Owner: Zens Market Insights URL:http://zentrader13.blogspot.com/ Join Date: Fri, 24 Nov 2006 21:03:28 -0600 Rating:0 Site Description: Using stock market sentiment to gain a trading edge. Stock market forecasts and market timing for Nasdaq and QQQQ based on proprietary sentiment analysis. Site statistics:Click here
This Bull Is Getting Really Nervous. 1970-01-01 00:59:59 This bull is getting really nervous after looking at today's Investor's Intelligence Poll where bears dropped down to 21.3% and the Bull/Bear Ratio increased to 2.8. To be sure, higher readings have failed to stop bull markets in the past, such as 2003 when the Bull/Bear Ratio spiked to 3.5 and the bull market just kept on chugging after some sideways chop. But, that is where one must look to the Read more:Nervous
Fasten Your Seatbelts 1970-01-01 00:59:59 It's Fed day and option expiration week, plus we just had 2 days in a row of a small point chnage in the Nasdaq McO, all of which portends some major volatility in the short-term. I am still expecting one more leg down to 1740-1750 NDX and approx 43 on QQQQ within the next few days to complete this short-term pullback.As of the market close on 12/11/06:Market Barometer = +6 (scale of -10 to +10)
We Have a Situation 1970-01-01 00:59:59 Another small point change in the Nasdaq McO today. Typically one of these leads to a very large move in the market within the next couple of days. We have had several McO small point changes over the course of the last week, and 2 this week alone, but the NDX still remains trapped in this tightly coiled triangle. I used the analogy earlier today of a coiled spring. Like a coiled spring this
My Wall Of Worry 1970-01-01 00:59:59 They say bull market "climb a wall of worry". Well, for those of us who are long, let's hope my personal wall of worry is a good sign for the market. That wall has been getting a few more bricks by the day, as my indicators are rolling over one by one, and I am seeing things on the tape that I just don't like to see. Here are just a few of the things that have me worried about this market: recent
Market Update for 12/14/06 1970-01-01 00:59:59 That "close call" weak sell signal my options sentiment indicator gave yesterday is no longer a close call as today I got an official tag of the "weak sell" zone. That is one more strike against the market. While not an extreme sell signal like the one I got back in early May of this year, it is still the first negative signal given by this sentiment indicator since May. When coupled with other Read more:Market
, Update
Breakout! 1970-01-01 00:59:59 Well, that cycle low appears to have come right on schedule despite my misgivings yesterday. Unless we get a dramatic downside reversal today (which looks highly unlikely), the market barometer will go back to +5 today and the model portfolio will gain return to 100% long QQQQ. Read more:Breakout
Liquidity Influx 1970-01-01 00:59:59 Today we got a nice influx of liquidity that may be just the exlixir that this market needed. We got 16.25 BN in Fed Temporary OMO's, 1.3 BN in Permanent OMO's, plus the Treasury department pumped in a whopping 18 BN in Term Investment Options. Read more:Liquidity
The Hallmark Of This Bull Market 1970-01-01 00:59:59 The hallmark of this bull market since the 2002 lows has been strong rallies that have arrived out of the blue just when the tape action was looking worst. Today looks to be no exception. So, has the Santa Claus rally begun? Based on my analysis the answer is yes. Cycles and seasonality strongly suggested a low point this week, and although internal deterioration was notable, the actual price Read more:Hallmark
, Market
Good News, Bad News... 1970-01-01 00:59:59 The good news is that we got a respectable rally on good but not stellar breadth and increasing volume today, which is probably the start of the Santa Rally. The bad news is that the NDX did not outperform the SPX again today, and that the leadership for this market appears to be shifting from technology to the oil and energy sector. And that ain't the makings of a healthy bull market. If that Read more:Good News
, Bad News
Fakeout 1970-01-01 00:59:59 Remember that chart I showed the other day of an option sentiment indicator that gives a sell signal when the blue line crosses back above the lower red band? Well, that signal turned out to be a fakeout as you can see in the updated chart above. Of course it is still in "overbought" territory whenever the blue line is below the red band. Compare this to the period from August to early October
Not So Fast. 1970-01-01 00:59:59 I mentioned intraday today that barring a dramatic downside reversal my market barometer would improve to +5 at the close today. Well, it appears that I spoke to soon.
As of the close of trading on 12/14/06:
Market Barometer = +4 (scale of -10 to +10)
Model Portfolio = 80% Long QQQQ
Due to some short-term overbought extremes on some of the inputs, the model was unable to show an improvement
Sentiment Stuff 1970-01-01 00:59:59 AAII weekly poll was mixed with 41% Bulls and 38% Bears. Not much to go on there.
AMG fund flows data showed another giant equity fund outflow of -$9 Billion excluding ETF's. However, much of this is distorted by year end capital gains distributions from the funds that are counted as outflows. This same week last year saw a similar phenomenon with a -$6 Billion outflow. Of course all those Read more:Sentiment
Quote of the Day 1970-01-01 00:59:59 My favorite quote of the day today comes from that message board where I'm not allowed to post. A trader who goes by the handle BigBadBear wrote "Im so short, I'm compressing into the ground."... That had to be the funniest thing I read all day. Hats off to BigBadBear for being so witty. Read more:Quote
More Liquidity 1970-01-01 00:59:59 Another $8.25 BN TOMO from the Fed today, and another $3 BN in TIO's from the Treasury adds some further liquidity fuel for the short-term. This is a typical seasonal phenomenon and may be a significant factor behind the seasonal Santa Rally. Read more:Liquidity
The "Santa Sell-Off"? 1970-01-01 00:59:59 Growth stocks continue to lag defensive issues here, and the NDX bearish divergence vs. SPX is still in place. This pattern of early NDX rallies that evaporate is troublesome. And AAPL and GOOG have only put in dead cat bounces off support so far. Of the growth leaders only RIMM has put in a decent bounce. And today's intraday high look ominously like a double top until proven otherwise. Read more:Santa
Capitulation? 1970-01-01 00:59:59 I noticed more than a few die hard bears throwing in the towel on Friday as I perused the message boards. Is this the capitulation phase that will usher in an intermediate-term top? It is starting to look that way. But, sentiment can always get more extreme. So, if the market was acting healthy I would be less inclined to look for a top here.
