliott
contracting triangle (wave e up), we expect that we will get a (possibly)
delayed Santa Claus rally in the opening days or weeks of the New Year.
We are planning to buy index-based products over the next week, but want to
reiterate that there is substantial overall risk of a strong leg down following
the next intermediate peak in the market.
In a normal year, the broad market strengthens this time of year as stocks oversold
as a result of tax-loss selling rebound. We may be seeing such a phenomenon occuring
now in fact. This is the basis of the 100% track record for profitability of long
Value Line - short S&P trades, as we've mentioned many times before.
New ETF Feature on the Website
At the request of a subscriber, we have added a new feature to the
ETF (Exchange Traded Fund) Dynamic Relative Strength form on
the MyClues page. The new feature adds the ability to specify an ending date that prices are compared to.
The default if not overridden is the previous close (shown as "yesterday" in the form). However, you
can erase "yesterday" and enter another date and that date's close will be used as the ending
date for the comparison. For instance, if you wanted to compare ETFs on relative strength
for the five-day period immediately preceding October 10th, 2002, you would enter 5
for the number of days and enter 20021010 for the Comparison to: date. The
format of the date is YYYYMMDD where YYYY is year, MM is month,
DD is day of month. There's a 30-second limit on how long the computations can
take on our server. Email if you run into the limit and we'll consider raising it.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks: A Turn Is Near
The stock market is getting very close to a turn to the upside.
We discuss finessing the turn in our
Detailed Comments Page . . . .
The Euro moved to test the overhead violet-colored trendline formed by the highs
of January 2001 and July 2002. The currency was rejected by this latest test, suggesting
the high may be in. Wait for confirmation before selling the Euro short.
The Dollar Index also looks like it's very close to a bottom here (since it moves exactly
opposite the Euro, that's certainly very consistent). Could be a buy very soon for foreign
investors looking to move into the world's safest fiat currency.
The Canadian Dollar continues to bang its head on the 50% retracement level of the
last decline, all the while demonstrating bearish divergence. The bear trend remains
alive.
The TSE Index briefly broke above its August high last week, but fell back into the
short term trading range. A breakout above 381.78 would be bullish. Next resistance is
above 410 on the red resistance trendline (daily chart).
The A$ has shown a lot more resilience than we expected — due, no doubt, to the
positive effect of rising gold prices. Still, a pullback is due. Watch the daily chart
support lines for signs of a long term breakdown and decline to (potentially) plumb new lows.
Strength on Wall Street over the next month could help pull the Aussie stock
market out of its funk. But, we'd be surprised if it lasts very long and
a drive to lower lows appears very likely in February and March.
The FTSE-100 came down to the support line and bounced off it last week. This is the
index to watch for a successful retest of that line, as discussed in our
Detailed Comments Page . . . .
Bond prices have a little bit of room to rally, but there's trouble in bond-land ahead. Additional comments
can be found on our
Detailed Comments Page . . . .
Sectors and Individual Stocks (Subscribers Only)
For tables ranking sectors and individual stocks, and links to charts of 3500 individual stocks and sectors, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
including access to our exclusive realtime, intraday indicators.
For a 3-4 month free trial subscription, click here.
For complete charts of commodities, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find links to webpages containing links to the following:
- Daily Indices, charts of sector and popular stock and bond market indices on a daily basis
- Quarter-Hourly Indices, charts of selected indices on a 15-minute basis
- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
Commodity prices, as reflected in the CRB Index, were boosted by oil and gold last week. Short term,
they've entered a consolidation trading range before the next leg up. Rising commodity prices do
not indicate an outbreak of inflation. Why? If inflation were on the horizon, bonds would
not have rallied in concert with commodity prices.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
Alternate MyClues Home Page Link ("http://clues.dhs.org:777/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks and Bonds:
Although the market tumbled again on Thursday, there were signs of a turn on the horizon.
Is that a Ho-ho-ho! we hear coming from a jolly old Saint Nick as he warms up for his yearly
visit to Wall Street? We discuss the potential for turns in both stocks and bonds on our
Detailed Comments Page . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
The ``pop-fly'' rally, which we thought would last a couple of days, fizzled quickly and
the market fell back to earth with a thud. It's unusual for a December Triple-Witch
futures and options expiration week to see such a weak market, but the frazzled market
has a lot to contend with these days. With the sabers rattling in Washington and rumors
flying about a military strike before January, most investors are ready to close their
books on the third straight year of overall losses.
We, however, have better things in mind in coming weeks. A potentially very lucrative
series of market moves is fast approaching and we don't intend to miss them. Read about them on our
Detailed Comments Page . . .
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
If no response, use this one instead:
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Stocks:
After Monday's surge higher, the market spent Tuesday digesting the gains. It was another
case of the worm climbing the greased pole two inches higher, then sliding down an inch.
Unfortunately, all of this effort in stocks is likely to have very limited rewards over
the next four months.
One of the big concerns that's beginning to surface here is that foreigners will cash
in their US chips and move their money back home. That was the focus of a story
on Yahoo! this week: Dollar at risk as global investors quietly exit US
("http://biz.yahoo.com/rf/021216/markets_japan_dollar_1.html"). Certainly, the action in gold suggests
investors are beginning to get dissatisfied with not only the US$, but also the other fiat
currencies. If foreigners pull their money from the US, the stock market might even
find itself heading for fair value (under Dow 5000 in our estimation).
Speaking of valuations, Terry
Laundry ("http://www.ttheory.com/") has been doing a series of studies in
the last year on that very topic. His conclusions are essentially the same as
ours: no lasting bull market can get started with stocks as overvalued as they
are right now.
Even so, there are good opportunities ahead which we have discussed recently.
The market may take until Thursday or Friday to get finished with this little
``pop-fly'' rally, but the path of least resistance is clearly on the downside
now. Watch the sentiment numbers: when the option players turn bullish,
it will be a sign the next leg down is close at hand. And, that should mark a
good opportunity in other sectors.
Rather than setting specific price targets, we'd rather watch the market —
and listen to its message. The market is always sending a message. It's best to
be listening for it, rather than forcing your own ideas of what it should do on the
market. You'll never win that argument.
Suggestions on where this market may be heading can be found on our
Detailed Comments Page . . .
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Stocks: Finally, That Bounce
We finally got that countertrend bounce we've been looking for and the pattern is beginning
to clear. Although there are likely to be several twists and turns in the weeks and
months ahead, having a clear roadmap to follow is very important in making money in this
market. That's exactly the subject of today's discussion in our
Detailed Comments Page . . .
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Stocks: High Anxiety
The market fell last week in slow motion, with the Dow and S&P 500 ending about 6.7% below their early
December peaks and the more volatile NASDAQ-100 off almost 13% from its high. What started as
what the sanguine bulls termed a ``necessary correction'' after the big runup from the
October lows has turned into a worrisome slide that shows little signs of a turn.
That's good — it means that a minor pullback has been able to wash most of the
short term bullish sentiment out of the market. Right after the slide began, short
term option players were confidently buying calls, anticipating a short term pullback
to be followed by a rise to higher highs — that's extremely bearish and
reminiscent of the behavior of these traders right after the March 2000 kickoff of
the whole bear market. Even though we are still leaning to
the long term bearish case (there's certainly very little evidence that the two-month
rally off the October lows was any different than any of the bear market rallies that preceded it), we
think that the market is due for a minor rally back to retrace at least half its
losses before turning down again.
The Bradley
has been nailing each and every twist and turn in the stock market for the past several months.
The next significant turn in the downtrend is scheduled for the end of the month. That turn date
coincides closely with the ideal bottom in the dominant trading cycle, which last bottomed on
July 24th. The actual ideal low in the cycle occurs on Christmas Day. When a low occurs on a
holiday, the days afterward can be quite volatile and trendless because the cycle has not yet
turned up with enough force to really move prices, so we don't expect the market to do much
until after New Year's Day. As you can see from the Bradley table, the market could rally for
a few weeks in January, then resume the downtrend. The real bottom in this bear market is
probably many months away, but these bear market rallies of 20-40% keep investors bullish enough to
stay in stocks for the whole ride down — just like in the Crash years of 1929-1932. By the
way, the Crash and decline in the 'Thirties lasted 34 months (a Fibonacci number, incidentally).
