Market Breadth Update: No News is Bad NewsMarket Breadth
HIGN/SPX:
The number of Stocks contributing to new highs continues to deteriorate and we haven't seen any improvement despite the gradual upside seen in Stocks indices..
This is the percentage of stocks on the New York stock exchange making new highs divided by the whole spx. The breadth shows that the bull market continues to be driven by fewer and fewer stocks, as the spx breaks to new highs however fewer and fewer stocks on the NYSE making new highs, driving the ratio down, especially within the recent months.
Stocks above long term average:
Swings from excessive bullish and bearish sentiment have been a good contrarian market indicator for the past years. Every time the indexes of stocks above or below 200-days Average reached an extreme of 90-100 percent a correction in SP500 was close.
Instances where the index started falling, diverging away from the SP500 index (indicating internal strength is weakening) were bearish signals, as at least a hefty correction followed. The chart below Illustrates these divergences, where periods of prolonged divergence followed by a more severe downside move, while minor divergences followed less severe corrections.
The ratio remains biased to the downside, failing to confirm rallies in the SPX ......
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Breadth Indicators
On Balance Volume Explains what to Expect from SPY !SPY Has to break down one of these supports along with a Break down of OBV Horizontal support ( Red ) , OR SPY should make higher highs with OBV breaking out of the Descending Triangle Pattern , to sustain New Highs. !
Worsening macro and technical divergence sreams for a short(THIS IS THE RIGHT ONE - THE OTHER ONE DOESN'T HAVE OBV OR SPY TARGETS. SORRY!)
Sticking with the bearish case for US Equities I've made for most of 2015, I'm currently selling short a pretty significant position in SPY versus a long basket of Equities and bonds from the rest of the world. My rationale:
1. US Equities are still rich versus rest-of-world stocks in P/E ratios, even after the steep outperformance of DAX and NKY (among others) over SPX.
2. Real Money keeps adding big time to European and Asian mutual funds whilst withdrawing from US on the margin. The trend so far is evident on the divergence in stock prices and I expect it to continue.
3. Macro data in US keeps surprising on the downside over and over again... it made sense to 'buy the bad data' as a Fed put (specially on support zones), but aside from the macro impact, there's a significant impact of worsening economic conditions on corporate earnings that hasn't been priced into this market, IMHO.
4. Big divergences in RSI and On Balance Volume have been developing since late 2014; the market keeps climbing higher with diminishing momentum and buying volume.
4. Signs of strong resistance above 211 on SPY / 2110 on ES/SPX; since early March, the market hasn't closed decisively over this area.
Initial targets of 207.50 and 206.60 as signals of money supporting the market. If broken, next targets will be 205 (lower Boll-band on the daily frame); 202.32 (200-day MA); and whatever price SPY will be trading at when it hits 30 on the daily RSI. Will use trailing stops accordingly if the position moves in my favour.
Good luck trading.
Where next?Decision time. Bitcoin can drop further or slowly get back on track. The On Balance Volume (OBV) is declining, but still in a bullish supporting area. LazyBear's Money Flow Support/Resistance (S/R) Level shows with custom setting that the price is near, but also below last support.
Entry example for Long $247. Target: $294
Entry example for Short $253. Target: $194
P:S. More about LazyBear's great indicator package which contains 12 useful indicators:
blog.tradingview.com
Bullish inverted Head and ShouldersNeat downtrend.
Inverted H&S (please if you disagree let me know).
RSI and CVI (Cumulative Volume Index) both high at Head's peak and low on right shoulders:
Note: Since there is no volume, I looked at the CVI, but I don't know anything about it....:(
The target (1.077) converges with the top of the downtrend (resistance).
OBV Triangle and it's price equivalentI drew a triangle based on OBV's 50 hour moving average (orange),
and mirrored the triangle on price.
Red and green areas are 80/20 % overbought / oversold zones.
At this moment we are in the overbought zone so you can try a short here.
I expect a big move of ca. 50% after price breaks out of the triangle.
