I was watching the 1189 level on October 21 to see if we were going to breakout. However, the TRIN was well over 1.0 all morning leading into the top at 1189. This indicates distribution. Here's why:
TRIN is the ratio of two ratios. (Advancing issues to Declining issues) to (Advancing volume to Declining volume). So, if you had 1800 advances to 1200 declines but 6M shares of advances to 8M shares of declines, then TRIN would be 1.5/0.75 or 2.0
If a rally is being bought into, you would expect the ratio to be less than 1.0, i.e., volume supporting the move. Here, the ratio was greater than 1.0 all morning and during those 30 minutes the market hovered at 1189, suggesting that the rally was being sold into. Distribution rallies are often sucker rallies and usually offer false breakouts.
TRIN is the ratio of two ratios. (Advancing issues to Declining issues) to (Advancing volume to Declining volume). So, if you had 1800 advances to 1200 declines but 6M shares of advances to 8M shares of declines, then TRIN would be 1.5/0.75 or 2.0
If a rally is being bought into, you would expect the ratio to be less than 1.0, i.e., volume supporting the move. Here, the ratio was greater than 1.0 all morning and during those 30 minutes the market hovered at 1189, suggesting that the rally was being sold into. Distribution rallies are often sucker rallies and usually offer false breakouts.
This got me thinking. Have we seen bearish divergence between the cumulative NYSE Advance-Decline Volume and the S&P at tops recently? Turns out we have. Check out the tops in January, April and August:
This bearish divergence at tops is excellent evidence of distribution. Don't look now, but we have some divergence already in October:
Note: for whatever reason, bullish divergence between $NYUD and $SPX does not appear very often at bottoms.
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Posts
Parker,
ReplyDeleteI have sent Terry a chart that combines the % of NYSE stocks over their 50 day EMA ($NYA50R) with your homemade oscillator and have come up with some amazing time symmetries. I can send the chart to you if you have an email address. Just slip me a note at jeffreyisyoung@yahoo.com
Parker, once again, very interesting. One question, where can i find a real time trin metric? The one you used to determine yesterday's rally was a sucker's rally? Thanks, Hunt
ReplyDeleteJEFF- I would love to see a copy of that chart as well if possible
ReplyDeleteThanks! email: jck1121@live.com
Hunt
ReplyDeleteThe symbol is $TRIN on Stockcharts. I subscribe to their real time data.
I had no idea that was available in real time, thought it was only end of day. Thanks! Hunt
ReplyDeleteI am just wondering if you could provide an update on the SPXA50R chart (% of SPX500 stocks above 50 days MA). I recall that you'd consider a new uptrend would have started if SPXA50R gets into the 85-90 region. This has occurred on Oct 13th (with reading at 93) and it has closed at 88.40 on Oct 22nd. Would you consider the possibility that due to the massive money printing (that has occurred and will occur) by the Fed, we will be seeing nominal increase in SPX Index despite a real decrease in SPX (say measured in Dollar Index or GLD).
ReplyDeleteForgive me if I ramble a bit-
ReplyDeleteI find the work done on your site very interesting, keep it up.
I imagine many who visit here are ex- Elliott wave disciples frustrated with losing money since June 2009- when their short term analysts got very bearish. After repeated calls from prechter to get 200pct short- most who followed are probably wiped out by now.
I've been following t-theory for a few years, and terry's call to stay bullish in June 2009 proved accurate. However, I guess with all methods, the fun must end. Since august 2010, t-theory has also stopped working. Is it time to be an Elliott wave disciple once again? Let me explain.
In one of the best investment letters I've ever read- the EWT April issue, prechter made the connection that the period of 1921-1929, was a mirror image of 1974-2000, only 3 times as large. His call for a low in stocks in 2016 mirrors terry's prediction. If 2010 is similar in nature to 1930, then why would he expect the market to collapse right away? By his own math it should last 2.5- 3.5 times as long. The April top to now is roughly 165 days. In 1930, stocks topped in mid April, dropped to early may, and rallied hard into may 30. That took about 45 days, then as a stimulus package was announced stocks dropped off a cliff. That's roughly 3.5 times.
The decline in 1930 lasted into mid June, before prices rallied again. That's about 15 days. 15 X 3.5 is roughly 50 days. = dec 12- Nulled echo low
anyone?
You have to be careful with fractals, but here's a blog that compares recent price action to 1930:
ReplyDeletehttp://the1930scenario.blogspot.com/
As for T Theory, I don't buy the argument that the August 26 call invalidates the theory. I have offered my own refinements to Terry's theory which may help improve the targeting of end dates (see my T12 and T13 videos), but the basis of Terry's theory works: the cash build up phase roughly equals the up trend phase.
Regarding the $NYA50R, we have seen serious whipsaw in 2010. It fell below 15% in May, then rose above 85% in September.
ReplyDeleteI have data back to 2002 on $NYA50R. It climbed above 85% in April of 2003, stayed above 15% until August of 2007, stayed below 85% until April 2009, stayed above 15% until May 2010, then stayed below 85% until September.
Clearly, going from one extreme to the other in four months is unparalleled. We should get a correction soon. It will be interesting to see if that correction pierces 15% or not.
I agree- using fractals in isolation is not wise. But let's take this one step further. Terry Laundry's bond yield low prediction and intermediate low in stocks is June/July 2011. A Martin Armstrong turn date June 13 2011. A Puentz crash window opens June 2011. An Elliott wave Intermediate 1 low (assuming we don't break the April 2010 high) would time perfectly for June 2011. Using the 1930's example above, a mid/late June 1930 low on a fractal basis lines up to a late November early December 2010 deep low. Deeper than anyone expects the market to go in such short a time. 400 S+P points would be a comparable move. The mid august 1930 low would line up with a major double bottom June 2011 low and launch another massive bear mkt rally.
ReplyDeleteIn 1930, mid September was the last real peak before the market really got crushed. This on a fractal basis lines up near multiple cycle highs in early 2012.
Again, perfect timing for a Elliott Wave intermediate 2 top.
I would expect record bullishness at this peak, as well as calls for a great new bull market as well.
"Terry Laundry's bond yield low prediction and intermediate low in stocks is June/July 2011. A Martin Armstrong turn date June 13 2011."
ReplyDeleteI must have missed this. If you don't mind, what day did he discuss the above so I can go back and listen. Many thanks.
I will try and find the exact audio file, but over the past several Sundays he has talked about a June/July 2011 bond price peak, which he says would probably coincide with a stock market low. The thinking is people will flock to safety in treasury bonds as a result of a decline in the stock market. Even if you look at the recent nulled echo low T, the beginning of the T is around June 2010. It's a bear T so likely to fail, but if you take it to it's peak - it would be June 2011.
ReplyDeleteA failed T would likely fall off prior, possibly setting up a oversold condition come mid June 2011/july 2011.