The current bear market will be 34 months in length next month and, from the evidence
at hand, looks ready to best the old mark by at least a couple of months. Now, if you count
the bear market as starting in September 2000 (rather than March) — a secondary peak —
it would have to go to July 2003 to equal the duration of the 'Thirties bear. The current bear
market has sliced more than 50% off the value of the US stock market, but the 'Thirties bear took
about 90%. And, given the fact that stocks are selling at a price-earnings ratio of 29 to over 50 (the
first figure is if you believe reported corporate earnings, while the second figure is if you believe
S&P's core earnings estimates). The average Price-Earning ratios at the bottom of past bear
markets? 12. Oops, it looks like there's air underneath this market.
One tell-tale sign of a big rally starting would be a 9:1 breadth day. In other words, when 9 times
as many stocks are advancing than are declining (at the close), it signals a big uptrend in effect. This
happened on the last day of 1986. It's possible it could happen again this year. Back in
'86, most market watchers dismissed the significance of this due to low trading volume.
It turned out to presage a 900-point rally in the Dow (doesn't sound like much these days,
but back then, that 900 points was a lot).
New Chart
We've added a chart of the Volatility Index
(VIX) which includes Bollinger Bands. These bands help identify extremes of highs and lows
by measuring statistical volatility. Our version of Bollinger Bands measures three different
timescales: 5-day, 20-day (the standard measure) and 80-day, which are shown in different
background colors to distinguish them (dark blue for 5-day, blue for 20-day and crimson for 80-day).
You'll notice that at the end of November, VIX reached
an extreme on the medium term (20-day) band and started rising. This preceded the
recent price peak in the market by a couple of trading days. Some of you emailed to
ask why VIX was rising along with prices. It turned out that it was an excellent time to sell.
However, despite the bear market, we've been able to find stocks that are rising, as we
discuss in our
Detailed Comments Page . . .
There we discuss a sector which rose sharply last week and we also mention some seasonal trading opportunities which,
historically, have never lost money!
We think the market is very close to topping, but hasn't yet. Europe's economy is far worse off than
the US economy, growing little more than 1% recently while the US has been growing at least twice
as fast. There's no reason the Euro should be at current levels. Once it tops, it should be a great
short sale. The only reason we can see for the Euro to be up is that the US dollar was down on gold
strength. Otherwise, this currency would have been down in dollar terms.
The Dollar Index was weak last week, moving inversely to gold.
The Canadian currency hit the top of the trading range within a long term downtrend last week,
a price which also just happens to mark a 50% retracement of the last big decline. The stage is
set for further decline ahead.
While we did not get a bounceback in the US stock market, we got a bit of a rally in the Toronto
TSE Index. This bounce is likely to continue on the very short term, with the market destined to trend lower into
the 2nd quarter of 2003.
The Aussie dollar continues to struggle with the long term, violet-colored resistance line
(see the Weekly Chart). This line
has held the A$ back for several years and it's doing so again. If the A$ cannot break out successfully,
we expect a fall into the 53¢ level, at which point a reassessment of long term prospects would
be required.
Near term a trading range is likely. Last week's decline took the All-Ordinaries to near the mid-November
low, but more importantly, the market is now in oversold territory. Look for a bounce rally this week
(as long as the November 12th low of 2915.40 is not significantly broken).
A rally above the dark brown overhead resistance polytrendline on the daily chart would be extremely
bullish and signal an end to the bear market and a substantial rise ahead.
A short term bullish development has occured as the daily chart indicates. Expect a short term rally
to get underway shortly (as long as Friday's low isn't taken out) and the market could rally for several
days before topping (look for resistance at the top line of the triangle) and plunging to near 3300 (Friday's low was 3839.40). Some very interesting and
volatile trading is coming to the London market, which tends to lead Wall Street a bit.
Strength in stocks near term should send the bond market down in a retracement of the recent rally. More on the
Detailed Comments Page . . .
Sectors and Individual Stocks (Subscribers Only)
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MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
including access to our exclusive realtime, intraday indicators.
For a 3-4 month free trial subscription, click here.
For complete charts of commodities, please visit your very own
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-- in the CHARTS & RESEARCH section of the page, you will find links to webpages containing links to the following:
- Daily Indices, charts of sector and popular stock and bond market indices on a daily basis
- Quarter-Hourly Indices, charts of selected indices on a 15-minute basis
- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
The CRB Index, despite new relative highs, is climbing up under its old support line on the
Weekly CRB Chart and should
soon find the trend has turned down. Only gold and oil are driving commodity prices right now
and they're not inflationary (rising oil prices act as a braking force on the economy, evidenced
by the fact that the bond market rallies on rising oil prices and falls on sinking oil).
Anyone who thinks inflation is about to get out of hand isn't watching the real economy.
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Stocks:
The time cycles are all pushing stocks down, despite the desperate attempts of money
managers to manipulate prices higher. Again on Thursday, heavy flows of cash into QQQ
(NASDAQ-100) call options failed to maintain an uptrend in the stock market. Has the
magic failed the manipulators? It certainly does look that way!
With cyclic pressure due to grow ever more negative in the near future, it won't be
long before the rats realize the ship is sinking and they are trapped on the Titanic
as it lunges below the surface one last time.
But, the areas we've highlighted as likely to do well are, indeed, doing very well
right now. Further discussion can be found on our
Detailed Comments Page . . .
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Stocks:
The market continues to attempt to rally, but is having trouble getting traction.
The QQQ (NASDAQ-100) option players, who have been buying loads of call options (bets that
the NASDAQ will rally, have so far been frustrated. Normally, option players are
the ``Wrong-Way Corrigans'' of the market, usually becoming bullish at the top
and bearish at the bottom. That's, in fact, the kind of track record the OEX
traders have exhibited for more than the decade we've been tracking their sentiment.
However, in recent weeks, especially during the October-November rally, the
QQQ players were exceptionally good at tipping coming rally surges by moving into
calls in large numbers. We attributed this phenomenon to front-running their
own buy programs in the underlying stocks — in essence, they were helping boost profits
on their call options by buying the underlying stocks.
Undoubtedly, they were helped by speculators who were jumping back into the same
stocks they had bolted out of in the May-July decline. In fact, one of the tipoffs
that the rally was not the beginning of a true bull market was the fact that
overvalued stocks were rapidly growing even more spectacularly overvalued, rather
than a rotation into undervalued new leaders. In other words, the ``Greater Fool
Theory'' was working in the QQQ players' favor.
With the recent rally sending overvalued NASDAQ stocks into nose-bleed territory,
however, there may be a considerable lack of new fools. We still can't count out
the possibility of a rally to take back around half to two-thirds of the decline
so far, but time is running out for the NASDAQ bulls. The 16-day cycle bottomed
last week, but has provided only brief spurts to the upside. It appears from our
Money Flow analysis that heavy selling continues to come in on rallies. We won't
rule out a rebound rally just yet, but it appears the downtrend is just as strong
as ever.
This is in line with the Bradley
Calendar: the next turning point is weeks away now. And, the overall trend
is expected to remain down for months. However, there are long term signs that
say 2003 will bring a huge rally, but it could very well get started from much
lower levels than the current market is trading at.
The long term pattern in the broad market, which we have discussed as our
preferred count several months ago, continues to take on the appearance of a
large trading range known in Elliott Wave circles as a contracting
triangle. We're nearing the final phases of it and the
fireworks are going to go off in a big way early next year if the pattern
plays out to a conclusion in January. We are likely to see a volatile trading
market within a narrowing trading range, as the pattern calls for. The final
wave within the triangle should get started at the next significant trading low due late this
month.
In any case, next year's bull market should be a real barn-burner on the upside
(and you thought we would always be bearish?).
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Stocks:
A slow-motion bounce took hold of Wall Street Tuesday, but there was little evidence that
investors were getting any more confident in the ability of the market to move up —
as it normally does this time of year. Sentiment is beginning to become a more
positive indicator, though. The fact that only 56¢ of upside bets on the OEX were made
for each dollar of downside bets says the crowd is betting on the downside. That's a good
contrary number and very close to the level which we like to see for a good trading bottom.
Indeed, those traders are probably right on the intermediate term trend, but the
short term trend is more likely to see the market retrace about half of its December
losses before we get another leg down. Indeed, the QQQ traders were considerably more bullish
Tuesday than their OEX counterparts — and the QQQ traders have been prescient on market
moves in the last couple of months.
Additional comments will be found on our
Detailed Comments Page . . .
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Stocks:
The tumble off the spike reversal high of Dec 2nd continued on Monday. Although option
traders are growing a bit more bearish, they haven't even come close to being truly
bearish yet, so any bounce here would be of only short term relief from the oversold
condition. The trend is likely to continue lower through the rest of the month, although a trading
range could send the market sideways until the short term oversold condition is worked off.
