Posts filed under “Technical Analysis”

Sell Side Indicator: Wall St’s Improving Optimism

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Chart
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 its now up in “ten of the last thirteen months after hitting an all-time low of 43.9 last July, and is now at its highest level since April 2012, when it first flashed a “Buy” signal.

Here is Merrill:

Wall Street’s bearishness is still as bad as it was at the market lows of March 2009. Given the contrarian nature of this indicator, we remain encouraged by Wall Street’s ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities at 53% vs. a traditional long-term average benchmark weighting of 60-65%. Even though the S&P 500 has risen nearly 20% since sentiment bottomed, history suggests that strong equity returns can last for years after the indicator troughs.

Note that the Sell Side Indicator is based on “average recommended equity allocation of Wall Street strategists as of the last business day of each month.” It has historically been a reliable contrary indicator.

 

Source:
Wall St Optimism Almost Back to March 2009 Levels
Savita Subramanian, Dan Suzuki, Alex Makedon, Jill Carey
Bank of America Merrill Lynch, September 3, 3013

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

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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

Japan versus Gold?

Charts like this make me want to Sell Japan and Buy Gold — at least for a quarter or so.   click for larger chart Source: Josh Brown

Category: Contrary Indicators, Technical Analysis, Trading

Wall Street (Still) Lukewarm on Equities

Click to enlarge     Merrill Lynch continues to point out that the Street remains unenthusiastic about stocks: Sentiment ticks up to highest in 13mos, but still far from bullish The Sell Side Indicator — our measure of Wall Street’s bullishness on stocks — ticked up just slightly in June to 49.8 from 49.6. The…Read More

Category: Sentiment, Technical Analysis

Is Gold Overdue for a Bounce?

Back in my days as a trader, I would peruse the lists of 52 week lows looking for reversal candidates. The key was finding an intelligent entry that had a very tight stop, so it presented a good risk reward. I am happy to risk one dollar to make three. Slowly build the position over…Read More

Category: Currency, Gold & Precious Metals, Technical Analysis, Trading

50 Year Chart: Stocks, Bonds & Gold

Click to enlarge   Yesterday, in response to our post on how wrong the public was back in this 2011 Gallup poll, the following suggestion was made: Which asset performed best is dependent on your definition of “long term”. 2011-2013 is at best medium term. Long term to most people means decades, 20 years or…Read More

Category: Fixed Income/Interest Rates, Gold & Precious Metals, Investing, Technical Analysis