04/15/2010 Market Recap: ISEE Equities Only Index Record High

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are BUY 4 of 6 are OVERBOUGHT Non-Stop Model is in BUY mode Short-term 1 of 1 are BUY 6 of 6 are NEUTRAL SPY ST Model is in BUY mode

ATTENTION 2.4.4 NYSE McClellan Oscillator: Negative divergence. BULLISH 4.1.0 S&P 500 Large Cap Index (Weekly): Head and Shoulders Bottom, target 1246. BEARISH 1.0.2 S&P 500 SPDRs (SPY 60 min): 18 unfilled gaps. (max was 18) 1.1.0 Nasdaq Composite (Daily): 10 unfilled gaps. (max was 10) *0.0.3 SPX Intermediate-term Trading Signals: CPCE and CPC MA(10) too low. 4.0.4 Dow Theory: Averages Must Confirm: NYHILO too high. 1.1.0 Nasdaq Composite (Daily): NDXA50R is way too high. 4.1.0 S&P 500 Large Cap Index (Weekly): BPSPX too high. *0.0.9 Extreme Put Call Ratio Watch: CPCE and CPC MA(5) too low. *8.1.5 Normalized CPCE: New record low. 6.2.3 VIX:VXV Trading Signals: Too low. 2.3.4 Nasdaq Total Volume/NYSE Total Volume: Too high. 04/14 Market Recap: percent of SPX stocks 1+ std dev above MA(50) is too high. 04/14 Market Recap: Smart/dumb confidence spread at sentimentrader is too large. 04/14 Market Recap: Too many bearish extreme signals at sentimentrader. 04/14 Market Recap: Intermediate-term Indicator Score at sentimentrader is too high. CONCLUSION So far no bearish signals worked but they are simply too many. I won’t attempt any short until the next NYMO Sell setup is triggered. Still hold the SPY ST Model long position, but no more equities long will be added.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 02/26 L *04/01 low *Adjust stop loss. Reversal Bar   NYMO Sell     Non-Stop     Newly added setup, will give signal on this setup the next time it’s triggered. OTHER ETFs TREND TRADE COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ UP   4.1.1 Nasdaq 100 Index (Weekly): BPNDX too high. IWM UP     CHINA ?     EMERGING UP     CANADA UP   4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): BPTSX is too high. BOND DOWN   Black bar plus big red bar, so pullback confirmed? DOLLAR UP *Good buy? Head and Shoulders Bottom, target $24.28. *Morning Star plus ChiOsc a little low, could rebound further.  GOLD UP   Seems to hold well above the breakout point. GDX UP   Ascending Triangle, target $54.2. Hammer and held the Ascending Triangle breakout point, will keep rebound? OIL UP ENERGY UP   FINANCIALS UP   4.4.2 Financials Select Sector SPDR (XLF Weekly): Fib confluences area from $16.76 to $16.97 could be the target. Up 9 weeks in a row tied the past record of streak up weeks. REITS UP MATERIALS UP   4.4.4 Materials Select Sector SPDR (XLB Weekly): BPMATE too high.

*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.

SEASONALITY: THE LATER HALF OF THE WEEK IS GENERALLY BULLISH

According to the Stock Trader’s Almanac:

1. 04/15 income tax deadline, Dow down only 5 times since 1981.
2. April expiration day, Dow up 11 of last 13.

CYCLE ANALYSIS: CYCLE TOP COULD BE AROUND 04/11 TO 04/15

See 04/08 Market Recap for more details.

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD

Nothing new, according to the II Survey, too many people expected a correction, so the stock market should rise to a new high first before actually pulling back. Basically, my guess is that we’ll repeat the year 2004 roller coaster pattern. See 03/19 Market Recap for more details.

SHORT-TERM: A STRONG EARNINGS OFF-SEASON USUALLY MEANS A WEAKER EARNINGS SEASON

See 04/09 Market Recap, the statistics about the Earnings Season plus the cycle analysis and plus too many bearish extremes accumulated in the table above, so my guess is that we’ll see typical sell on news in the coming earnings season.

A new record again today – the ISEE Equities Only Index closed at a new record high. The reading 348 means for very 3.48 calls bought there’s 1 put bought, this is way too bullish. The last time when ISEE Equities Only Index kept going to record high was around the 2007 bull market top.

 

Take a look at ISEE Equities Only Index MA(10) which is perhaps the most common way to use the put call ratio.

 

T2105 from Telechart, also new high. Comparing with a longer history chart the new high today was nothing but it looks to me recently every time it reached a new high the market was topped.

 

The official definition of the T2105, take a look if interested.

T2105 High Low Logic Index

Developed by Norman Fosback, the Index is computed as the lesser of the number of new highs or new lows divided by the total number of issues traded. Daily or weekly NYSE data typically is used in the calculation.

The concept behind the indicator is that either a large number of stocks will reach new highs or a large number will establish new lows, but normally not both at the same time. Since the High Low Logic Index is the lesser of the two ratios, high readings are infrequent.

When a high indicator reading does occur, it signifies that market internals are inconsistent with many stocks reaching new highs at the same time that many stocks establish new lows. Such a condition is considered bearish for stock prices.

Extreme low indicator readings reveal a uniform market. They are considered bullish for stock prices.

STOCK SCREENER:  For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.

Looks like it’s too late to long stocks now as the market is way too overbought. Waiting for a better chance.