One reason to expect a trading range is that Money Flow continues to diverge
bullishly on the SPY chart, while growing less bearish on the QQQ chart.
That is enough to suspect that the market makers and floor traders are ready to see
a bit of short covering before taking stock prices lower. All bets are off when the
bombing of Iraq begins in earnest, of course. That's a foregone conclusion at this
point given strong evidence that Iraq is a major thorn in the coalition's side — and
likely to become a truly serious infection if not treated in the near future. No matter
how hard Saddam tries to hide his weapons of mass destruction, it won't be long before
this monster and his regime will be forcefully ended.
Once the fighting has progressed to the point where it is clear that the coalition
will win a major victory in the region, the stock market is very likely to celebrate.
However, at this point, the best estimates we've heard on when that will be point
to no earlier than January, and possibly a bit later (our technical work points toward
a major bear market low in the March-April timeframe).
Dow Quote Problem
Quotes from the CBOT on Monday were just plain wrong, which affected some of the charts.
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Stocks: A Divided Market
There are a couple of stocks which exactly mirror two key market indices:
SPY tracks the S&P 500 Index of 500 blue chip stocks and QQQ
tracks the NASDAQ-100 Index of 100 leading NASDAQ stocks. In the October-November
rally just concluded, the QQQ outperformed the SPY by a considerable margin.
We have noticed, though, that the Money Flow patterns in these two stocks
painted very different pictures this past week, as the following charts
illustrate:
[Both of these charts are updated every quarter-hour during market hours
on your MyClues website. The SPY link is next to the
S&P 500 intraday link, while the QQQ link is below the Relative
Strength Table.]
The QQQ chart above shows a very clear pattern of distribution,
indicating that the bulk of the trading activity is dominated by selling pressure —
the Money Flow line has been trending lower.
There is no evidence of significant or sustained buying pressure,
leading to the conclusion that this index, and by extension the high tech
sector it represents, remains in a bearish trend.
The SPY chart, on the other hand, shows more of a fluctuation
between phases of bullish accumulation (rising Money Flow line)
and bearish distribution (falling Money Flow line). During
the first part of last week, when the SPY was peaking, the Money Flow line shows that
sellers were dominating trading and warned that the rally was not to be
trusted by those long (i.e., those who are bullish and holding stock index futures or
stocks). This condition of rising prices, but a falling
Money Flow line, is known to technical analysts as bearish divergence and indicates
a weak market doomed to failure at some future point (barring an influx of
money on the buy side to keep the rally going). Toward the end of the week after several
days of price declines in the market, the pattern
reversed and buying pressure was evidenced by a rising Money Flow line while prices
continued to decline — a condition called bullish divergence by technicians.
Finally, on Friday morning, the market made the cycle low
we had been looking for and rallied back somewhat. Although QQQ did rally in price alongside SPY,
the fact that its Money Flow line fell back toward its lows near the close casts
doubt on the staying power of this rally in the QQQ.
At this point the only thing
that's clear about the future course of the market is that it's awash in an unsettled
sea, with cash moving out of the tech sector and, sometimes, into bluer chip issues.
This is a sign of nervousness amongst fund managers, who tend to gravitate to more
liquid blue chips because they can liquidate their stock positions in a hurry if need be.
So, the positive flow of funds into the S&P 500's SPY is not necessarily all
that bullish an indicator — it's more a sign of a nervous market with ``hot'' cash
finding a motel to stay in for the moment, but not necessarily taking up long term residence.
During the last week of November, we registered a sell signal based upon our
OEX sentiment indicator. Since that sell signal, the market has been under
selling pressure while attempting to move higher but failing to do so. According to the Bradley Calendar, the trend should be
expected to remain down into late December, with only a brief period of
strength into the New Year, then a renewed decline in the First Quarter. This
flies in the face of the seasonal tendency for the market to move higher in the
October-April season, so there's a tug-o'-war between those two forces. Given
the fact that stocks, especially tech stocks, are overvalued from a fundamental
viewpoint, we think a move lower would benefit the market in the long run by
making stocks more attractively priced.
Special warning to users reading this on Hotmail: Microsoft has been found
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please visit your MyClues Home Page to reach the desired page instead.
There is a sector we've been spotlighting recently which has been
gaining ground day by day. We discuss it and its bearish implications for the broad
market and the economy on our
Detailed Comments Page . . .
The Euro continues to hold near the top of the trading range. In our opinion this is a distribution
top, meaning the Euro will soon embark on a sustained downtrend in price relative to the US Dollar.
The US Dollar Index continues to find resistance at the descending resistance polytrendline on the
daily chart. As long as it continues to hold the long term violet-color support polytrendline on the
weekly chart, the ultimate resolution of this trading range should be to the upside.
Long term trend remains down.
The test of the August high failed and the index is demonstrating clear bearish divergence,
signaling trouble ahead.
While continuing to hold the daily support trendlines, the weekly chart shows the A$ has still
not mastered the long term downtrendline. Ultimately, the market will decide, but we think the
decision will be to the downside.
Although showing a bit more strength in the rally than we expected, the market succumbed to
influence from the US stock markets last week and tumbled. In line with the other stock markets,
we don't expect a near term bull market here to develop for several more months except for select
stocks and sectors.
The desultory trading range has broken down now and the market drooped below its bullish
support line. We think there's a reasonable chance that this whole pattern is a contracting
triangle now in its wave d to the downside. If that's the case, once this decline finishes
(and if the Bradley is correct, that would be near the end of month), a wave e rally would
top below the high of wave c (4224.80) and be followed by a plunge to new lows next
year.
See our
Detailed Comments Page . . .
Sectors and Individual Stocks (Subscribers Only)
For tables ranking sectors and individual stocks, and links to charts of 3500 individual stocks and sectors, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
including access to our exclusive realtime, intraday indicators.
For a 3-4 month free trial subscription, click here.
For complete charts of commodities, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find links to webpages containing links to the following:
- Daily Indices, charts of sector and popular stock and bond market indices on a daily basis
- Quarter-Hourly Indices, charts of selected indices on a 15-minute basis
- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
After breaking long term support weeks ago, the CRB rallied up to retest the old support line
from underneath. This process seems to be close to completing, with the deflationary trend set
to resume. With the unemployment rate zooming over 5% last month — rising from 5.7% to 6% — the probability of further price
increases in commodities from the consumer demand side of the equation is a dwindling percentage.
The sharp decline in copper prices is just one of many commodities which are tumbling. Were it not
for gold and oil, the CRB Index would be much weaker at the present time.
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Stocks:
With the trend now firmly down in the stock market, we expect a short term
bounce very soon. On Thursday, there were tentative signs of such a rebound
developing, with the ``lead dog'' indices beginning to firm up after leading
to the downside all week. A 50% retracement of the fall to date would be
a normal expectation, but given the seasonal uptilt to stocks this time of
year, a full retest of Monday's high cannot be ruled out.
Sentiment supports a bounce back rally here, with the OEX pit turning
neutral to slightly bearish and the QQQ traders switching from puts to calls
(the latter have shown themselves to be much less of a contrary indicator than
the former in recent weeks — in fact, QQQ volume may be tilted toward
program traders positioning themselves ahead of stock transactions, making
them a leading indicator of programs to come). We suspect that there will be some program buyers
on the scene soon considering the weight of call dollar volume in the QQQ.
The market is still looking for direction, waiting for a catalyst to show
the way. The seasonal rally has left the bulls in a fairly untenable position
holding too much in the way of overvalued stocks.
Longer term sentiment continues to warn that this is not the
beginning of a sustainable bull market, but rather a bear market rally
designed to draw the crowd back into the stock market ahead of further
declines. The Investor's Intelligence poll of advisors has never
shown twice as many bullish as bearish at the beginning of a real bull market. Instead,
those numbers are characteristic of a bear market rally. Real bull
markets will climb a Wall of Worry, not a Slope of Hope, as this
one is doing.
Some have pointed to good breadth, or plurality of gainers over decliners,
as a sign of a new bull market. The best day since the October bottom occured
last Wednesday in a shortened session just before Thanksgiving, a day which
almost always sees the market rally. Even on the very best day of the rally,
the ratio of advancing stocks to declining ones on the NYSE could only reach 3.8.
