$SPY – testing an important level

SPY, the monster S&P 500 ETF, took a look at 212.5 again today and held that support in late day trading. A couple of weeks ago it was doing that repeatedly.

My guess it will bounce a bit from here but the question is how high and what after that?

If it does not run right back up to the top of the recent range there is a likelihood that the steep decline market bears have so long been waiting for will be at hand.

The confounding thing about the general market in the past three months has been how many fundamental and technical indications have dropped into place that bear similarities to the market tops in 2000 and 2007 but the price drop has not gotten going in earnest.

For instance, monthly NYSE margin debt has clicked down again in a massive divergence to the market’s high level sideways move. Breadth in general has been declining despite price index defiance. It could be only the Fed, with an eye on the election, is holding the market up.

Whatever.

If today’s rip to the downside, on the other hand, is the shot that cripples the lumbering ship, 208 on SPY could be seen in a hurry, and 200 eventually would not be out of the question.

This is one of those times when long-term investors better sit up and take notice.  Decide how much of the current gain one is willing to lose and stick to it.  If there is a sell-off (for the rest of year?),  the signs it is, once again, not different this time have been obvious for some time.

(right click on the chart for a larger view)

spy2016-10-11_1808

Watching $BID for a market top

Sotheby’s Holding (BID) has so often been a market bellwether.

And at tops at that!  A rare thing in the world of calling market direction. Bottoms are easier to see and sometimes obvious but tops…”calling” tops has killed many a market prognosticator and killed many a bear.

So let me say right off I’m not calling a top here.  Just trying to pay attention…

And when BID quits rallying and/or diverges with general market, it is time to pay attention.  BID was down a bit on its monthly chart in September.  That is a lower high for the stock while the S&P 500 and Nasdaq drifted higher.

What’s it mean?  Maybe nothing.  Yet.  But take a look at the chart action showing BID with the SPX on the chart below in 2000 and 2007.  One might say, as BID goes so goes everything else.

And this time, so far, BID has not even crawled up to the top of its long-term price range, which is rather ominous going forward.

(click on the chart for a larger view)

bid_2016-10-03_0749

 

$SPY – anticipating new highs

Following the green…

SPY, the ETF for S&P 500 index,  after being trapped in a box (see chart below) for 37 trading days, nearly four weeks of frustrating sideways chop, has a good chance it will resolve itself to the upside and into new high ground tomorrow.

And take the entire stock market with it.

The trouble is as it comes to the top of the box again, 45 of the stocks on my nifty-fifty stock list are on buys.  That’s a lot, so much that the last two times (8/15 and 8/23) there were 40 or more, the market took a sharp drop the next trading day.

The difference this time is market breadth has turned up after 27 days of decline.  It is as if the bears, having tried but failed to take the market down, have run out of time.

Note the follow through on SPY each time breadth turned up in the immediate past (the green lines on the chart).  If the market follows the green again this time there is no where else to go but to new highs.

But since anticipation is only anticipation, needless to say, one has to be nimble at this juncture either way, and protective stops are a must, long or short.

(right click on the chart for a larger view)

spy_green_2016-08-10_0615

This market could scream higher…

Call this a perspective on my Nifty-Fifty stock list.

Yesterday, there were 44 of the 50 stocks on sell signals.  That usually marks either the beginning of a bottom or the bottom itself.

On the up day today (however small) one has to lean to the idea this is the bottom itself.

Ask me, this is hard to believe since the market virtually has not gone down at all. So it seems this is a sideways move that will vault (scream) to new highs again soon. Maybe tomorrow.

Note on the chart below the past instances of 40 or more sells on the Nifty-Fifty.  Hard to believe but pretty plain to see.

(right click on the chart for a larger view)

NFTY50_2016-08-18_1435

#Greed top could lead to #SPY stumble

CNN Money’s “Fear and Greed Index”, a calculation of seven key market indicators in order to gauge the primary emotions underlying the stock market, appears to have put in a double top at an extreme greed level.

Historically, this pattern has led to significant sell-offs in the general market as investors’ and traders’ greed, fueled by the market’s recent rally, cycle down once again to a prevalent fear level.

There is really no way to tell how far the S&P 500 index (SPX, also the SPY ETF) will fall but the last time this down cycle took place the SPY fell from a high of 211 to a low of 185 (about 250 SPX points, a 10% or so correction). There is no guarantee it will stop there.

Regardless, this is an excellent shorting opportunity across the face of the stock market, just as it will eventually lead to an fine buying opportunity later on.

