Today is November 12, the end of T13 according to my calculations, and we finally got an 30-minute candle that closed below 6-week channel support. We've had several candle "tails" that dipped below the channel, but no candles that closed below the channel.
I took a short position this morning when we broke horizontal support at S&P 1204.3 cash with a stop at the 3-day (Fib 233 period) moving average on the 5-minute chart (then 1213, now 1211).
I was looking to see whether channel support would hold or break before deciding whether to dump the position before the weekend. Now that channel support has broken, I've moved my stop to break even and continue to monitor.
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I am beginning to think that the cycle low came early with last Friday's top which is another reason you can't always specifically call topping dates and you need to be flexible. I am still of the belief that this is only going to be a minor setback and that we will remain bullish a bit longer here. Just my opinion in an ever changing landscape.
ReplyDeleteIt's impossible to anticpate the end of day numbers at this point. However, the day looks somewhat similar to Aug 19th so far. Putting those A/D numbers into the spreadsheet gave results of ~ -38 on the AD osc and ~ -46 on the Vol osc.
ReplyDeleteThe AD osc has not been negative since August. The Vol osc would also be below the low point in Oct for that oscillator.
I do expect a close on or near the lows today but the numbers may still get slightly better even then. We'll just have to see.
The implication might be that there will be a lower low than today in the near future if these numbers are reasonably correct.
If you connect the intra-day highs on 11/9, 11/10 and 11/11, you have a pretty good down-sloping resistance line that will end today around ~1210 and is losing slightly more than 4 points a day.
ReplyDeleteTo me, that's as good of a "bullish above, bearish below" line as any.
Parker and every one else.. I agree with the comments. my take is as follows
ReplyDelete=Market is down 110 Dow points and 16 S&P points as of 2:15.
Both indexes have broken support trend lines, both daily and hourly, and I have confirmed sell signals in the SPY, the SPX the COMP and the Euro and now the TRAN
I am buying the TZA at $20.65. stop at $19.78. If you prefer to short the SPY, short at $120.00 and stop at $121.66
I am offering the sell signal prior to the close.. the break of the trend lines is substantial and it is unlikely the market will reverse. If the market does reverse prior to the close, I would not carry the trade over the weekend. If the last 15 minutes are still down, it should be safe to carry the trade over the week end.
I referred to a developing "coil" a few days ago, and suggested that "coils" often move first to the opposite intended direction. In this case,a the SPX broke up out of the coil and is now trending lower. the 1186 level should be watched carefully.
Bill
Great blog Parker, I enjoy Terry;s Stuff.
ReplyDeleteFwiw, I had a Trend change day today, but the 1.05 Low may have been the 12.45 hourly CIT Low, as it was right at Key support area.
OE week is still biased to be Up
Hey guys, interesting day. Today certainly had a beginning sell-off tint to it. I'm waiting for Monday's action to confirm and will likely go short then. Something I've noticed is that if you look at the McClellan (NOT the oscillator, but the comparison of 5% and 10% lines) when the 10% line drops below the zero line, it very often coincides with the beginning of a sell off. Not always, but often.
ReplyDeleteTrendline breaks are important and I pay attention to them, but I'm finding that they're more important when the trendbreak results in a move following the prevailing trend. When it's counter-trend, price action sometimes just returns to the last low in a consolidation range (wish I had a percentage) and will break and break and break until it continues the trend by breaking topside trendline and/or price resistance (like in late September and most of October).
I waited for two reasons. 1: As tempting as it is to want to get in before volatility takes hold (I trade options, and volatility makes certain strikes gain value fast) Price action held at the 20day EMA and the VIX hasn't broken it's downtrend line so it looks like a possible bounce. 2: Though it broke downside out of the downtrending channel and broke the green August low uptrend line, it also held at the support level joining the tops from two weeks ago. You can view a screenshot here:
http://chartpostings.blogspot.com/2010/11/will-it-sell-off-on-monday.html
I'm just going to hang on for the moment. Thanks for the conversation.