If this were a real bull market, we should have seen a ratio of around
9.0 by now. If we were to see such great breadth, of course, we'd have
to admit we're wrong about the bear market rally and join the bullish majority.
Nothing yet indicates we are anywhere near that point, however.
Investors in the future are likely to look back on this ``Indian Summer'' of a stock
market as the last, best chance they had to sell the stock market before the next big leg
down.
Of course, there is that stock sector we mentioned yesterday, which did pretty well
on Thursday. We think it's going to trend higher while the rest of the market heads
lower. If you haven't read the prior day's comments, you can do so now on our
Detailed Comments Page . . .
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· ^IXQ
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
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· A Week Ago
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Stocks: Bounce Due
The market never moves in a straight line for long and a bounce is due in the declining
trend. But, the severity of this correction has yet to sink in after weeks of soporific
bear market rally. We say that because our sentiment gauge, even after several days of
decline, still shows that option traders are blithely buying more dollars worth of call options
that puts, betting that this is a dip worth buying, rather than a shelf worth selling.
Such confidence in the face of a decline is a sign of complacency of the first order.
A bounce back rally here should demonstrate just how much conviction the bulls have.
If the NASDAQ lead-dog indices are relatively weak, we can assume the recent decline
was simply the initial leg down and that a much stronger decline lies ahead once the
bounce is finished.
One sector has been doing great despite the weak broad market. We discuss it in our
Detailed Comments Page . . .
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· ^CRB
· ^HUI
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Stocks: Key Support Trendline Breaks
The two leading indices in this rally have been the NASDAQ-100 and the Semiconductor
Index. Both of those indices broke through key support lines on Tuesday, confirming
the trend is lower. We are currently on a short term sell signal in stocks based on bearish
sentiment divergence as of the close last Wednesday.
An interesting shadow of the selling in NASDAQ occured earlier in the day. Put dollar-volume
in the QQQ options jumped far ahead of call volume, and even ahead of OEX put dollar-volume
as well. It is possible that program traders are using QQQ options to position themselves for
profits ahead of anticipated program trades. We noticed unusually predictive activity in the
QQQ call options in the runup to the early November elections. Instead of being a contrary
indicator, unusually large dollar-volume in QQQ options appears to be indicative of program
trading activity hours later in the day. Now, we're seeing the same type of activity in the
puts, with a subsequent decline following. These figures are updated on our website
throughout the trading day.
Interest in the gold stocks is picking up here (see the HUI and XAU charts, for instance).
With international tensions rising along with the possibility of a meltdown in Japan
(Japanese banks may have to sell US stocks and bonds to shore up their sinking foundations),
the gold market is showing signs of being one of the few safe havens again.
For those who are familiar with spread and seasonal trading, we'd like to remind you of
their excellent track record at this time of year (some have never shown a loss
and this has been the case for many years after their 100% success rate was first publicized).
We are working on a Spread Trading Special Report right now which we hope
to publish in the next week or so.
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· ^HUI
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Stocks: It's a Mania
To everything there is a season — and this one is wild and manic. Speculators are pouring
almost twice as much money betting on further rally even though the market is heading lower.
On Monday, the crowd continued to plunge headlong into the most speculative stocks — those
either without foreseeable earnings or those with only modest growth ahead — the
semiconductor stocks represented by the SOX. It's pretty clear that we're replaying March
2000 (the zenith of the Bubble) right now in terms of sentiment. Then, the speculators welcomed every dip as a
buying opportunity and bought call options. They believed that trees can grow to the
sky.
Unfortunately, trees didn't grow to the sky and most of the forest has since burned down.
But, the speculators have decided that, after almost three years of unrelenting bear
market, faith is back and the tech stocks are going to allow them to recoup their
losses — between now and New Years' Day, of course! How any group of investors,
after being so badly burned, can so easily believe that the semiconductor stocks
will magically come back to life and revitalize their portfolios beggars belief.
Then, again, alcoholics share those traits, don't they?
Perhaps Greenspan's Twelve Step Program to reliquify the stock market is finally
beginning to work?
Well, PE ratios in the hundreds — or, infinite — eventually will have
their comeuppance when reality bites. Chances are the reversal which occured Monday
was the last gasp of the bear market rally. The decline unfolded in a clear
five wave move to the downside, which qualifies as a genuine downside trend.
The last hour rally Monday was likely the final countertrend rally before a larger
plunge to the downside.
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Sector Performance Since:
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Stocks:
After our sentimental sell signal given on the close Wednesday, investors
decided it might be a good time to take some profits on the bear market rally.
Although ending the week in the black, profit-taking sent most indices
to closing losses despite the favorable monthly seasonal and holiday tendency.
We have found that the broad market tends to close up on the last trading day of the
month 70% of the time. And, there is also a tendency for the Friday after
Thanksgiving to see an up close in the blue chips. Since the market failed
to live up to normal expectations, we can conclude this to be a sign that the
top is behind us. The potential for new lows ahead is high.
Although the trend is now firmly down, the market may spend a few days forming a broadening
top in the general price area it moved through last week.
For further discussion of the stock market, please see our Detailed Comments Page . . .
The Euro remains very weak and has now broken through its uptrend support line. A halfway retracement
of its 2002 rise targets 93.67¢ — it closed Friday at 99.4¢.
The Dollar Index needs to break above the light brown polytrend resistance line in the daily
chart to turn the trend up from here. Although this may very well be a bear market rally, it
should exceed the previous high and engender bullish sentiment toward the dollar. A failure to
break above that downtrending resistance line, however, would be extremely bearish for the US currency
and the US stock market.
The Canadian Dollar remains in a broad trading range that is likely to eventually see the
currency break through its bottom at 62.5¢.
Friday was a Time Ratio High turning point, suggesting the Canadian stock market should have
formed a top.
The Aussie Dollar broke above the downtrending resistance line, then closed a very volatile week
below it. The battle is on between the bulls and bears, with jury out. The breakout was bullish,
but the close below the line bearish.
The marginal break of the resistance polytrendline helps target a bottom in the bear market
for March 2003. The Australian market is now aligned with Wall Street in terms of when
to expect a bottom.
The FTSE is directionless, waiting for a catalyst to engender a trend.
Bonds have been a source of funds for stock investors in recent weeks. The top in stocks
should put an end to the bleeding from bonds.
Sectors and Individual Stocks (Subscribers Only)
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- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
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The CRB Index appears to be working through an expanding triangle (or broadening top formation).
This pattern implies that a much more volatile environment is building steam, with large
swings in commodity prices (perhaps oil and gold?). As with all triangles, once the pattern
is complete, a thrust rally should end the entire runup from October 2001.
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
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· 18 Oct 1999
· A Week Ago
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Stocks: Sentimental Sell Signal
On very light volume, stocks rallied back on Wednesday in a fifth and final
wave up in the rally from early November. This five-wave up move completes the wave C
rally of an A-B-C bear market rally which started in early October.
Sentiment is the most powerful and reliable technical indicator because it
provides a snapshot into what the crowd is thinking. We like to see a ratio on the
OEX gauge of better than twice as much money being bet on further rally to register
an overly-bullish condition. We then look for a higher high in price to coincide
with a lower reading on the dollar-weighted OEX sentiment gauge — a condition known
technically as bearish divergence — to signal a condition where the market
is at — or is in the process of making — a top.
That's exactly what we're seeing right now. On Monday, the OEX closed at 476.95,
while the dollar-weighted call-put ratio closed at 3.22.
On Wednesday, the index closed at 480.36, with the ratio closing at 1.81.
In other words, the index made a higher high, but the indicator made a lower high,
constituting a case of bearish divergence — thus a definitive sell
signal from sentiment.
Numerous other indicators are pointing to a significant stock market top in this
timeframe, including the Bradley Calendar, which projected a turning point
this week, as well as a confluence of Time Ratio
turning point projections for Friday, November 29th. Additionally, oscillators are
overbought and moving to lower highs — more bearish divergence against new highs in price.
As if to underscore the importance of the current time period, the
Australian
All-Ordinaries rallied up to the downtrending resistance line which has provided a
ceiling several times starting in May and most recently in August.
The XAU
Gold Stock Index is also testing support in the large contracting
triangle formation which should lead to a powerful thrust rally. The HUI
Gold BUGS Index has been relatively stronger than the XAU, which is bullish for
gold price in general because the BUGS do not significantly hedge (sell forward
contracts) their gold production. When a gold mining company hedges, it loses money
when gold prices rise. The fact that the BUGS are stronger indicates the market is
making a forecast that gold prices will rise in the future and benefit the non-hedged
gold mining stocks.