Market timing.  They say it can’t be done but a study of the chart below should make it rather obvious “they” don’t know what they are talking about.

(right click on the chart to view a larger image)

FEAR_AND_GREED_2016-04-11_1609

#NYSE Margin Debt

This may be too simplistic but every time I look at this Doug Short chart, I think at least 800 SPX points down before this finishes unraveling. It takes time, of course, but this time that would put the S&P 500 somewhere in the 1400s.

These numbers from the NYSE are a month old so the current record rally is not in them yet but I suspect when it is, it’ll look similar to that little blip up in 2008 just before the real tumble continued.

For Doug Short’s article GO HERE.

(click on chart for a larger view)

Nyse Margin Debt 2016-04-02_1114

 

#Banks – Someone said there’s a rally?

Since February 12th the stock market has been rallying strongly.

So what’s with these guys?

And to top it off, Bloomberg had an article this morning on CEO compensation at the biggest banks.  Now we know where all the QE went.

(click on image for a larger view)

Banks_2016-03-17_0844

 

I $SPY seven days of greed…

CNN Money’s Fear-and-Greed Index is, simply put, one of the most useful market-timing tools there is.

For example, the most recent rally, using the index as a trigger, bought the market on the open of February 16 (see the green vertical line on the chart below), a swing that has carried SPY, the SPX ETF, from 188 to 199 today, a gain of 5.3%, but more notably it has so far racked up gains for the 3x-leverage ETF of 17.4% in UPRO, 15.9% in the Nasdaq’s TQQQ, and a whopping 29.5% for TNA, the Russell fund.

That buy signal, now 18 trading days old, is still on and counting but …

But the Fear-and-Greed Index has now registered greed for seven days.  Call it lucky or unlucky depending on one’s bullish or bearish point-of-view but seven days of greed is often all she writes on an upside swing (see the chart) before a sudden sell-down.

As they say, it could be different this time but…

But it seldom ever is.

(right click on chart for larger view)

FG_2016-03-09_1451

#NiftyFiftyStocks once again signal a bounce

Had 45 of the 50 stocks in my nifty-fifty stock list on sells yesterday (2/9/16).  That doesn’t guarantee a rally but often signals a turn in the market for at least a bounce.

And after today’s overnight down and the run up during the market’s regular session, it appears a reversal may be in.  Another hint that we may go up some from here came in the Dow stocks today – only four remained below their opens at the end of the day and two of those slip at the close.

My longer term swing signals have not entirely turned bullish yet so a rally long here remains iffy until further confirmation.

(right click on the chart for a larger view)NIFTY_FIFTY2016-02-09_1619

 

 

$XLF – Deja vu all over again

Not to make too much of this but…

(Reuters) – Wells Fargo & Co, the biggest U.S. residential mortgage lender and a major lender to the energy industry, reported a slight dip in quarterly profit on Friday as it set aside more money to cover bad loans to oil and gas companies.

Walls Fargo – whose latest balance sheet showed it had replaced Citigroup Inc as the third-largest U.S. bank – managed to increase revenue from mortgage banking for the first time in three quarters in the three months ended Dec. 31.

But its exposure to energy loans meant provisions for credit losses jumped by about $346 million from a year earlier to $831 million. Of the increase, about $159 million was mainly for oil and gas loans.

In the fourth quarter alone, the bank’s wholesale division set aside $90 million more for bad loans than in the third quarter, primarily for loans to energy companies.

And it has been reported the bank has as much as $17 billion in outstanding loans to energy companies.  Wells Fargo is already admitting bad loans to energy but what about the rest of the big banks? Given the tumble in energy and its various companies (especially frackers) one has to wonder how much the sector is running on credit from the major banks (one suspects a lot), and how many of those loans are in jeopardy of default.

For the “deja vu all over again” (as Yogi would put it) see charts below:

Back in 2007, prior to the free fall of the financial sector into the crisis of 2008, the housing sector (ITB), so important in bank lending, was falling apart for a full five months while the financial sector continued to make new highs, until both sectors crashed in lockstep.

(right click on chart for a larger image)

housing_20072016-01-15_1750

This time around the energy sector (XLE) has been falling for 10 months while stocks in the banking sector continued to make new highs.   Both sectors are now both in sync…and going down…

How far?  No telling, but there is some historical precedent for sector divergences such as these.

(right click on chart for a larger image)

Energy_2016_2016-01-15_1750