A few charts showing the state of sentiment, and other technical factors.

On Tuesday, we made a Bullish trading call for RR&A subscribers — it was based on technicals and sentiment  (since we launched Ritholtz Research & Analytics, I’ve had to move the trading calls off of the blog; it keeps the lawyers sane and the regulators happy).

Have a look at the 4 charts in question:

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Percentage of NYSE stocks over 200 day moving average
click for larger graphs
Percent_above_200_day

Put Call Ratio

Put_call_ratio

 

Big NYSE Volume Spike on Sell off
Nyse_volume_spike

Too Many Bears

Too_many_bears

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None of this changes the longer-term perspective, or the views on the second half of the year; Rather, it recognizes the washed out condition and potential for a 3-6 week counter-trend rally.

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Category: Investing, Markets, Psychology, RR&A, Technical Analysis, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

27 Responses to “RR&A Trading Call”

  1. jim reynolds says:

    another good read with some neat charts:
    http://www.financialsense.com/Market/wrapup.htm

  2. Drew Yallop says:

    Hi Barry,

    Just a heads-up. Until this post I was not aware that your pay site was up and functioning. The last reference to it here was I believe when the dummy site was brought up. There may be others that are still waiting.

    BR: I was going to make an official announcement Monday, but the cat’s out of the bag

  3. jim reynolds says:

    another good read with some neat charts:
    http://www.financialsense.com/Market/wrapup.htm

  4. mne says:

    great call .. i think many people monitor your site to see the level of bears to bulls…. and tuesday was the most bearish in months , another great reverse-indicator

  5. tjofpa says:

    For KB Home, Stevenson cuts his stock price target to $32 from $80.
    Gee, I guess i was off by a bit…

  6. vf says:

    a lot of people (bears) looking for short squeeze into tomorrow’s expiry.. makes me think it could be a fade. yesterday’s rally and today’s bounce driven by weak dollar which is what got this whole sell-off started in the first place (energy and materials were best performing sectors yesterday).. note the bonds have backed up on this dollar selling. stocks won’t be able to sustain a rally while bonds and the dollar are for sale.

  7. B says:

    Hmmm……

    I stuck my toe in yesterday on the futures arbitrage pop at 1;30ish but……….too many bears? Is that why we have a 1+% gap at the open in more than one index, stock, etc?

    We are really oversold but not so oversold we couldn’t get another run down. I am wondering if this isn’t just a relief from 8 down days but we’ll just have to take it as it comes cause on the daily, I still don’t have a buy signal.

  8. me2200 says:

    I’m not buying it either. Suddenly someone flipped a switch and we are back to our bull market ?

  9. Chad K says:

    Any chance for free membership for your long-time readers?

  10. ndk says:

    I’m going to have to agree with the two curmudgeons above me. This counterrally has been extremely violent, and feels like everybody’s afraid they won’t get in in time.

    You know what else bothers me? The VIX doesn’t really monitor volatility; it always goes down when the market goes up. It measures pretty much explicitly the premium for puts.

  11. vf says:

    i think the VIX measures implied volatilty premiums not actual volatility moves

  12. toddZ says:

    I don’t know Barry… I took a long trade after that record volume selling climax and it didn’t work out at all. Don’t get caught in the trap of being a bear all year, only to get caught in further downdraft. It’s down right embarrassing! LOL

  13. B says:

    Actually, IF we are still in a bull market, that’s pretty much the way it works. Someone flips a switch and we are off to the races in this range bound environment. The only question I have is if “if” applies.

    Greed is punished on the long term charts but it is also punished on the intraday charts. I see alot up 4-5%.