The Market has come to a short term support area.
ReplyDeleteI expect it will edge up early next week. I will short NASD when it bounce back next Tuesday. If it
breaks down this support area late next week, then
I expect to see pretty fast run to the down side.
Dan
ReplyDeleteThanks for your input.. It does seem there is some value in the NYMO observation you have made.. .I did a little back testing and the Break below the -10% line did occur about 15 times, since 1/201- and 7 of those times the NYMO did occur on the same day as my own strategy generated a Sell signal. However, on 8 occasions, the NYMO generated a signal breaking below the -10 line that was not confirmed by my own strategy. These 8 occasions also did not produce a meaningful decline in the SPX.
To be considered useful, the NYMO signal you have observed would have to be used in conjunction with other well tested indicators.
thanks for you insight.
Bill
Saturday Observations
ReplyDeleteAs of the close on Friday, I have confirmation of Momentum Changes in the RUT, COMPQ, TRAN, DOW, SPX, SPY and the Aussie dollar, as well as confirmation of Buy signal for the US Dollar index. Also breakdowns through the trend support lines in the SPX hourly and daily. (the hourly had been the most persistent channel observer)
Plus, all of this is consistent with the anticipated top projected for this past week by Terry and Parker.
Next week should be interesting.
Make it a great trading experience!
Bill
Hi Dan
ReplyDeleteThanks for your input.
I went back 30 months on the 10% line. I added one qualification: I looked for 10% crossing below 0 after it had risen to at least 350.
I also studied where these signals occurred in relation to the 50-day moving average. As you know, we are currently well above the 50MA.
The signal happened above the 50MA 5 times in 30 months (6/6/07, 10/16/07, 6/16/09, 9/1/09, 10/26/09). 4 out of 5 resulted in price declining to the 50MA.
Of those 4, three times then price rallied to a lower high, then sold off to make a lower low below the 50MA.
The trend has changed to down, here is why:
ReplyDelete"They say the trend is your friend, but what does that really mean? Here are some clues:
Since the late August Lows, we have had 5 corrections (Cyan lines in chart), lasting 1-2 TD:
1. 08/27H-08/31L = 24.33 SP's
2. 09/21H-09/23L = 25.80 SP's
3. 09/30H-10/04L = 25.29 SP's
4. 10/18H-10/19L = 25.82 SP’s
5. 10/25H-10/27L = 24.40 SP's
The Main Rules to have a real Change in Trend to down (which means do not short this uptrend aggressively until then), is the decline should last longer than 2 TD and must exceed 26 SP’s.
On Friday, the decline has lasted more than 2 TD and larger than 26 SP's, which means there is a Change in Trend to down"
http://timeandcycles.blogspot.com/2010/11/is-there-major-trend-change-at-hand.html
It will not be a straight down move though.
Thanks guys, I don't have access to historical McClellan signals at this time. Thanks for looking back, Parker. I'll copy that down.
ReplyDeleteThanks BillH, but I think you might have misunderstood my description. I don't mean 10% crossing below the 5% line because that is just a cross below the zero line on the McC Oscillator (McC Osc is just 10% relative to the 5% line so 5% line is counted as zero). I'm talking about just the blue 10% line crossing below the different zero line that accompanies the 5% and 10% lines. Also, could you clarify what date you looked back from? Is that 12/01 or 1/2001?
Looks like we're all refining our personal market edge's. Good luck everyone.
Hey TimeandCycles, I don't seem to know what your abbreviations are. What are SP's and TD's?
ReplyDeleteDan
ReplyDeleteFor $35, McClellan will send you all their data back to 1990 in Excel if you want to back test.
Sorry about that Dan,
ReplyDeleteSP = Standard and Poor 500
TD = Trading days
Dan
ReplyDeleteI am not sure what you are doing.. but I like what I thought you were doing... and it does support what my work has produced this year.