Targets:
Upside: 333-375
Downside: 130-90
Cheers : ]
-- PS: Here is the pine script code for the OBV indicator with moving averages: pastebin.com
Bearish divergence at key resistance levelVolume and OBV are both not supporting the bullishness of this wave (III)
We are likely to continue forming the wedge (in 5 waves ideally) on lower volume and break down right after.
Sell here and buy at the level of green support trend line.
For further analysis check out my other published charts that I linked bellow.
Cheers : ]
LNKD (Linked In) Target for 20% gainLinked in created and inverted ascending scallop -- confirmed. (thepatternsite.com). A bonus is the U-shaped volume with the pattern.
This alone sets the target price at 279.25.
In addition, a cup and handle is in the process of forming, which if successful, sets an intermediate target price at 263.
On Balance Volume (OBV) also remains in a very positive upward trend.
SP500: Time to Short Stocks.. Once More...The current market positioning seems pretty vulnerable, where after a 5-years bull market, serious technical warning signals have been persistent within the past year. So a short seems an attractive call just slightly higher, as the reward compared to risk is high.
I have discussed in my earlier posts some of these signals, such as market breadth deterioration, add to that the bearish breakout in high yield corporate bonds shown on chart, note that HYC bonds have been diverging failing to confirm the upside in equities for more than a year now.(HYCB and equities have been positively correlated).
Another behavior that evolved recently is the out performance of consumer staples sector compared to consumer discretionary, within the past 20 years, tops were preceded by such behavior(which is logical as defensive sectors are more appealing to investors in risk-aversion environment).
If we get a move higher following the FOMC meeting, i will be looking to short near 2035.
If you want to read more about these technical deterioration signals, please check the related links below
Guys, lets make a small sentiment survey here, if you're bearish just comment "Bearish", if you're bullish comment "Bullish".. for the coming few months ..I think we could ask the question in different way, do you think the latest high is the top for for the coming six months, or no? ..... Thank you
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Also at my Facebook page www.thefxchannel.com
My best regards,
Technician
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Trading Criteria:
1. Trades are taken in two units
2. First unit would be closed at first target
3. Stop loss is then moved to break-even
4. Second unit would be closed at second target
Notes:
5) If 90 percent of first target is reached I move stop loss to breakeven.
6) If 90 percent of first target is reached without triggering entry I cancel the trade.
7) Remember: Losing is a main part of the game
BTCUSD setting up bullish, waiting for price to confirm.The key word of the last week has been whipsaw. This term is applied in trading circles when the price head’s in one direction, and then is quickly followed by a movement in the opposite direction. The price of bitcoin has entered a period of high volatility and is whipsawing all over the place. A few simple words here: traders beware. It is time to be vigilant and wait for the price to resolve it itself one way or the other and form a trend before putting money to work. The chart below shows how hard it has been to predict the price movement as we have moved from bearish to bullish back to bearish and are now back in the cloud. Right now price is bumping up against the top of resistance and a break through would be a bullish signal. The Lagging Line which is the slowest of the Lines has yet to pierce into the cloud and confirm a bullish move, if it does, that should mean we are seeing a bullish transition forming.
Based on recent trading it would be prudent to look at other indicators to confirm the move. The chart below shows some indicators we will use to get confirmations in the event that price breaks resistance. The RSI is in bullish zone despite the recent downturn and is has plenty of room to run if the price confirms to the upside. Money Flow has been very bullish and continues to be so, as money has continued to come into bitcoin despite all the volatility in price. MACD is close to crossing over which would trigger a buy signal. What’s even more significant is that MACD is now in positive territory when making the cross over, so this is another potential bullish signal. On Balance Volume (OBV) is trending at a low level, an upside move in price should be confirmed with a rising OBV. Using other indicators to confirm is essential when analyzing charts particularly when we are a period of uncertainty and waiting for signals to trade.
Conclusion
We don’t have any definite trading signals as price has created a false breakout followed by a false breakdown. Price is now back in the cloud and rubbing against resistance. The weight of the evidence leans bullish and if price confirms a buy signal will be triggered. In the meantime, there is no need to rush into a trade. Price will tell us what we need to know soon enough.
