Posts filed under “Technical Analysis”

Bull Market Corrections, 2009-2013

click for ginormous chart
bull market corrections
Source: Investech

 

 

We are almost through September and despite its reputation for volatility, the month has seen strong upside and new bull market highs.

The S&P500 lost “only” 4.6% in August, but based on the Sturm und Drang you are forgiven for assuming it was 3X that amount.

As the chart above shows, there have been lots of 5%+ retrenchments since the market lows of 2009. Its worth noting that the corrections since 2011 have gotten shallower.

Here is Jim Stack:

“Historically, the average time between market corrections is 7.6 months. However, as shown in the graph [above], there were five corrections in just the first year of this bull market. After the initial 12 months, corrections slowed and followed a more typical pattern, occurring once or twice a year. Altogether, there have been 11 corrections of 5% or more, with two of those logging greater than 10% declines.

How does this compare to other extended bull markets? At 4.5 years, this bull market is already one of the longest since the Great Depression. Looking at the S&P 500 back to 1932, the average bull market duration is 3.8 years and, in comparison, this one is getting a little long in the tooth. Still, it does have a few peers… of the 16 bull markets over the past eight decades, only five prior to this one lasted more than 4.5 years.”

Good stuff. Stack is one of my favorite off Wall Street strategists, and I always appreciate his cool, data driven analyses.

 

Category: Cycles, Markets, Technical Analysis

Stock Market Sentiment & Technical Indicators

You know I love these sorts of things: Dr. Ed Yardeni has a nice set of monster sentiment charts posted at his site. The link is Stock Market Indicators: Fundamental, Sentiment,. & Technical and its 20 pages of fun.   courtesy of Yardeni Research, Inc. September 17, 2013.

Category: Sentiment, Technical Analysis

Dow Theory or Buy and Hold?

Reading through the classic textbook, Technical Analysis of Stock Trends, last night I stumbled upon a stunning stat comparing the returns of a strategy using Dow Theory versus buy and hold. Using Dow Theory buy and sell signals would have turned an initial investment of $100 in 1897 into $492,597.38 by the end of 2010. …Read More

Category: Dividends, Technical Analysis

Shiller P/E Bottoms

Shiller P/E Bottoms Coincide with Major Lows, Downtrend Breaks Precede Rallies Click for ginormous chart Source: Merrill Lynch   Nice chart from Stephen Suttmeier & Co looking at how the Shiller P/E ratio compares to regular P/E at major lows, downtrend breaks, and before rallies: The good news is that secular trading ranges lead to…Read More

Category: Technical Analysis, Valuation

Sell Side Indicator: Wall St’s Improving Optimism

Click to enlarge Source: Merrill Lynch/BoA   This is an interesting chart: Improving Wall Street sentiment is still no where near the levels associated with excessive sentiment. Despite the ongoing rally — or perhaps because of it — we are now all the back to the levels enjoyed at the lows in March 2009. Merrill notes…Read More

Category: Contrary Indicators, Sentiment, Technical Analysis

Year 2 in 4 Year Presidential Cycle

Click to enlarge Source: The Chart Store via All Star Charts   We have not looked at the Presidential Cycle in some time (See this, this and this from 2005). Regardless, it is something that people often fail to contextualize correctly: What the chart above shows is the historical average of the 4 year presidential…Read More

Category: Cycles, Investing, Politics, Technical Analysis

Bull! Rallies Without 20% Corrections

  click for larger table Source: Merrill Lynch Global Research,   Interesting look at bull markets that have gone on without a 20% correction (note this is within the context of a 20%+ cyclical rally). Merrill Lynch’s Global Research team note that 2 prior cyclical bull markets marked a transition from a secular bear market…Read More

Category: Cycles, Markets, Technical Analysis

Chart Attack: Mutual Fund Outflows

I forgot to publish this Bloomberg appearance from last week — here is the last segments, looking at monthly mutual fund outflows on Bloomberg Television’s “Street Smart.”

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Category: Media, Technical Analysis, Video

NASDAQ 100 A-D line At New Highs

Click to enlarge
Chart

 

 

Yesterday, I showed Merrill’s most active A/D line, which had broken out to new highs.

One reader took exception with this, suggesting that its a case of bullish confirmation bias. I disagreed for 2 simple reasons:

-Merrill’s “Chart Talk” has been running the most active A/D chart for years;
-Any index or major technical analytical measure making a new high is newsworthy

I appreciate the insidious nature of various biases in our wetware — and I want readers to keep pushing back on anything that remotely looks like bullish or bearish bias in action.

Ironically, the day after that discussion, Merrill’s Technical Analysis group noted the break out in the A/D line of the Nasdaq 100 — itself at 13 year highs.

To paraphrase Stephen Colbert, sometimes Reality just has a bullish bias . . .

Text from Merrill’s wonks after the jump

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Category: Technical Analysis

Advance Declines Break Out to New Highs

Click to enlarge   From Merrill Lynch’s technical team: The Most Active A-D line breaks to new highs The Most Active Advance-Decline (A-D) line is a market breadth indicator of the daily top 15 most active stocks by share volume in the US. These stocks are generally more liquid with larger market caps where the…Read More

Category: Technical Analysis