Get Stan Weinstein’s Global Trend Alert For Free
Published March 23rd, 2007 in Technical Analysis Tags: bull and bear, global trend alert, nightly business report, soft dollar, stan weinstein, technical analyst.
Stan Weinstein is a veteran technical analyst and author. Unlike many other ‘gurus’ he only wrote one book: Secrets for Profiting in Bull and Bear Markets. He’s been badgered since its publication in the 1980’s to write more but he always counters with ‘I’ve already said everything I could have said’. Which is very true. Take one novice, mix liberally with the Weinsteinian market approach and you’ve got yourself a trader who can go long and short, identify market tops and bottoms and manage their risk intelligently.
Since he wrote his classic book, Weinstein went on to author a retail newsletter called the ‘Professional Tape Reader’. He has since discontinued it and now Weinstein dedicates his considerable expertise and experience to publish an institutional service called the ‘Global Trend Alert’ (here’s a sample from 2005 (PDF)). Only problem is that it goes for $40,000 a year!
So, what to do if you aren’t a hedge fund and can’t soft-dollar it? or if you just don’t have $40K between the couch cushions? Well, for one, start by reading his book. Everything he does in the Global Trend Alert comes directly from the analysis he outlines there. Second, tune in to the Nightly Business Report on PBS. Weinstein is a guest on the Market Monitor segment of the show. Unfortunately, the rotation of guests on that segment is so you get to hear Stan’s take on the market only a few times a year. Read the transcript of his latest appearance in November 2006. Third, start analysing the market using the same tools. And go back and compare your understanding with his previous interviews in the archives.
OK so there isn’t exactly a way for you to get the $40,000 Global Trend Alert advisory service for free… but when you internalize Weinstein’s approach, you actually will have gained much more. You’ll be able to truly understand the why and how rather than having the end-product served up to you on a $40,000 a year silver platter.
bull and bear, global trend alert, nightly business report, soft dollar, stan weinstein, technical analyst
Enjoyed this? Don't miss the next one, grab the feed or
164 Responses to “Get Stan Weinstein’s Global Trend Alert For Free”
- 1 Pingback on Mar 24th, 2007 at 2:17 pm
- 2 Pingback on Jan 17th, 2008 at 3:24 am
- 3 Pingback on Apr 24th, 2008 at 2:06 pm
- 4 Pingback on Jun 4th, 2008 at 2:45 am
Search
Trader’s Narrative is powered by
Please send Stan’s free Global Trend Alert. Thanks
Sure thing Keith! Please send the free $40,000
Stan Weinstein was on Nightly Business Report on September 14, 2007
and said that if the Dow goes where it is NOW, the market is in trouble:
“If at any point the Dow breaks down and closes - at the close below 12,800, that would turn what’s a problem market into a much bigger problem.”
Just wondering why in his book, he always uses the 30 bar moving average on the weekly chart but in his Global Trend Alert, he likes to use the 200 bar moving average on the daily chart. Thanks.
One week before my mother’s 70th birthday, Weinstein went 100% bullish on wallstrett week. on aug. 16 (mom’s birthday) the market was up a whooping 3% or over 22 points! one month before, sir john templeton went positive, saying we were entering the greatest bull market in history.
My career as a stockbroker and now fee based advisor begain May, 1981, but came of fruition in Aug. 1982. It has been a great ride.
Thank you Stan.
Please send Stan’s free Global Trend Alert. Thanks
Weinstein’s approach is indeed one of the best out there. This is one of the trading books out there I definitely recommend reading. Internalizing his ideas will make you a profitable trader.
Olivier
Re: Tim May 19th 2008
Tim, did you ever find out an answer to your 200 day MA vs 30 week MA question?
Sam - Oz
The book is great - now I can understand why and how the market moves.
30 MA vs. 200 MA same as Tims question - Any answer ?? Please Reply
Tim, I don’t know but suspect that the 150 vs. 200 daily moving average debate is meaningless. The important thing is a long term indicator of the trend which I think is what Stan tries to find. Have you tried getting in touch and asking the man himself?
Maybe one reason that Mr. Weinstein uses the 200 day moving averge is because its the moving average that is used in Investors Business Daily on all of their charts in addition to the 50 DMA. By the way Mr. Weinstein is supposed to be the guest on Nightly Business Reports tonight on November 14, 2008.