We're at a critical turning point in the market right now. If a top is in place this
week, or early next week, the stock market is likely to trend lower throughout the
rest of the year and perhaps for the first quarter of 2003.
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
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Stocks: Mania Peaking
The manic urge to buy shares before they get more expensive seems to be cooling just
a bit. However, the number of bears reported by Investor's Intelligence dropped
to the lowest level of the year this week. Apparently, the belief that seasonals will
protect the guilty is rampant among investors.
Will they be saved by the benevolent season? In most years, we'd have said ``yes'', but
this is a bear market which takes no prisoners. Thus, the seasonals appear to be poised
to disappoint this year, given the dominant 22-week trading cycle low due in the next few weeks.
Light holiday trading led to big pullbacks in the indices. The SOX Index, which remains
in la-la valuation land, fell over 4%, but remains ahead 67.12% from its bear market
closing low of October 10th. Does this all feel like the March 2000 top all over again?
You bet it does.
Back in 2000, most observers were solidly in the ``buy the dip'' category, so any
pullback was greeted with confidence that an opportunity to buy was at hand. In
Tuesday's big tumble, more money continued to pour into speculative bets on the
upside ($1.17 went into OEX calls for each $1 of OEX puts). This is the kind of
sentiment which marks very dangerous territory for the bulls. If we do get a bounce
back from Tuesday's dip, it would likely fail and lead to much more on the downside.
The stock market will be open all day Wednesday, closed Thursday for Thanksgiving,
then open for only a half-session on Friday. The bond market closes early Wednesday
and Friday (and is also closed all day Thursday). Have a Happy Thanksgiving!
Due to the light volume, traders are best advised to take some time to spend with
families. Although the NASDAQ especially is near support, we think the trend has
turned neutral at best (and very negative at worst), and in this low liquidity
environment, the ability of floor traders to gun for stops is enhanced.
Note: Wintry weather caused intermittent connectivity problems with our webserver Tuesday
and our redundant route had problems due to a name server outage. Hopefully, this
double-whammy won't be repeated soon.
Format for printing.
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· ^SML
· ^CRB
· ^HUI
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: They Love That Dip
Welcome back to Bubble-land! We're so pleased all you investors have decided to rekindle those
grand ol' days of stock price growth without any prospect of earnings!
That seemed to be the dominant emotion on Wall Street Monday as the crowd went into
a frenzy betting on the upside. Our OEX numbers were well into overly-bullish
territory, warning that manic emotions are at play now.
As one subscriber wrote,
``Bob,
One more SOX fact: the index represents 17 stocks. 8 have no earnings, one has a PE under 50, that is KLAC (KLA-TENCOR) at 46. Linear Tech, Maxim and Intel are under 60. XLNX is in the 604s. The rest are over 100 and some over 200.
And I saved the best for last, all those numbers are before today's 3.22% climb in the index.''
And, an alleged internal KLA-TENCOR memo sent to the Longwaves Forum Sunday evening stated that
chipmakers like Intel, IBM and several Taiwanese companies were slashing equipment orders,
with the result that, for the first time in its history, losses for KLAC were to be expected over
the next four quarters.
Truly, the bubble is back. But, how long can it last?
We discuss the technical patterns which point toward a particular time when the market should
peak in our
Detailed Comments Page . . .
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
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· ^CRB
· ^HUI
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Sector Performance Since:
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· 18 Oct 1999
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Stocks: A Clear Path for Stocks Ahead
There are times when the path ahead in the stock market is clearly marked. And,
there are many more times when that path is shrouded in fog. Fortunately, we are
at a time when the path ahead is clear.
Reviewing the bear market rally:
The market bottom in early October (8 Oct in NASDAQ, 10 Oct in the Dow), kicked off wave A
of an A-B-C rally phase. Wave B consolidated the gains from the 6 Nov top and we are now
within the final rally, wave C. Within wave C, the market is tracing out an impulsive
five-wave move with wave 3 complete and wave 4 in progress. Wave 3 was relatively weak
as third waves go, falling short of the net advance in wave 1. Since wave 5s are usually
the weakest wave, it's very possible that we've seen the high price of the entire bear
market rally already. Normally, wave 5 will move the market to a higher high, though, so
it's more likely that we'll see a higher high this week, but don't count on it.
Timing. A tremendous confluence of timing indicators point to a turn this week.
And, there is a very important behavior in the market which will help pinpoint the
top as we discuss further in our
Detailed Comments Page . . .
The Euro remains close to its recent highs, but, fundamentally, there is no reason
for the Euro to be so overvalued. Interest rates are relatively high for a zone with
such poor economic prospects, but appear to be the only thread holding this currency up.
The US Dollar Index has held within a narrow trading range for months, but
given the potential for a rally in gold prices, is likely to break down soon.
The rangebound trading continues with a likely steep decline ahead once the bottom falls out.
The TSE should find strong resistance at the August high (380.33) and turn down.
The A$ continues to struggle at the resistance line on the
Weekly
Cash Chart. The yellow polytrendline suggests some upward pressure could potentially continue for
up to two more months, but the trend should turn down strongly at some point, relieving pressure on
the Australian stock market and Australian exporters. It's very likely that the government is
artificially levitating the A$ due to some unwise investments they made on the future course of
the currency.
The market is closing in on resistance at the brown polytrendline (just above 3000), which
should provide a ceiling this week. Although the Australian market tends to be a follower
of Wall Street, its recent relative underperformance may be a leading indicator if it turns down alongside
NASDAQ, rather than the Dow.
All of the stock markets are in basically the same shape this week: topping. In the case
of the London market, the high is likely to be below the August high of 4466.4.
This is an important market for all investors to watch: the London market often tops out before
the blue chip US indices.
Bonds continue in a long term bull market with corrections mostly due to strength in
the stock market. With the stock market trend changing this week, the bond market
should benefit from flight-to-quality buying.
Note: extended comments will be found on our Extended Comments Page . . .
Sectors and Individual Stocks (Subscribers Only)
For tables ranking sectors and individual stocks, and links to charts of 3500 individual stocks and sectors, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
including access to our exclusive realtime, intraday indicators.
For a 3-4 month free trial subscription, click here.
For complete charts of commodities, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find links to webpages containing links to the following:
- Daily Indices, charts of sector and popular stock and bond market indices on a daily basis
- Quarter-Hourly Indices, charts of selected indices on a 15-minute basis
- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
The pattern in the CRB is a broadening top formation. Although this implies volatility, it also
implies a significnat long term top is forming. This is bad news for the economy as it implies
a return of the deflationary trend and recession/depression ahead.
Copper continued up last week and appears headed for the 62% retracement price of 74.67 basis
December. Copper is a great leading indicator for the economy: if the 62% retracement price is exceeded,
it indicates a strengthening economy.
The contracting triangle is nearing completion. Is gold gearing up for a flight-to-quality
rally due to some future event? It certainly looks that way. We shall soon see the outcome
of this formation.
For an up to date list of the stocks in the Gold BUGS Index, see
"http://www.amex.com/othProd/prodInf/OpPiIndComp.jsp?Product_Symbol=HUI".
And, for charts of — and ratings for — those stocks, visit your MyClues Home Page (links at the top of this page).
Format for printing.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
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· ^MID
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· ^NYA
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· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
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Stocks: Thrust Rally Continues
There's not a lot to add here after calling for a thrust rally and getting it.
This rally is burning through much of the sideline cash and should burn itself
out before long. Remember to watch for NDX and SOX to top first, a couple of days
before the SPX and DJ.
It's very hot money levitating the market higher as brokers and money managers
desperately attempt to drive the market to a higher close for the year as a whole.
These managers are paid to earn money and are using various rationalizations to
manipulate the indices. They've been doing this since early October to push the
stock market up into the Election. Now, they've driving toward eliminating the
possibility of a third straight year of losses in the Dow and S&P 500.
While they may temporarily control stock prices, they will eventually lose
control. And, something they very definitely do not have control over
is the possibility of a terrorist attack on the scale of 911. When that
happens, these euphoric feelings will evaporate very quickly.
If you're long the market for the rally, be sure to keep very tight stop
losses: this is, after all, a thrust rally, which means it will
burn itself out very quickly.
Note: a discussion of when this thrust rally will burn itself
out and produce the next major intermediate top
continues on our Detailed Comments Page.