This is what bothers me of recent Nasdaq Comp RallyAD Issues is a GREAT breath indicator. It is still in a downtrend showing a big negative divergence. I dont like this at all
Add This To Your Toolbox ~ Technician Breadth Indicator!Maybe its just the beginning... I am examining the market breadth by subtracting the number of NYSE stocks making new highs from the stocks making new lows, the study points to a potential major reversal could be at hand...
If for example:
-500 stocks making new highs and only 20 stocks making new lows then we will get a 480 stocks sum, and there for the index will spike higher
-Oppositely, if only 20 stocks making new highs while 500 stocks making new lows, then we will -480 sum, and the index spikes lower.
This is a clear indicator of the internal strength of market.
So if we add a tool to gauge the behavior of this index, and spot instances where the index deviates substantially from its mean, that might give us valuable information. Therefore, I added a 52-week Bollinger bands, with 3 standard deviation. Three STD means that the upper and lower bands deviates 3 times from the mid band (the 52-week average). Note that the possibility moving 3STD from the mean is very low.
That resulted in a very interesting indicator... Where instances of up and downside spikes out of the bands hinted extreme cases and potential key turning points. The interpretation of these spikes depends mainly on the prior price trend, please see the different cases I plotted on chart in numerical order.
I believe this is a very valuable indicator, and am happy and satisfied to share with you, where If you like it... Give a thumbs up and share it..
Comments are welcomed..
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Now that BearWhale (Draper?) has exited — are we est new supportThe accumulation is actually up, which hopefully means people are buying at this level, establishing a new support.
I'm not jazzed about a $330-350 support level, but it's better than not knowing where the floor is at.
Still, my miners are shut down, until it's cool enough to use them for heating, or BTC goes above $400 again.
No more support, where does it land. I don't care, personally. I'm out. We pierced the only support that mattered.
Watch out for sharks... the whales have left the building.
And once again, they say, thank you for your buy support as they sold off their bags of holding.
Here that noise? It's the sound of an overinflated, no-intrinsic-value ponzi, deflating.
It's even dropping as I'm writing this {"amount":"333.18","currency":"USD"}
Priceline.Com -PCLN-Daily: On Balance Volume Saying Goodbye...Very strong selling is going on under the surface of PCLN. Although the price appears to be healthy and range-bound, it appears as if long term holders have liquidated their positions and now are waiting for prices to fall dramatically.
I know it looks like I'm kicking PCLN when it's down, but it is still just "rolling over" on the long term chart. The uptrend has been thousands of percent and this is only less than 20% off the highest highs.
Airline stocks rolled over and are very weak, so that bodes ill for all the stocks involved in the travel industry for the near term.
The ATR is 23 points. If you use 1 ATR as a measuring stick, your stop can be about 3 ATR's away and your target might be about the same. The probability of hitting 3 ATR's profit versus the 3 ATR stop is the key in the long run: I'd presume about 75% chance of a win from this setup. That makes a good system in the long run if you can find enough trades to take.
1:24PM EST Wednesday, October 1, 2014
BTC Balancing ActOnce again I'm using BTC-e because I use MetaTrader, and the Bitstamp chart throws me off just a wee bit in regards to the immediate future.
Back in March, when we were still coming off the massive bull surge of last year, we still had bubble tendencies, made apparent by the significant and the significant (both notated above). This being a bubble, the volume and price had to be balanced more correctly, as they were going into April. At this point both the and of the Willy became oversold, allowing that powerful line cross in the oversold zone. Also at this point, the negative volume balanced out the positive volume, and the result was the phenomenal price spike and staying power over the next few months.
Still reeling from the bubble, BTC's actual value ever enigmatic, the positive volume and positive price action once again require balance, which occurs in August and September.
Earlier, I posted a chart appealing to the bull side in us, but the strength I really want coming into this may only arise from another wringing of the weak hands. This holds true especially after what many consider to be a dead cat bounce occurring last week. A wringing of the hands could result in a minor flash crash on BTC-e, as the negative volume bar lengthens. This would potentially allow both lines of the Willy to become oversold, and will consequentially allow the all but perfect oversold Willy line cross. This will result in On Balance Volume bouncing off the floor and ascending once more.
