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Post by huh on Jul 28, 2014 7:26:50 GMT -5
Interesting article: Risk Laboratory: Volatility, Options and the World by Ophir Gottlieb: Sunday, July 27Here are some key excerpts from the write-up: * As of Friday: 34% of stocks are now trading above their 20-day MA * As of three weeks ago: 76% of stocks were trading above their 20-day MA | * As of Friday: 47% of stocks are now trading above their 50-day MA * As of three-weeks ago: 80% of stocks were trading above their 50-day MA | Last week the NASDAQ 100 hit a 52 wk high but with this time it has happened with fewest number of constituents (also) making new highs ever. | As small caps under-perform we must remember that there are 2000 companies in the Russell 2000 (aptly named) and just 500 companies in the S&P 500 (also aptly named). So what?... The under-performance in the Russell 2000 is an under-performance of the majority of companies. |
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Post by huh on Jul 28, 2014 7:33:54 GMT -5
But I don't believe we have seen the top in the major indices quite yet. SPX appears to be in a rising wedge and has been reaching for the top of that pattern since a touch of the bottom all the way back on 10/04/2011 (the bottom of the last major pullback).
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Post by huh on Jul 28, 2014 7:38:57 GMT -5
Also, many charts are pointing to possible double-tops, or slightly higher, but have yet to hit those upside targets. I've posted many of these here already, but they include GOOG, AMZN, AAPL, IYR and others. IWM's recent under performance began after a double-top with a slightly higher high, and could be signalling the same to happen with many of these. Remember this call for IYR from Feb 11? I've been eyeing that one but the triple DRN is just too low volume for overnights. I should keep it in mind for intraday. My threshold volume for overnight viability in the 3Xs is 500,000. Worth keeping an eye on. If it can close above the downtrend line (across the 07/23/13 & 10/25/13 highs), then sets up for a target ~75.75 - 'coincidentally' the highs of May of last year. Needs to confirm yet by holding this line. But if it plays, it should move fast. View AttachmentHere's an updated look at it's chart: Didn't move near as fast as I thought it might, but almost to the double-top target.
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Post by huh on Jul 28, 2014 7:51:25 GMT -5
Here's a quick look at the GOOG chart. Don't think I had posted the pattern for the double-top/H&S head test upside target before:
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Post by huh on Jul 28, 2014 8:01:31 GMT -5
Also, there's the VIX.
A downside gap was left open @11.21 in VIX in March of last year, and it took 15 months for it to finally get filled on 06/06 of this year. But only one month later, it left another gap down ~10.32.
I believe this gap will get filled before a top is in for the indices. Perhaps a double-bottom for the VIX.
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Post by huh on Jul 28, 2014 8:50:00 GMT -5
As Crumb and I talked about, could see SPX high 1950's/low 1960's as the next buyable dip. As for when the top could occur - could be as soon as a week or so with a blow-off top (unlikely), or as what happened with IYR, could be a slow grind up. I don't think this bull market will continue past October of this year though.
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Post by crumbdon on Jul 28, 2014 8:58:22 GMT -5
Yeah, Huh, this morning looks to be setting up for 1958-60. Should be a good SHORT-TERM buy spot, IMOHO. I'll also watch SPY 197, as buyers like those round #'s. A 197 bounce should be short-lived, though. Potential blowoff tops have all been artificially held back so far, prolonging the topping process. Gotta break sometime this year, though.
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Post by crumbdon on Jul 28, 2014 10:09:57 GMT -5
Buyers working over that SPY 197 area pretty hard. I still think it is likely to fail by eod or first thing tomorrow morning though. But it is still the bulls' game to lose here.
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Post by huh on Jul 28, 2014 10:22:29 GMT -5
Buyers working over that SPY 197 area pretty hard. I still think it is likely to fail by eod or first thing tomorrow morning though. But it is still the bulls' game to lose here. Showing more support here than I expected from the charts. I'd like to see that SPX 1957.85 gap filled before trying for new highs, but not looking like it wants to cooperate right now.
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Post by crumbdon on Jul 28, 2014 10:37:18 GMT -5
Agreed. I best keep my mouth shut here, lol.
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Post by huh on Jul 28, 2014 10:43:05 GMT -5
Agreed. I best keep my mouth shut here, lol. Afraid of jinxing it?