  14. plenty of skepticism here . . . lets see how the market trades into expiry

  15. EMD says:

    i actually shorted more Russell 2000 late this morning… think the 2.5% pop was a little overdone. expecting more forced selling (margin calls) into 3:00pm which has been the pattern the past few days… will stop out relatively quickly if we don’t fade into the night.

    good luck to all…

  16. toddZ says:

    I just got short the SPY and QQQQ. This feels like the end to a short covering rally and not an end to the larger sell-off. Look at copper:

    http://www.futuresource.com/charts/charts.jsp?s=HGM06

    It has also had a brief rally, but still a long way to go…

    If this rally fails in a big way, there’s going to be a lot of people throwing in the towel.

  17. B says:

    I’m anticipating I’ll be out of my long position later today or tomorrow depending on how this unfolds. I might re-enter next week but we are likely to go back and retest yesterday’s close at a minimum IMO.

    This was the no brainer long trade of the century. You had to go back thirty years to see 9 days of losses in a row. And, with options expiration pointing to the Qs and SPYs wanting to go much higher, it was as close to 100% as you get.

    I think you are going to get the short end of the stick Todd. We are on a lunch time pause most likely before we make another assault on the 10dma. We’ll see.

  18. David says:

    I got chased out of a QQQQ put position this morning. The Dow is in a window of opportunity for both short and intermediate term lows (unlike gold, which I think has a little more room to fall). I’ve been caught too many times holding puts at these kind of potential reversal points to let it happen again.

  19. me2200 says:

    I’ve got the feeling that this move to the upside is overdone. I’ll bet there are some bears waiting on the sidelines to dump as soon as we inch a bit higher.

  20. Mark says:

    From Bloomberg:

    U.S. Economy: Claims Fall, Manufacturing Accelerates (Update1) ………

    “Futures traders, who at the start of the week saw no chance of an August move by the Fed, now put the probability at about 70 percent. The Fed’s benchmark rate is 5 percent. ”

    So we are now pricing in a 70% chance of a rate hike in August? Really? Let’s take this thing higher! (Then short.)

  21. Mark says:

    B-

    What would convince you to go long?

  22. Art Vandalay says:

    If most of the world’s central banks are withdrawing money from the system to bring down commodity prices (seems like it’s working), it’s hard to believe that this withdrawl will be good for stocks intermediate term.

  23. B says:

    I am actually long right now. I just expect I will be stopped out. I totally discount options expiration week. I like this week because of the volatility but it has a mind of its own given positions were placed long before we got here. I see $39 on the Qs and 1285 on the SPYs as the theoretical limits this week. We likely ain’t gonna hit 1285 but that just means we could run up here.

    That said, it just isn’t normal to see heavy declines then declare the first up day as the bottom. You could play it that way but it’s against my risk managment philosophy. That has kept me out of playing any long bets up sans this one. I actually expected to get a confirmation quite a few times but it didn’t materialize on the daily. Now, the low may be in but the bottom is likely not. ie, We’ll likely do the hippy hippy shake here for a bit then make a sustainable move. Odds are it is up…….but we could have one more fakout down as well.

  24. Mark says:

    Uh, B, I think your bet on the Naz (if I read you right) turned out hunky-dory today.

  25. emd says:

    i sucked today. oh well, not too bad of a hit but shorted waaaaaay too early this morning. covered half at the close (but then i bought jly puts just because i’m stubborn)

    hurry up sunrise. today was impressive. wonder what follow-thru we’ll see.

  26. toddZ says:

    I think today was a great day to start getting short! 1/3 today, 1/3 tomorrow and 1/3 on the first 100 points down. Anyone on margin (bull OR bear) is going to get crushed though with all the volitility.

    I’m surprised how many traders (especially on this board) are taking long trades on this power bounce. Catching these bounces is just going to be pure luck.

    This bear market we’ve been chatting about may be here sooner than we all thought. Nothing worse than a Bear losing money on a long trade… Read up on Soros vs. tech stocks for that story.

  27. Mark says:

    Is anybody with me that what the bulls REALLY needed was few quiet up days without all this volatility? This was a screamer and seems to me to be the “fast, furious, prone to failure” rally that Hussman says are so common here.