I realize this speculation is quite detailed, and risks being complete nonsense because of it's pretense of extreme clarity, but I only include personal exactness for fun. I realize this conflicts with earlier charts in terms of my forecast for the immediate future, but essentially I just want to get across the need for another bear shaking after that "dead cat bounce."
Obviously, this chart does not take into account overall volume balancing, including all the time before March of this year, but there are way too many factors to account for in even attempting to make that information useful. The pattern is consistent enough in today's Bitcoin climate to induce speculation on my part.
DAL Long - Bull Flag ConsolidationThe idea here isn't very difficult to understand. DAL has made a run up from $35.51 on August 8th, where we saw a bounce off the 150EMA, a personal favorite area to get long for me, especially looking at the weekly chart for this. Anyways, from the top down:
1) Bullish RSI Holding 60 Support
2) Established Uptrend - Long Term
3) Bounce off 150 EMA
4) Long $4.46 move straight up through all EMA(8/21/50), through resistance, and consolidating above.
5) Broken Downtrend
6)Weekly Uptrend Is Beautiful - Right At EMAs (8/21)
(My Screen Is Too Small To Pull Up Both Simultaneously)
Cons:
1) MACD Is Positive
2) Momentum Tapering As We Consolidate
I like the chart, and like what I see. I'm getting long here. Possibly with a covered call, but maybe something else. Not sure what other plays are available with such low volatility, but the verticals and diagonals are getting old.
Goldman Sachs Short - Overbought Momentum LossGoldman Sachs is a short to me here on the daily for a quick short. I'll disclose now that on the Weekly chart I am long based on the giant indented head and shoulders and the smaller head and shoulders that makes up the right shoulder. That is in my IRA however, as I do not purchase stock (writing covered calls) in my trading account simply because it ties up too much capital (usually).
The weekly outlook aside, I like what we see for a potential brief pullback here. Working from the top down, RSI is approaching it's previous two time resistance around 74, indicating to me that the stock is overbought. Both of these prior occurrences happened in the current trend.
Secondly, we have a shooting star after a two week up move, now followed by what looks like it will be a Harami. GS does not have a historical pattern of breaking out above the BB, even after a slight contraction in volatility. When it has, it's usually a quick retracement.
The one thing I do not like here is that OBV usually leads price and it has now crossed above it's 21WMA. Last time this happened it led a leg up. This time, however, over 50% of the move has already happened and it's just crossing positive, so perhaps it's not much to worry about.
IV%R is low in GS, at only 12% so that leaves the possibility of selling anything for a credit out of the books. That means I'm looking for a Long Put Spread basically. A diagonal wouldn't do because diagonals usually require some time passage, and this should be quick. Although I may keep an eye on the diagonal just to see how it would pan out. This low volatility market is no fun, and leaves my option strategies severely limited. Hopefully we will find some nice charts with higher volatility sometime tomorrow that we can enter some strangles and naked calls/puts with.
BBY Earnings Play; Unbalanced Iron Condor W/ $0 Upside RiskBestBuy has been consolidating since the beginning of July. Earnings are due tomorrow before the opening, and our IV% is at 56%, so I am looking for a play here to collect a credit.
Historically looking at BBY we can see usually see a slightly bullish move after earnings (EPS, which is usually beating estimates). Because of this, and being at the top of this range with our other indicators showing bullish momentum as indicated on the chart, I want upside protection, while I expect the range in BBY to continue through expiration this Friday.
All that being said, and what is shown on the chart, I am selling for a $0.50-$0.55 credit the 25/29.5/34.5/35 Put/Put/Cal/Call. This means if we break out from here, not only will I likely be putting on another bullish trade to take advantage of the breakout, but I will still have a small (VERY small) profit. That however beats a loss.
Ideally, we would like volatility to collapse and BBY to stay between $29.00 and $34.50, but anything above $29.00 would be acceptable.