Thanks for the heads up Rick. The interview will be archived here eventually.
please send me stan’s free golbal trend alert. im a big fan since i read his book.thanks
hi,
if the offer is still open…i would really appreciate you to send me a free copy of the global trend alert
i think it is one of the few methods which is right most of the time (always in the lonfg term)
Appreciate the free Global Trend Alert. Saw Stanon NBR for the 2d time. He has finally made me a believer as the real thing. I usually dont like books with the title Secrets but Stan was a worthwhile read and embrace.
Thanks much for this web site
Please send free Global Trend Alert. Thank you.
In Stan’s book, he uses a 30 week moving average. 7 days times 30 weeks is about 210 days or roughly 200 days. So, my guess is that the 30 week moving average he talks about in his book is essentially the same thing as the 200 day moving average, give or take a week or so.
Please send me a Global Trend Alert, by Stan Weinstein if still available.Thank you.
Please send me a Global Trend Alert, by Stan Weinstein if still available.
Thank you,
Scott
No one talks about the Double Top in the Dow Jones Utility average at 550.
It is still working of that top and has a lot to go before it can finally show some
strength in that indicator.
Please send me a Global Trend Alert, by Stan Weinstein if still available.
Thanks!
I’d appreciate have an email exchange with anyone who has had success in day-trading / swing trading and is using Stan’s methodology.
Thanks,
Scott
Please send me a Global Trend Alert, by Stan Weinstein if still available.
Thanks you so much.
Please send me a Global Trend Alert, by Stan Weinstein if still available.
Thanks!
Have a nice day.
Please send me a Global Trend Alert…Weinstein fan…Thanks much
Woops…guess thats what I get for not reading the entire article. By the way, since there are only 5 trading days in a week,the 30wk ma is 150day.
Thank you for keeping this article posted.
Stan Weinstein’s book is highly recommended.
Please send a copy of Global Trend Alert, much appreciated.
CJ
Could I please get a free global trend alert. Thank you.
Please send me a Global Trend Alert
Thank you
Please send me a copy of the Global Trend Alert. I have just finished his book. Really good info.
I finished the book a while ago, its unbelievable. I look at stock trading trough a completely new perspective. Could I please get a sample of the Global Trend Alert? I am considering investing through this. Thank you.
Please send me the Global Trade Alert. I’m going to buy Stan’s book today.
Thanks.
Please send me the Global Trade Alert. I orderd a copy of Stan’s book today.
Thanks.
Cliff
Read the last patagraph…you CANNOT GET IT FREE…just read the book and internalize it and its like getting it free.
Does anyone know a website that shows the “Momentum Index” (advance/decline stocks) ? This seems like a great indicator which he explains in his book. During an interview in I believe August 2007, right before the first crash, he predicted from this chart that the market is extremely unhealthy because although the market was at all time highs at 14000, more stocks were declining rather than advancing. He nailed it.
check on this website
Please send me the Global Trade Alert. I orderd a copy of Stan’s book today.
Thanks.
Hi,
Momentum index.
http://www.stockcharts.com
enter a symbol: $NYAD and click GO
Select:
Range: 3 years
Type: invisible
Size: Landscape
Log Scale: disable
Overlays:
Horizontal line 0
Simple Mov. Avg 200
click on Update
Hi,
Sorry for repeat the above message.
These are the others Weinstein’s chapter 8 indicators.
NYSE Advance-decline line
http://www.stockcharts.com
enter a symbol: $NYAD and click GO
Select:
Range: 3 years
Type: cumulative
Size: Landscape
Log Scale: disable
click on Update
NYSE New highs - new lows
http://www.stockcharts.com
enter a symbol: $NYHL and click GO
Select:
Range: 3 years
Size: Landscape
Log Scale: disable
click on Update
World Market
http://www.stockcharts.com
enter a symbol: $DJW and click GO
Select:
Periods: Weekly
Range: 3 years
Size: Landscape
Log Scale: disable
Overlays:
Exp Mov. Avg 30
click on Update
Price / Div
This is Barron’s Market Laboratory site, for collect data:
http://online.barrons.com/public/page/9_0210-indexespeyields.html
sample:
Last Week Prev.Week Year Ago
DJ Ind Avg 8017.59 7776.18 12609.42
P/E Ratio 26.59 25.79 53.04
Earns Yield % 3.76 3.88 1.89
Earns $ 301.55 301.55 237.75
>>Divs Yield % 3.84 3.99 2.49
Rovinson, ok so basically a long term chart of the NYSE adv-decline. Not sure what your point is though. btw I like to use Nasdaq breadth numbers because it is less polluted by non-operating company securities.
