Posts filed under “Technical Analysis”

The Bull Market Ends (or Is It Just a Correction?)

We awoke this morning to see futures deep in the red. Over the past two weeks, markets seem indecisive, unable to make much progress. Lots of days began with positive trades, only to roll over and fall into losses. Several days that began in the red closed negative, though usually off their worst levels. Last week’s big ugly Monday is still fresh in many traders’ minds.

Might this be the start of the long-awaited, overdue correction?

There certainly have been plenty of catalysts that could hasten a 10 percent drop or worse. Earnings season has begun rather inauspiciously. There have been several high profile disappointments — IBM, Best Buy, Intel and Citigroup come to mind.

On the other side of the world, China is slowing, with January manufacturing Purchasing Managers’ Index falling to a 6-month low and breaking 50 (49.6). New orders, exports, employment and backlogs all showed declines. On top of that, HSBC reports that China continues to face a cash shortage within its financial system (why does that sound so familiar?).

All this takes place against the backdrop of the U.S. Federal Reserve taper. The first step toward removing the bond-buying program was put into place last month, with the next step possibly coming as soon as the two-day Open Market Committee meeting next week. An unusually accommodative monetary policy is beginning to come to the natural end of its unnatural life. Indeed, the degree of stimulus has been so enormous that it might take three full years or even longer to fully unwind it. Congress has exhibited no interest in post-recession fiscal stimulus — unlike in prior recessions -– so perhaps the FOMC ‘s slow withdrawal is a mixed blessing.

 

Continues here

Category: Data Analysis, Investing, Technical Analysis, Trading

Over 400 Days Without a Correction

Source:Société Générale   From Société Générale strategist Andrew Lapthorne comes the chart above, and the observation that “It has been 408 days since the last 10% correction in the MSCI World index, the 8th longest period on record.” As the char above shows, this is just about the median length of time between corrections. The mere…Read More

Category: Digital Media, Markets, Technical Analysis

BCA U.S. Equity Valuation Index

click for larger graphic Source: BCA Research   There seems to be an increasing concern that stocks have become wildly overvalued, especially in light of rising interest rates. However, somewhat overvalued U.S. equity prices can continue to rise if price/earning multiples keep expanding.   Continues here      

Category: Markets, Technical Analysis, Valuation

Gold Charts: 2000-Present, 2011, ’12, ’13

This is from a bigger project I am working on. I found it interesting that even thought Gold hit its peak in 2011, it did not have a negative year until 2013:   2000-2013 ~~~ 2011 2012 2013

Category: Gold & Precious Metals, Technical Analysis

Huprich: Wisdom Comes in the Smallest of Packages.

We previously published Art Hurpichs’ Market Truisms and Axioms back in 2011.  Art is a CMT with Day Hagan Asset Management, and he returns with an updated set of Stock Market Rules to Remember. Enjoy. ~~~ As you are reading this, we are in the process of moving our “youngest” to Virginia, as he prepares for…Read More

Category: Rules, Technical Analysis, Trading

Major Trend Analysis

Major Trend Analysis The 2000-2003 Bear Market The Major Trend Indicator (MTI-black line) is helpful in identifying when the market is vulnerable to an intermediate correction within a bull market, and the onset of a bear market. Ongoing bull markets are confirmed when the MTI climbs above the green line. When a rally fails to…Read More

Category: Markets, Technical Analysis, Think Tank

Advance Decline Line (Market Breadth) Says No Top Yet

Source: Chart courtesy of Carl Swenlin, Decision Point (annotations by Ritholtz)   One of the best ways to identify a market that is exhausted is to look for divergences between Breadth (i.e. the number of advancing equities versus the number of declining ones) and Price (i.e. new highs). That is a concept that Paul Desmond…Read More

Category: Markets, Psychology, Technical Analysis

Merrill’s Secular Road Map Projects S&P 500 2300 in 2017

S&P 2300? Give It Four Years: Ritholtz Chart Source: BAML   It took more than 13 years, but the S&P 500 managed to eclipse its 2007 highs of 1576 earlier this year. This move takes it out of a long term trading range, and according to the Technical Analysts at Bank of America Merrill Lynch,…Read More

Category: Cycles, Technical Analysis

Does Too Few Bears = Correction?

  What do you get when you cross an overbought market with too few bears? Often, that combination of complacency leads to a correction. So far, all it has produced is a lot of frustrated contrarian traders. Stephen Suttmeier, technical strategist at Merrill Lynch, put the situation into broader context in his monthly chart book…Read More

Category: Sentiment, Technical Analysis

What Indices Are At All Time & 2013 Highs?

A hedge fund manager friend had mentioned a research report that had noted the Dow, FTSE and Nikkei were at neither all time nor 2013 highs. Those there indices sounded like it a bit of cherry picking to me. So rather than succumb to the usual confirmation bias, I decided to see what major indexes…Read More

Category: Investing, Markets, Technical Analysis