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Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Lead Dogs Surge
Our lead dog indices, NDX (NASDAQ-100) and SOX (Semiconductors), have been telling us this
bear market rally wasn't over. They have been leading since October 8th, bottoming two days
ahead of the blue chips, and have been stronger all the way up as the
ETF 20-Day Heat Map
illustrates (which the QQQ and IGW entries graphically illustrate).
In the prior update we said,
``Stocks on the short term continue to work sideways in what could be a contracting triangle in the wave B position (counting the October 10-November 6 move from Dow 7200 to 8800 as an overall wave A). This is short term bullish if the pattern works to completion because it could resolve into a thrust rally in wave C.
If the short term pattern is a contracting triangle, we should get a complete pattern this week and an up thrust into Monday or Tuesday.''
The lead dogs jumped out ahead of the pack Wednesday as our
Relative Strength
Page illustrates — this page is a subwindow on our Trading Page, where it
automatically refreshes itself every minute during the trading day. The lead dogs were
clearly out in front despite the early selloff to test support lines, signaling that
the market still had work to do on the upside. Here is a snapshot of the table taken
during the final minutes of trading Wednesday illustrating these points:
| Relative Strength of | Compared to | Strength | Quote Age |
|---|
| NDX | DJ | +2.29% | 39s |
| NDX | SPX | +2.12% | 9s |
| SOX | DJ | +5.16% | 39s |
| MID | SPX | +0.18% | 9s |
| SML | SPX | -0.13% | 9s |
| VLE | SPX | +0.10% | 9s |
Despite the strength the lead dogs are showing, however, they will top out about two
trading days ahead of the next intermediate top in the market. Consequently, with
important turn dates due next week, we have to carefully watch for signs of weakness
in the ``dogs'' to signal an important turn. That turn could be to a very strong
resumption of the underlying bear market trend.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks:
We hope you're enjoying Free Week at Elliott Wave International. If you haven't
done so, the URL to sign up is
"http://www.elliottwave.com/a.asp?url=http://www.elliottwave.com/freeweek&cn;=mktclue".
The trading range, directionless stock market waffled around again on Tuesday, although a brief
intraday rally sparked a bit of short covering in mid-session. But, the gains could not be
sustained. The market is waiting for something to give it direction. Interestingly, it could
have reacted badly to the news that Iraq has violated the most recent UN resolution and thus
has invited the coalition to attack, but apparently, that bit of news had already been
discounted by the market.
We are expecting this current period of narrowing trading range to be the calm before
the storm. Low volatility regimes build up energy for high volatility once a spark
ignites the crowd. We have several turning points due soon which point toward a big
surge directly ahead.
Gold stocks sold off Tuesday as the narrowing trading range works slowly toward the
day of reckoning. This market also confirms that a high volatility move is coming.
With commercials short and speculators long, the smart money is betting that gold
prices will be lower at some point in the future. However, that is a long term
perspective and a short term thrust rally would be consistent with the longer term
bear trend these stocks have been in for the last couple of decades. The timing of
that thrust depends upon when the triangle is complete. That should be coming up
in the near future.
Note: detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Free Week Begins Today at ElliottWave.com
Today at 5 p.m. EST, Ellottwave
International (link: "http://www.elliottwave.com/a.asp?url=freeweek&cn;=mktclue") opens their
doors for another free week for Market Clues subscribers. Use the link above to sign up!
Stocks:
The stock market completed five waves up Monday morning and started a retracement.
We have been looking for a correction of normal proportions (38-62%) of the preceding
advance at the very least, but it appears that the sideline money continues to flow into
high tech stocks despite historic high valuation levels.
One confirmation of a more substantial top in place we would have liked to have seen: weakness
in the NASDAQ-100 or Semiconductor Indices, our ``lead-dogs'' which typically put in tops
and bottoms a couple of days ahead of the rest of the market. That didn't happen Monday
and until it does the likelihood of a substantial retracement is greatly diminished.
The other item of note in an otherwise dull Monday session was the behavior of QQQ
option traders. They started the day heavily buying put options (a bet that the NASDAQ-100 Index
would go down substantially) — and they were right on the very short term. However,
by mid-afternoon, they were buying call options (bets that the NASDAQ-100 would rise substantially).
It has been conjectured by some that program traders are using the QQQ options to pump
up some of their arbitrage profits. If that's the case, the rise in call buying is bullish.
On the other hand, if speculators are buying the dip, that's bearish. Until we have more
history of this option series, we can't make a definitive statement about this indicator.
The action was very interesting, however.
Several indicators point to a top in this timeframe. However, those forward-looking indicators
can be early and we need to have more coincident indicators confirming them before we can
declare this bear market rally at an end. We do suggest that the longer the market spends
in this price range, the worse the decline to come is going to be. Just as a long period of base building
precedes a strong runup in a bull market, a long period of ceiling building precedes a strong decline in a
bear market.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^SOX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Stocks: Range Trading
Last week unfolded very much as we described one week ago:
``If you're a short term trader, however, you're going to like this market because you like
to play it from both short and long positions. There should be ample opportunities to
do both in the coming months. But, if you're a longer term investor, you have to
look for a narrowing trading range here until the Iraq situation is finally settled.
And, that could be many months.''
That's exactly what we're seeing here on all of the major indices. The week began with a
dip and ended with a flourish for the bulls as option expiration saw price manipulation
of individual stocks to expire call and put options worthless. Some indices were weaker
and some were stronger, so it's a mixed picture. Our ``lead-dog'' index, the NASDAQ-100 Index
(NDX or QQQ), was relatively strong and hovered near its recovery high and a resistance
trendline at the close of trading Friday. The Dow was mired in the range over two hundred
points below its high of the previous week (8800). A glance at the 5-day relative strength
report shows that tech sectors were leading. Such sectors as semiconductors, internet, software and networking
put in net gains for the week. However, almost all daily charts on these sectors
indicate that strength here is a fleeting proposition. That's because we're seeing
bearish divergence as those new highs are not confirmed by corresponding highs
on our oscillators.
Sentiment remains a roadblock to rally in the stock market. Our short term
options-based sentiment gauges show far too much bullishness for the market to make
big gains. Those figures are confirmed by longer term sentiment gauges such as
Investor's Intelligence which reported that over half of all advisors are
now bullish — that's more than twice the number bullish at the bottom last
month! That's a huge swing in sentiment which cannot be discounted. Apparently,
this bear market rally has had its intended effect on the minds of market watchers.
If this were a new bull market (as we had hoped it would be), the bears would still
be in the majority and would be vocally calling for a crash. Instead, the bulls are
out in force, urging investors to buy before prices move much higher. That's not
a sign of a bull market environment.
Note: further and more detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
The Euro couldn't make a new high on the failure of the central bank to cut rates
after the US Fed cut short term rates the prior week. This failure to move to a new
high is bearish for the currency and for the European economy. Is deflation ahead for
Europe? It's looking more and more likely.
The US dollar spent the week recovering from the prior week's selloff on
the Fed rate cut. Remember, the US Dollar Index moves almost exactly inversely to the Euro.
The Canadian Dollar is trapped in a trading range within a long term bear market. We expect a breakdown
of the range will usher in a strong move to the downside.
The Canadian stock market showed strength in price last week, but the rally wasn't confirmed by our
oscillators, suggesting very limited upside potential.
The A$ was not able to break through the long term resistance line in the weekly chart last week.
As long as that trendline is honored, we continue to believe that the A$ will eventually plumb the
lows (below 48¢).
The All-Ords continued weaker last week although it closed near the highs. The brown resistance
polytrendline points toward a down cycle lasting into the end of the first quarter of 2003 and
may be predictive that the new bull market may not get off the ground until after that timeframe.
The FTSE has been stuck in a trading range below a resistance polytrendline that won't bottom
until the first quarter of next year. Without a breakout, expect more of the same.
Stronger economic news last week set bonds back late in the week, but the uptrend remains intact in
bond prices. And, the chart of the CRB Index suggests strongly that the Fed is not finished
cutting interest rates. In fact, cuts in the long bond rate are highly likely in the years
ahead as the Fed buys bonds to stave off the looming clouds of deflation.
Last week, the government reported a huge jump in the Producer Price Index. The bond market
reacted initially by falling, but recovered completely by the end of the session. It's clear
that the numbers were a fantasy and the market's reaction reflects that. Remember, it's the
market's reaction to news, not the news itself, that counts.