Bitcoin Price Fails: Triangles, Andrews' Pitchfork, OBVBitcoin price has fallen through all the triangles drawn on this chart - including the big green symmetrical triangle based on the $339.79 low.
Bitcoin price failed to reach escape velocity after breaking out of Andrews' Pitchfork and could never break above descending blue price trigger line. At this point, there is the possibility that price falls back into the pitchfork, taking price significantly lower.
On Balance Volume (OBV) failed to stay above critical black line. That failure, in concert with triangles breakdown, and failure of price to rise above buy trigger line, foreshadowed lower Bitcoin price.
Bitcoin Technical Breakdown ContinuesBitcoin continues its technical breakdown. On the 1-day chart the 50-day EMA has crossed below the 100-day EMA. You'll also notice Bitcoin price has dropped far below the 200-day EMA as well.
In addition, Bitcoin has fallen below the Keltner Channels, which is something I had mentioned as a possibility in the past.
On Balance Volume (OBV) is at an extremely low level. The last time OBV was at these levels Bitcoin price was closer to $100 than $200.
Expect the pain to continue.
Dow Jones - On-balance volume strategyI have checked and over checked this strategy a few times, so I hope there won't be too many mistakes. As you will see, this is a very simple and effective strategy, which produces signals when used on its own, without adding any other indicator on the chart or using any fundamental factor. All you need is the OBV indicator, candlesticks and support and resistance. This is how it goes :
1 Look for a divergence on OBV. It shouldn't be a divergence when the price goes flat, it should be a divergence formed on two peaks or troughs. Note that only class A and B divergences have been taken into consideration.
2 After spotting a divergence, wait for a bullish or bearish candlestick like : hammer. shooting star, doji, engulfing, piercing line, dark cloud cover, abandoned baby. Candlestick patterns can be considered too : Evening/morning star, island reversal.
3 Look for the first structure support, that is the start of the current rally or the start of the current correction and set a target above or below it by a few points. On that particular target, position should be closed by <=50%, of the entire position.
4 Before getting to the target, after moving in your favor, the stop should be adjusted to breakeven.
5 The remaining of the original position should be closed when the trader sees fit, or till a contrary signal appears. I have not found a proper closing signal yet.
In the period this strategy was tested, it produced 39 signals. That means 3 signals each year.
4 signals were whipsaws, the red lines.
5 signals broke even (if the stop would have been adjusted to breakeven after the trade moved in your favor)
11 signals went to structure support, and made a rebound.
19 signals went a lot below structure support, with some of them even predicting long lasting corrections.
You can see that I'm using the word support, and not resistance. That is because this strategy doesn't really give long signals, most of them are shorting signals. Out of the 39 signals, 9 were long, 30 were short. Out of the 9 long signals, 6 went through the immediate resistance, 2 made it only to the resistance, and one of them failed.
This is a trading strategy that I'm going to use from now on, separately from my usual trading system. I'll be back with more information.
Bitcoin Price and On Balance Volume (OBV)While it is well and good to create charts, monitor indicators and attempt to discern the direction of the Bitcoin price, it is easy to get buried in complexity and blinded by bias. That is why the On Balance Volume (OBV) is so valuable.
You can read more about it by following the link below:
www.investopedia.com
Essentially OBV allows you to eliminate a lot of the noise from day to day volume movement and get a clear idea which direction it is headed in. Price and volume are highly correlated as you can see by looking at the chart.
On the OBV, I have added a horizontal black line where OBV has clearly pivoted recently. OBV isn't going to help much in determining price so much as price momentum. Prices below the horizontal line tend to be lower (but aren't always) than the prices below the line. This is relative. For instance, you shouldn't apply this months back. You use it to look at more recent price action not to compare today to several months ago.
You'll notice that OBV is below the horizontal line and has not moved dramatically lower. This helps explain the recent flat Bitcoin price.
The OBV should also help - in conjunction with other patterns and indicators - when to buy or sell Bitcoin. For instance, it may not be a great time to go long Bitcoin since the direction of price isn't clear. Should the volume continue to decline, then price will likely decline with it.
