Chart Updates

1. SP500 – the rally since Thursday has kept both bull and bear cases open:

11fe112. However, volume has been weak on the rally versus the falls – the reverse of December’s rally from correction:

11fe183. Call/Put versus SP500 – see U Karlewitz comment at bottom of chart:

11fe24. Rydex Bull-Bear versus SP500 – again see U Karlewitz comment at foot:

11fe15. Cyclicals continue to display relative weakness despite the rally:

11fe196. The Nasdaq 100 is the most bullish looking US index, but continues to reveal underlying breadth divergence:

11fe127. The Russell 2000 is currently the weakest index, but still has a long way to fall to mean-revert in valuation:

11fe178. Bull-defining parabolic stock, sector and index charts which have yet to break down (whilst others have):

11fe3 11fe411fe69. Economic Surprise Index latest – a reversal of fortunes in 2014 bar Japan:

11fe7 11fe8 11fe9 11fe1010. Commodities inventories latest – tightening broadly in progress (and echoed in some softs):

11fe13 11fe1411fe16 11fe15

Gold, gold miners and treasury bonds continue to attract money flows despite the stock market rally of the last few days. I have added to my short stock index positions today and will add more if we move higher still. Based on the indicators in my last post and this, I expect the rally to top out imminently and revisit the lows of last week. At that point we can review to see if indicators have washed out more thoroughly. Based on bigger picture indicators I don’t expect the market to recover from there, but first we can judge that nearer term picture for clues. I would stop adding shorts if US indices rallied back up to their highs on good breadth, volume and renewed cyclical strength, with accompanying weakness in gold and treasuries. Yellen speaking today and likely some market reaction to her overall tone.

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30 thoughts on “Chart Updates

  1. Since the swing low, even down on the 1 minute charts, there has not been a single sell signal I recognize in the index etf’s.Expected yesterday… did not happen.Last call in the QQQ before a new high is 8840.

    a note .. though I am primarily a short term trader, I am long ag etf in agreement with John’s recent position post for a long term trade with stop below recent low.

  2. John, would you mind answer my question in the past article, please;if you have the kindness and courtesy. Thanks in advance.

    @apanalis

  3. Having launched Feb 2012, solarcycles.net has now been running 2 years. Readership has increased significantly in the last couple of months, with the busiest ever day just last week. If you are a new regular reader, I encourage you to comment. This site is about sharing information, and it should be clear that it’s fairly civilised here, so do not fear stepping forward with a link or a bit of analysis or just a question. If you’d rather email me instead, my details are on the About page.

  4. February 10, 2014

    In summary, John your idea is to increase short positions from12 of feb to 14th feb to mantein until 14-17th feb´14? or will be the last opportunity to be short for a long time?

    @apanalis
    Reply
    Antonio Pérez Algás
    February 10, 2014

    ViX indicator, must close two gaps downwards

    @apanalis
    Reply

      1. I concur, John, around 16k Dow Jones is short for me, no matter if we reach 17k, if the expectation is at least 30-40% decline, always trading with Etfs, in my case.

        Thanks.

        @apanalis

  5. John, I can’t agree more…and barring another round of euphoric buying spree, I believe Russell 2000 is the best short from a mean aversion standpoint.

    I too added to my short positions.

      1. As per the end of my post above – unless volume, breadth and sector rotation turn positive, and money flows back out of safe havens, then I see this rip as a bull trap. We are still in keeping by price and time with the second chance of the 3 analogs.

    1. From what I read, the PBoC is still keeping a tight rein on credit. Recent changes also involved elevating the status of the CB, away from controls by state council. PBoC has traditionally been more hawkish than state council or NDRC.

  6. John,
    It seems the miners are overbought now and need a breather, just not sure how far they will get pushed up. In addition to your indicators listed, it seems a near term catalyst (known) for a strong reaction would be retail sales. To add another opinion, Armstrong doesn’t think Gold has bottomed. All of your indicators are strongly supportive of reversion, but it always seems with the CBs involved, the magic hands do their work! I’ll be watching this crazy market…

  7. I think Commodities are joining in, and I (hope) am not talking my own book because I am heavily invested in HUI:) We will see….:)

  8. I have been reading the blog for about 3 months and love the work you are doing. I’m just small potatoes I trade my deferred comp account. Left the equities and went 100% in bonds Dec 31 per the Bradley model. I also have been trading the NUGT in an IRA account. Keep up the good work!

    1. By the way I should make the point that the Bradley model graph depicts 1929 is not going to occur again. Think this is all paranoia as what creates the pattern resembling 1929 has significantly changed. That doesn’t mean what John says should be interpreted any differently. I’m just posting that I believe this 1929 stuff to be a bad echo or blip on the RADAR screen.

  9. Over the coming days a buying panic might lead to the extreme enthusiasm for stocks, which the sentiment scales, sentimentrader displays on its free entrance site, didn’t show up to now. Although the “second chance” scenario is still in play, it might turn out, that a few indicators like these scales and the cumulative advance-decline line can’t be dwarfed even by the most sophisticated bearish case.

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