Sectors and Individual Stocks (Subscribers Only)
For tables ranking sectors and individual stocks, and links to charts of 3500 individual stocks and sectors, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
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- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
The CRB Index uptrend ended in late October as the uptrend support line was broken. The CRB
is attempting to retest that uptrend line from underneath, but it appears that a much larger
drop in commodity prices lies ahead. This is bad news from the point of view of deflation and
suggests the Fed is not finished cutting interest rates.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Profits Taken
The market sold off as short term investors and traders took profits: it was buy on the
rumor of a rate-cut and sell on the news of the real thing. And, of course, the levitation
provided by the election campaign dissipated quickly as the glow of Republican victory
faded and the market turned its attention to the economy.
And the economy is sliding down the hill still. It's clear that more stimulation is
needed both by the Federal Reserve and by the Congress. Thus, the politicians will
now work on making the tax cut permanent, lowering payroll taxes and, perhaps,
tossing a bone to the market: eliminating double-taxation of dividends.
Although we believe this is a bear market still, we won't shun buying for a rally
when and if we get the chance (detailed in our Detailed Comments Page).
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Republicans Take Congress
The campaign to rig the election paid off for the Republicans as they took both
houses of Congress in the election Tuesday. Then, the Fed cut interest rates by
½ point, generating tremendous confusion in the markets. Does this action
signal a panic on the part of the Fed? Does this mean a deflationary spiral has
already started? If so, the recent rally in stock prices was on little more than hot air and hope.
And, the bear market rally we've enjoyed is just about over.
We always try to listen to the message the markets are sending us. We also pay attention
to the potentials. For instance, in July, we recognized an intermediate term
bottom in the stock market which just might have been the bear market
bottom. Once the rally was underway, however, we realized that it had all the earmarks
of a bear market rally — because we listened to what the market was trying to tell us.
Ultimately, the July lows were taken out in the next downturn.
Similarly, the October bottom was potentially the end of the bear market and
the beginning of a bull market. So far, that hasn't been confirmed. In fact, it has
most of the earmarks of a bear market rally like the August rally. Thus, when we listen
to what the market is telling us, we are seeing what appears to be something similar
to the prior rally: just another bear market affair ultimately leading to new lows
in the major indices. Staying on the right side of the
market — and controlling risk — are our goals.
Sentiment is wildly bullish right now according to our Dollar-Weighted
Option figures. OEX traders went heavily toward the overly-bullish mark
on Wednesday and the recovery into the close pushed them even further into the
bullish camp.
After the cash stock market closed, the futures markets sold off, signaling that
short term traders are saying they think we've seen the top in this move.
Note: further comments for subscribers only will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Levitation Day
During this period of time when cycles are pointing down, it's quite an accomplishment
for the Republicans to have levitated the market all the way into Election Day. We wonder
if, perhaps, this might be a preview of future fiscal policy we can expect out of the
Bush Administration going into the 2004 election.
The crash in the stock market over the past couple of years has taken much of the wind
out of government sails. Not only has the Federal government suffered reduced capital
gains and income tax revenue,
but the states have as well. Those governmental units made the classic fiscal mistake: that is,
just as a bull market makes everyone a market genius, rising tax revenues from the
bubble market of the 'Nineties made the politicos think the largesse would never end.
And, you know what politicians do with more money? They spend it, of course! Now
that the revenues are falling and the economy slumped in a two-year recession (so far),
the normal Keynesian solution (increased government spending to boost a sagging
economy) can't be counted on. Instead, what we have are state governments cutting
back on their expenditures to balance budgets — creating a drag when they should
be stimulating the economy by spending more.
But, has the Bush Administration re-election team indeed found the Golden
Goose of market manipulation? If they have, they have solved two problems
with one solution. By boosting the stock market back into Bubble-land,
they re-energize government revenue and spending, helping revitalize the
economy. And, they make people richer and more prone to voting Republican
in the next election.
No, we don't seriously think they can keep it up. This kind of manipulation
can work for a few weeks in a seasonally strong period, but they aren't likely
to be able to fool everyone all the time. But, you've probably noticed there
haven't been too many folks complaining about this rally, have you? Strange
how quiet the critics get when the market is going up!
In any case, economic reality is likely to set in no later than next month
— we're still suffering through a recession. Near term, we're probably
going to see the market sell off on profit-taking when the Fed meets today and announces they
are cutting short term rates ¼%. Oh, there might be an initial pop fly
rally, but it's likely to be sold heavily by the hedge funds. Unless we see
large amounts of money going into the QQQ call options, we'll look for a 50%
retracement of the October rally to get started no later than 2:15 p.m. EST Wednesday
(that's when the Fed announcement comes out). The market should selloff into
the weekend, put in a base and rally into the late November timeframe for an
intermediate top. After that, things could get really strong on the downside
for several months.
That is, unless the RATs have more tricks up their sleeves. We'll watch the
indicators for signs they have found a more permanent solution to current
levels in the stock market. Our working assumption remains that this rally
is a bear market rally and that market indices are going much lower next year.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Running Stocks Up The Flagpole
The US Treasury Dept ran the flag up the pole Monday — the Republican re-election stock
market flag, that is. Money poured into overblown, overhyped and overvalued NASDAQ stocks
and flowed out of the blue chips, a sign of concentrated buying by the Plunge
Protection Team — in this case, the Republican Aid Team (RAT).
Now you know why the market smelled that way!
Internals were poor, with barely more stocks advancing than declining. And, volume was
very concentrated in advancing issues (i.e., those the RATs were buying): the Arms Index
for NASDAQ came in at 0.25.
By mid-afternoon, most traders sensed that the RATs might have lost control and were in trouble — the market
suddenly made a U-turn to the downside. By the close, the Dow Industrials had
dropped 160.84 points off its high of the day, ending only 48.20 points off its
low, but still up slightly from Friday's closing level.
The RATs need to levitate the market on Tuesday to keep the voters in a good mood
when they go to the polls to vote for Republicans (or, so they hope — we think
even the average voter has smelled a rat). So, we'll be looking for them
to be buying Tuesday, especially in the NASDAQ-100 futures and options (watch the
QQQ dollar-weighted option ratio for an indication of such activity). But,
time is running out and so is the pattern: the rally from early October has taken
on the form of an ABC — and it's almost complete now. Ideally, we should see
a 50% retracement before any further rally. The RATs may have even used up most
of the sideline cash in this rally, but we will have to see the nature of the
retracement to judge whether we will get that rally into late November or early
December.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: SOX on Fire
The Semiconductor Index (SOX) tipped the current rally and is moving higher. However, it has
gotten far ahead of fundamentals and constitutes a reflation of the recent bubble. After falling
over 85% from its all-time high, it has risen almost 50% in recent weeks. Is the rise over,
or can we expect more? The answer to that question will tell us much about the fate of the
market.
The stock market, in fact, is quite overbought and in need of a retracement (correction),
but is likely to continue its upward trend for a few more weeks.
We have found that one of our indicators has been able to call almost every short
term turn in the market recently. We were surprised because this indicator has
been behaving exactly opposite to its historical pattern. Why and how this
has happened is behind recent insider moves in the market. Although this new finding
has greatest significance to short term traders, longer term investors may find it
helpful to know how we can get an inside glimpse into the forces which move the market
on a daily basis. This indicator is updated several times each trading hour on our
Trading
Page.
Other forecasting indicators, one of which has nailed every recent turn in the
stock market, are looking for a near term reaction, followed by a strong move in the
other direction.
Note: detailed comments which expand on the above (and answer some questions
posed) will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
The Euro rallied last week on the coming rate cut by the US Federal Reserve. However, this is likely
to be the last fling to the upside for a long time to come. That's because the current rally is best
counted as a thrust rally — and those don't last long before a trend change in the opposite
direction. Near term, the rally needs to pull back slightly and we should see some retracement
before a final high. At that point, the Euro is likely to resume its downtrend.
Commercial interests remain very bearish on the Euro, now holding 23,470 long contracts
versus 67,459 short contracts on the Chicago Merc, an increase in net short position
of 7894 contracts in just the last week. Who's long (bullish) the Euro? Small and large
traders. That's hot money which can change position in the blink of an eye.
The Dollar Index is moving exactly inversely to the Euro. It should test the prior low at 103.54.
The rally appears to be over or almost over. The currency has not quite reached its prior
high (which was a 50% retracement level of the previous leg down). Still bearish, with
commercials holding 43,129 contracts short to 12,775 long — a substantial increase
in their net short position over the preceding week (+7296).