I was looking at just this year.
Here is what I looked at.. and like I said, I liked it. :)
http://stockcharts.com/h-sc/ui?s=$NYMO&p=D&yr=0&mn=11&dy=10&id=p37775746029&a=214064242
Bill
Hi Bill, this is what I was talking about (the bottom section of the chart):
ReplyDeletehttp://stockcharts.com/charts/indices/McSumNYSE.html
The bottom is the raw data. The Oscillator (2nd down) is simply the distance between the 10% and 5% lines and the Summation is a cumulative representation of the Oscillator. It's not exactly the same, but Parker's Oscillator ($NYAD:$CPC), the McC Oscillator ($NYMO) and Terry Laundry's Volume Oscillator all look very similar, but ARE different.
The $NYMO zero crossovers do occur sooner, but sometimes far too soon (like the April run and the current Sept/Oct run), while the bottom section's zero crossover tended to occur closer to an actual rollover. BUT I haven't studied this much at all and it could use some refinement or something to filter signals. It's been my experience so far that bottoms are much easier to call, while tops take more confirmation. Whatever you're doing, Bill, it looks nice.
Still holding my SPY shorts from $121.40 and $122.80.
ReplyDeleteKISS....
Dan
ReplyDeleteI am not certain how you are creating the oscillator......I am a subscriber to stockcharts... not to decision point. but when I enter the url you provided, and then click on the chart that is displayed, it takes me to a stock chart.com display, but it shows a free stockchart with none of the overlays that first show on the decisionpoint.com link.
I can not find an overlay in stockcharts.com that will let me create the 5% x 10% moving average oscillator that decisionpoints.com shows.
it does look like it might be a good oscillator.
Bill
Dan
ReplyDeleteNow that I see the chart you are talking about, I can see "350" doesn't make sense. Because that chart is the ratio adjusted MO, and I was using non-ratio adjusted numbers FYI. The dates I provided above for zero crosses of the 10% line (while price was above the 50MA) should be the same, however.
Parker:
ReplyDeleteNice blog, it would be great if you could post a reference chart, along with your comments. Or is there some other place where you post them ?
Yash
ReplyDeleteUnfortunately, I cannot post charts in the comment section. I can't even post links. All I can do is give a URL address.
I can post charts when I start a new blog entry, and will try post more charts in that fashion.
Bill, I'm not creating anything, I took a screenshot at the end of 2009 of the page I linked which only shows one year's data. So when I observed the 10% crossover, I looked back at my 2009 chart and thought it was worth mentioning. What you see is what I was talking about. I can't delve into exact days as the chart's not big enough to mark them. And yes, I agree there's real merit to it and I do watch it. Advance-Decline data is very important in telling the market breadth.
ReplyDeleteParker, thanks for the warning. I hadn't compared numbers yet. I think I'm going to construct my own McClellan Oscillator in Excel so I can manipulate the data and see if I can work any new helpful observations out. I found a good description on the McClellan site.
http://www.mcoscillator.com/learning_center/kb/mcclellan_oscillator/Calculating_the_McClellan_Oscillator/
Dan, the same site has a spreadheet already set up with the formulaes in place. It only goes back a limited amount of time so I wound up buying the historical data package.
ReplyDeleteYou can add your own tweaks and charts to the spreadsheet, of course, with either the free or the historical version.
For what it's worth, my breath-based indicator gave a sell signal on Friday, so I went short. It's usually quite reliable, but it did give me false signals twice in this rally, and another almost-but-not-quite sell signal.
ReplyDeleteInterestingly, one of those false signals and the almost-but-not-quite signal matched Bill's two failed signals from the chart he posted above. I was tempted not to take this signal given the recent market strength, but I felt the same way at the April top, thinking it would be shallow little pull-back that I would buy into. Taught me a good lesson. Thanks for the good discussion everyone.