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Post by crumbdon on Jul 28, 2014 11:08:20 GMT -5
Agreed. I best keep my mouth shut here, lol. Afraid of jinxing it? Mark Twain said it best: "Better to remain silent and be thought a fool than to speak out and remove all doubt." It's sorta my motto in life One thing for certain, this market has spent the better part of the last year or two setting up patterns and then busting them.
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Post by novie08 on Jul 28, 2014 11:21:57 GMT -5
So agree about the patterns. Would someone please comment on the put/call ratio and where it is now? I would like a good way to follow this indicator. Thank you!
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Post by crumbdon on Jul 28, 2014 12:48:21 GMT -5
There you have it- Drop to SPY 196???
BUSTED!!!!!!
(Stoopid market!!)
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Post by huh on Jul 28, 2014 19:57:02 GMT -5
So agree about the patterns. Would someone please comment on the put/call ratio and where it is now? I would like a good way to follow this indicator. Thank you! I don't follow it regularly, and have very limited knowledge of option products. But here are today's numbers: Ratios Total Put/Call Ratio 0.91 Index Put/Call Ratio 1.12 Exchange Traded Products Put/Call Ratio 1.69 Equity Put/Call Ratio 0.59 CBOE Volatility Index (VIX) Put/Call Ratio 0.21 Although the Equity Put/Call Ratio is very low, in fact near 8 year historical lows, what concerns me is the Exchange Traded Products ratio. It is high. Very high compared to the normal Equity ratio. In fact, the Equity Ratio in October & November of 2008 right before the crash peaked at 1.16, and it was only over 1.00 for a total of 6 days in those months. If you take the average of the Equity & ETP Ratios above, you get an average of 1.14 - that's only two points off the highest mark in November of 2008. Of course on the flip side of that, ETP's likely get more put purchases simply because of the increased decay in the leveraged products, and because of the easy short money in products like UNG (those ETF/ETN's that fall regardless of the underlying because of things like contango). But in any case, I have a hard time believing that the Equity put call/ratio can be used as a tool as it might have once been due to the now overwhelming popularity of the ETP products. Lastly, I took a look at the data for Total Put/Call Ratios and I don't see anything that would indicate it could be used as a market predictor tool (back to 2006). In fact, I've seen websites that suggest using this ratio as a contrarian indicator instead since option traders are more often wrong than right, and perhaps because hedge funds tend to buy more puts than calls in order to protect their long positions. JMHO - I used data from the CBOE put/call archives found at www.cboe.com/data/putcallratio.aspx
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Post by huh on Jul 28, 2014 20:10:46 GMT -5
Personally, I think of greater concern would be the overall margin debt. Although on its own it doesn't have the history to support it as a market top predictor tool, it sure does show when the potential for a major top or bottom exists: Here's a chart taken from seeking alpha. And another from Ryan Detrick at ST:
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Post by huh on Jul 28, 2014 20:16:30 GMT -5
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Post by novie08 on Jul 28, 2014 21:48:05 GMT -5
Thanks for all of that work huh...lots to mull over. Armstrong saying (as far as I can tell) that since we didn't reach that nominal low in July, correction coming into late Oct/early Nov.
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Post by crumbdon on Jul 28, 2014 23:19:09 GMT -5
Read this earlier today, but kind of yawned when he said "within the next 12 months". That gives plenty of time for another principle to kick in that has withstood the test of time much longer than his predictions, and that's called "reversion to the mean". In other words, a 12 month time frame gives a LOT of time for something to happen that is already LONG overdue. I will agree with his assessment, though, that suggests basically the higher it goes, the harder it falls. That's just simple physics that even a knucklehead like me can understand
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Post by huh on Jul 29, 2014 7:30:10 GMT -5
Read this earlier today, but kind of yawned when he said "within the next 12 months". That gives plenty of time for another principle to kick in that has withstood the test of time much longer than his predictions, and that's called "reversion to the mean". In other words, a 12 month time frame gives a LOT of time for something to happen that is already LONG overdue. I will agree with his assessment, though, that suggests basically the higher it goes, the harder it falls. That's just simple physics that even a knucklehead like me can understand Yep, exact same thing went through my head, Crumb. Only another indicator, along with the divergence in # of stocks over their 20 & 50 dma's and the extreme prints in margin debt, reinforcing the idea that perhaps we are very near a top - in terms of price, not necessarily time. But, as for the timing, combining these things with the VIX downside target, upside targets in many large names pointing to potential double-tops, and the SPX rising wedge, we might be able to predict not when it will happen, but rather at least, when it is happening.
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