Unfortunately, the market is not acting very healthy Read more:Capitulation
Mountain of Money 1970-01-01 00:59:59 Remeber the huge inflows into Money
Market funds that I mentioned on Thursday per the AMG data? Here is a blog entry over at The Big Picture that gives some more detail on this phenomenon. Evidently, the amount of assets in Money Market funds has now eclipsed the record seen at the bear market lows in 2002.
This makes me feel a little more sanguine about the sentiment backdrop, because IF we are Read more:Mountain
More Signs of Capitulation 1970-01-01 00:59:59 More signs of capitulation in this week's Blogger Poll, where a big shift in the poll took the Bear-Bear spread from it's widest in history last week to dead even this week. This would make only the 3rd week that Bears didn't outnumber Bulls in this poll since the July lows. So, it appears that the Bloggers are finally caving.
The amazing thing is that the Perma-Bears over at TT still haven't Read more:Capitulation
Liquidity Watch 1970-01-01 00:59:59 I count about $30 Billion in cash buyouts announced today. Plus the Fed did a Permanent Open Market Operation to inject liquidity, and we got another TIO from the Treasury. All this liquidity ought to be supportive of higher stock prices short-term. Read more:Liquidity
Leadership Watch: Another WSJ Hatchet Job 1970-01-01 00:59:59 Taking a look at the leading big cap growth stocks:
WSJ did a hatchet job on GOOG today, which I think is a major factor in the NDX's fade from the early highs.
Watch AAPL here as it is retesting last week's low and if it holds there is a inverse Head and Shoulders bottom that could be forming on the hourly chart.
RIMM is consolidating nicely after last weeks strong bounce.
For the NDX to Read more:Leadership
, Hatchet
Broken 1970-01-01 00:59:59 Folks, I hate to say it, but there is something seriously wrong with the NDX here. The big cap growth leaders AAPL and GOOG both broke down below last week's lows today, and the NDX once again gapped and crapped, failing to take out it's 11/24 high. This is not an encouraging development and it is starting to look ominously like a double top. This is all the more worrisome as it comes at a time Read more:Broken
Seasonality Shmeezonality! 1970-01-01 00:59:59 I don't know about you, but I'm getting pretty darn tired of reading/hearing about seasonality. Heck, I'm as guilty as the rest of the herd, as I've been harping on the Santa Rally far too much. But that stops now! The fact is that seasonality is so deceptively simple, and we all hear/read about all the statistics on every blog, in every financial news article, in every newsletter, and on every
A Scalper's Market 1970-01-01 00:59:59 Truth be told I am ready to go on a Holiday break from this whipsaw mess of a market. For an intermediate-term position trader nothing much is happening now. Although the NDX is acting very sick, it has yet to turn it's intermediate-term trend down. So, for now at least we are just looking at a choppy sideways range since the 11/24 top, a scalper's market. I am a position trader, not a scalper, Read more:Market
Did Somebody Say Whipsaw? 1970-01-01 00:59:59 Yes, I did... In my comments last night I noted that this market was going nowhere fast, but was likely to take the scenic route to get there, meaning plenty of wild swings up and down while price remained rangebound. That was a pretty good description of today's action. But when all was said and done it looks to me like another distribution day for the Nasdaq as volume expanded. And the rotation Read more:Somebody
May in December? 1970-01-01 00:59:59 Looking at the message boards today the overall tone of member posts was eerily to similar early May, with the complacency generated by the Dow hanging in there despite the NDX faltering badly. Some of the names have changed but the same arguments for more upside are being made. One particular sentiment "guru" is even making the same statement about how only a short-term pullback is possible Read more:December
CW Watch: 3rd Year of Presidential Cycle 1970-01-01 00:59:59 Be prepared for a media bombardment on how the 3rd year of the PresidentialCycle
is ALWAYS up big. This is the opposite of last year when all the stories were doom and gloom about the impending plunge into the 4-year cycle low that of course was a "no show" (big surprise there). Now with all the 3rd year Presidential Cycle bullish conventional wisdom taking center spotlight, I expect bulls are
News Reactions 1970-01-01 00:59:59 If you want a quick read on the health of the market watch how the market reacts to news. Remember back in mid August when we got a tame CPI report and the market went bonkers to the upside? Now compare that with last Friday's gap and crap reaction to a much better than expected CPI. The difference is that back in August sentiment was at major bearish extremes and so the market was a rocketship Read more:Reactions
The Real Deal? 1970-01-01 00:59:59 Remember my post from a few days back entitled "Fakeout"? It showed a short-term options sentiment tool I use and how it gave a false sell signal at that time. But I noted that was still in the "overbought" zone, and so with back to back fakeouts being quite rare I expected the next sell signal to be the real deal. Looks like we just barely got it today.
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