The Canadian market is moving more in tune with European stock markets. The high on
October 28th coincided with the high in the Dow and S&P 500, but the trading range
in Toronto has much more of a downward tilt to it than the New York market. Still, we
think a retracement here is healthy and we should see a return to rally within a week.
But, watch the NY and London markets for leading indicators.
The A$ attempted to rally along with the Euro, but fell back on Thursday, returning
to the long term trendlines which have characterized its bear market rally recently.
Commercials were extremely bearish the last time we mentioned them, but this week
they reached new highs in bearishness. Commercials now hold only 2,837 contracts long versus
33,286 contracts short. That's an increase of 3270 net short contracts. Moreover,
large traders do not hold a single contract short! Most telling of all for the coming
crash in the A$ is the position of small traders: 21,075 long to only 3,240 short.
When the hot money gets going, so will the A$ — to the downside. Which is,
after all, good news.
Although caught in a trading range all week, the All-Ordinaries weren't able to make
their high on Monday, October 28th — they peaked the previous Thursday, the 24th.
Still, late week highs were within a few points of the prior week's high, so the
pattern is close enough to the US market to suspect that we're only halfway through
this overall trend rally from October 10th.
The FTSE has been much weaker than the US markets. However, we should point out that the
London market bottomed well ahead of the US market, on the 24th of September versus the
10th of October. The retracement so far has erased almost half of the prior rally's gains.
If the US market does the same, it would bode well for further rally thereafter. Watch the
London market for an upturn — it may continue to serve as a good leading indicator
for the other stock markets.
The XAU has been bottled up in an overarching polytrend resistance line since June. Last
week, the first sign of a breakout started appearing. This doesn't change the trend to up,
however, and we'll need to see more strength to suggest an imminent uptrend.
Suggested reading: ``Gold Lives in a Cage'', a new
article by Craig Harris of Harris Capital Management, Inc. CTA. Craig describes himself as a
``reluctant bull'' on gold. ("http://www.321gold.com/editorials/harris/harris103102.html")
Bonds continue to correct their recent rally, but should provide an excellent haven from
stock market weakness.
Sectors and Individual Stocks (Subscribers Only)
For tables ranking sectors and individual stocks, and links to charts of 3500 individual stocks and sectors, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find a wealth of tools for selecting top sectors and stocks,
including access to our exclusive realtime, intraday indicators.
For a 3-4 month free trial subscription, click here.
For complete charts of commodities, please visit your very own
MyClues Home Page
-- in the CHARTS & RESEARCH section of the page, you will find links to webpages containing links to the following:
- Daily Indices, charts of sector and popular stock and bond market indices on a daily basis
- Quarter-Hourly Indices, charts of selected indices on a 15-minute basis
- Daily Futures, charts of futures markets on a daily basis
- Quarter-Hourly Futures, charts of those same futures markets on a 15-minute basis
For a 3-4 month free trial subscription, click here.
Commodities are continuing to adhere to the long support line they've developed on
both the daily and weekly charts. This continues to be an excellent argument against deflation.
Copper punched through resistance at the prior 4th wave high and moved close to the 50%
retracement price of 73.02¢ (the high was made on Friday at 72.9¢). Further resistance
is at the 62% retracement price of 74.76¢. The jury is out on this one, but we still lean
toward the bearish case: demand for copper depends to a large extent on the housing industry,
which shows strong signs of slowing demand right now. We count the current rally as wave A in
a bear market rally. Still, this rally is another good argument against deflation.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Hallowe'en Window Dressing
The buyers kept up the pressure to close the market at high levels on Thursday as the
end of the best month of gains for the stock market since January 1987 came to a close.
The bears are ready for the ride down, though, and were selling every intraday rally
attempt. The QQQ traders, who may have inside information to guide their purchases of
NASDAQ-100 options, were heavily pouring money into puts (bets the market would go
down). We have noted recently that these option players, unlike their OEX cousins,
are more often correct than wrong.
We're in the middle of what would normally be the Monthly Buying Spree, but
recent activities seem to have sapped much of the buying strength early (sort of
like the 0% auto financing offers sapped much of 2003 buying strength for automobiles).
We put cash to work Wednesday and bought bonds for the short term, awaiting a big buying opportunity upcoming in
stocks if we get that big retracement we're looking for.
Note: detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Very Toppy Market
The market moved higher Wednesday as end of month buying pressure helped the market
recover. However, due to a number of technical factors, this rally probably has made
a near term ceiling and the beginning of a stiff decline into mid-month.
We emailed subscribers to our Notification List (a self-service list which can be
found on your MyClues Page on the Special Reports header bar) and liquidated our holdings Wednesday afternoon in order to assess our next move. As we
like to say, ``When in doubt, get out.'' It's something most investors should do. It's
always better to view the market from a stable platform, such as cash, to get a good
perspective (it's especially good to be able to view the market from cash when you've
just taken a good profit!).
The Bradley Calendar has now (almost assuredly) nailed the last four turns in the
market, the latest being Monday's high. The next turn in that calendar comes little more
than a week from today, so we are likely to find a good buying opportunity in the near future.
We're counting this corrective wave as B, the middle down wave within an ABC rally which started in early October. Once wave
B bottoms and wave C begins, the upside should be explosive. Until that buying opportunity
comes, however, we're play defense in this overall bear market rally — even if we
do think a 50% rise off the October low is very likely.
Note: detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: A Sentimental Turnaround
Tuesday has a reputation of being a turnaround day and this one proved to be a double
turnaround. Initially, the market sold off on the plunge in consumer sentiment. Now,
consumer sentiment is a lagging indicator and with the economy moving into its third
year of recession, that segment is throwing in the towel. That shouldn't have been
news to the market, but it caused a huge plunge.
What happened was that buyers cancelled their bids for stocks and the hedge funds
came in to sell stocks short. With no buyers, the vacuum under the market created
a big downdraft.
Later in the day, the selling pressure dried up and the buyers returned, sending
the market right back up to a positive close. In other words, lots of sound and
fury with no substance whatsoever. But, that's the nature of the market right now
as the correction which started after the 16th continues. We expect it to continue
for another week or so, but we also expect a higher high in the next few days as
the Monthly Buying Spree shifts into high gear.
Despite an expected dip to retrace some of the Oct. 10-16 rally, we expect much higher
prices on the indices for quite a while to come.
Note: detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
· ^VLE
· ^RUT
· ^SML
· ^CRB
· ^XAU
· ^BTK
· ^TYX
Sector Performance Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
Sector Acceleration Since:
8 Apr 1999
· 18 Oct 1999
· A Week Ago
· A Fortnight Ago
MyClues Home Page Link ("http://clues.dhs.org/cgi-bin/myclues?myhome=yes&member;[email protected]")
Got Stocks? Do you have money in the stock market? If so, you need to read this valuable excerpt from Chapter 20 of Bob Prechter's new book, Conquer the Crash. By now, you should be familiar with Bob's long-term forecast for stocks - namely, there's still a LONG way to go in this bear market. In this excerpt, Bob offers advice on stocks, mutual funds, short-selling, diversifying, and more. To be fully prepared for the bear market, you need to read all of Conquer the Crash and act on Bob's advice. But, the information you are about to read is a great start.
Stocks: Pre-Spree Weakness
The market couldn't advance Monday with the weight of too many bulls on its back.
More than twice as much money went into upside bets in options and that helped drag
the market lower.
However, we have leading sectors which are still working their way higher. These
leading sectors are still extremely oversold on a long term basis and have
good potential to rise over the next month.
Because of the potential for a deeper pullback later in the week, we may switch
between stocks and bonds at some point this week (if you are on the Notification
List, you will receive an email notification — this is a self-service email notification list you can add
yourself to and delete yourself from by clicking on the links in the Special Reports header bar
on your MyClues Home Page). This is especially the case because the Bradley Calendar
warns that Monday the 28th of October marks the center date for a minor trend change (a turn
down in this case) and a move lower in the 8th of November. We need confirmation
from our coincident indicators before switching, however.
Note: more detailed comments will be found on our Detailed Comments Page.
Fixed Income Exchange-Traded Funds: We have summarized the fixed-income exchange-traded
funds in this page ("http://clues.dhs.org/clues/fixedincomeetfs.html"). These make a good place to invest during weak periods in the stock market. They have the advantage
of stocks (they can be traded when the market is open) and move in the opposite direction.
Format for printing.
[Go back]
Popular Indices:
^SPX
· ^IXQ
· ^NDX
· ^DJI
· ^MID
· ^OEX
· ^NYA
·