Jan 21, 2016: 3:45 PM CST
What’s Breadth suggesting about the current market? And how was it extremely helpful in calling the recent top?
Let’s take a look!
First, what we’re seeing is the S&P 500 Weekly Chart with a specific Breadth Indicator.
We’re noting stocks at New 52-Week Highs (Blue), New 52-Week Lows (Red) and the Difference (Lower Panel).
Breadth is helpful to determine whether a Trend in motion is likely to Continue or Reverse.
Namely, when Breadth (stocks making new 52-week highs) consistently INCREASES with price going up, odds favor the continuity of the trend into the near future.
I highlighted two periods of Breadth Strength with Price Strength… and yes stocks continued higher.
However, the three Red Arrows on the New 52-Week High panel also showed negative divergences. Continue Reading…
Jan 21, 2016: 12:25 PM CST
With the S&P 500 falling over 11% at the beginning of 2016, which big-name stocks in the Dow Jones have beat the market… and which have lagged it?
Let’s start with the relative strength leadership (if we can call it that) so far in the bearish start to 2016:
We’re just measuring simply the price performance so far in 2016.
At the moment, no stock is positive on this scale yet Wal-Mart (WMT) is the “best of a bad start.”
Wal-Mart shares have fallen less than 1% when the other “top five” stocks have declined 2% to 3.5% as shown.
Here’s the Relative Strength Chart of Wal-Mart as we begin 2016:
Wal-Mart remains in a downtrend but there may be signs of life and a bullish reversal if this picture continues.
Price reversed off a new 52-week low in November near $56.00 per share and price has crossed above falling daily moving averages.
Other stocks showing “Relative Strength” include McDonald’s (MCD), United Health (UNH), Verizon (VZ), and Proctor and Gamble (PG).
Here’s the chart of “Relative Weakness” and there are a few big names on the list: Continue Reading…
Jan 20, 2016: 12:59 PM CST
As we focus on the US Stock Market, let’s pull the perspective back.
Let’s focus for a moment on three intraday charts – and powerfully persistent trends – that underscore how powerful the price movements of 2016 has been.
Combine these three charts together in your mind:
The @ES (S&P 500) and @CL (Crude Oil) Markets have been in literal collapse.
No meaningful bounce/rally has occurred and certainly there’s been no reversal against these powerful trends.
The S&P 500 is down over 10% in over two weeks while Crude Oil has collapsed further, falling roughly 30%.
It’s a large-scale “Risk-Off” Money Flow movement that has been relentless.
There’s one more chart that underscores the damage and money flow: Continue Reading…
Jan 20, 2016: 12:43 PM CST
Recently I’ve been drawing your attention to the Weekly Chart pivot levels and “Arc Trendline Distribution” structure and today we’re seeing “inconceivable” downside targets being hit ahead of schedule.
Let’s update our Weekly Chart perspective for the S&P 500 and Dow Jones:
Take a moment first to review our previous planning posts:
January 19: “Daily Pivot Planning Levels”
January 15: “Weekly Planning (Distribution Arc)”
January 7: “Distribution Arc Trendlines and Updated Targets”
The January 7th update particularly was correct well in advance of highlighting the reversal pattern and downside targets (achieved this week).
The S&P 500 – having broken the 1,900 and 1,870 low – has collapsed as would be expected “down toward” the 1,800 new weekly target level.
The 1,800 pivot is the confluence of the late 2014 spike reversal low and the rising 200 week SMA.
To be frank, today’s price action officially and objectively REVERSES the Weekly (Intermediate) Trend of the stock market from Sideways to Down.
The Daily Chart or Short-Term Trend is without any doubt in a prevailing and ongoing downtrend.
Let’s turn to the Weekly Chart Update of the Dow Jones: Continue Reading…
Jan 19, 2016: 11:59 AM CST
“Stocks which are weak tend to get weaker.” Twitter (TWTR) continues to demonstrate the power of this simple statement for traders.
It’s extremely tempting to find a weak stock and try to trade a reversal, but it’s more profitable to find a trend and ride it for all it is worth.
Let’s chart the Weekly and Daily path of Twitter (TWTR) and note what opportunities may exist for us now.
Here’s the bigger picture Weekly Chart:
The weekly chart serves as a reminder not just that this popular stock (note the volume) is volatile, but that it remains in a primary downtrend.
After a successful few months after the initial IPO, shares peaked above $65.00 and have never seen this level since.
Two multi-month deceptive counter-trend bullish rallies lured bulls to their doom when price broke rising trendlines to trigger new sell-short (breakdown) signals.
The last straw for the (then) rangebound stock was the breakdown in July 2015 under the $35.00 per share pivot which set the stage for the current relentless selling pressure we see today.
One more small retracement to the falling 20 week EMA (green into $30) was the most recent larger-picture sell-short signal ahead of the current swing to today’s fresh new price lows.
With this larger downtrend in mind, focus on the Daily Chart for a moment: Continue Reading…