I would like the Global Trend Alert….
please, send me the Global Trend Alert.
someone has already pointed this out, but the 30 weeks and 150 day chart are the same thing since there are 5 trading days in a week(30*5= 150).
Regarding the 200 vs 150 chart, they both give long term signals. Some use both and look at the change in the gap between the two as an earlier sign.
Given the brilliance and simplicity of the teaching in this book i wonder what would make people pay $40,000 for the service. Probably the same that charge very high fees for their “expertise”.
The reason it’s $40k is that he primarily deals with institutions instead of poor schlubs like ourselves.
C’mon, Stan, how ’bout a break for the little guy, the one that made this country great!
Finally, to everybody who asks to “send me the Global Trend Alert”, GET A CLUE! IT AIN”T AVAILABLE FOR FREE! The article does feature a link to an old copy of the report.
Winston….everything is in the book. Learn it, follow it and save the $40,000 and invest it after this October. The market will be choppy until then. In his “Global Trend Alert” he rates each stock in the S%P 500 based on his Stage I, II,III,IV analysis. You can do the same. Then pick the best prospects…..thank you Stan.
Ron, thanks for clarifying. I guess my dry wit zips past people’s heads.
Ron,
I intended my comment to be tongue-in-cheek, but I guess my wording was not up to the task.
BTW I have read his book and have found to be a great read. I have, however, read elsewhere that according to Hulbert’s (a service that rates various market prognosticators) his record isn’t particularly spectacular. Can anyone confirm/refute this?
There now is a triple top in the DOW JONES UTILITY indicator at the 3.81 to 3.849 . Also the number of new lows is almost non existant. This is a bearish sign. Never, since 1975 have I seen two days in a row without any new lows. The HIGH- LOW INDEX which is the percentage of highs to highs and lows is at 99%. The current bottom of this market in March, the high low index was at 99.6 four days in a row.
The number of stocks making new highs and new lows is in a strange area because the market in the middle of a trailing 12 month range that is so abnormally wide, but the studies that I have done suggest that either an enormous number of stocks making new highs or new lows is bullish. The most bearish NH or NL phenomena is when you have a lot of stocks making both new highs and new lows suggesting a trendless or confused market. Do you have a study that you can share to support the following comment?
“Also the number of new lows is almost non existent. This is a bearish sign. “
Historically, when that percentage gets under 70%, it is a sell signal. Keep in mind, you never use one indicator for your choice to get a signal from
the market. Remember , in 2007 the high low indicator was above 90@ for almost four months until late Febuary. In October of 2007, the best it got to, was 89@and it quickly declined to under 30%. In my above statement, the high low percentage in early March of 2009 was.04% for 5 days. Then the market went from0.004 to the present figure of 99%. In other words it cannot get much better than that. At this point you cannot say the market will fall apart. Only that you should get some kind of correction. At some point in the future, I believe the market will top out and continue the bearish trend.
The percent of stocks making new 12 month highs was near zero at times during 1975, 1983 and 2003 as well
Having the number of new lows near zero is not the same as having 0 new lows.
Number of stocks making new lows. I hope my tabs transfer readable.
Since 1970, taking a 5 day moving average of the number of stocks making new lows divided by the number of issues traded
0 represents days where %NLs ranged from 0 to 0.99%, 1 represents days where %NLs ranged from 1 to 1.99% of issues traded, etc. The second column is the number of times the S&P was up 252 days later. The third column is the # of times the S&P was down 252 days later. The third column is the % of times up and the fourth column is the avg % change in the SP 252 days later
NLs/ #UP #DN %UP Avg%CH
Issues
0 3587 1065 77.1 9.1
1 1478 732 66.9 5.9
2 754 323 70.0 7.4
3 402 143 73.8 8.7
4 272 100 73.1 9.3
5 187 78 70.6 9.0
6 108 61 63.9 8.8
7 91 54 62.8 8.6
8 64 38 62.7 4.6
9 34 33 50.7 0.5
10 46 21 68.7 7.2
11 39 26 60.0 4.5
12 23 28 45.1 2.3
13 24 10 70.6 6.6
14 17 11 60.7 6.4
15 9 8 52.9 -1.3
16 14 11 56.0 1.5
17 12 6 66.7 5.5
18 8 4 66.7 10.1
19 7 3 70.0 17.6
20 7 2 77.8 17.7
21 6 5 54.5 1.9
22 9 1 90.0 15.4
23 6 2 75.0 16.5
24 1 2 33.3 -9.9
25 4 3 57.1 10.9
26 3 1 75.0 20.4
27 1 1 50.0 9.1
28 6 1 85.7 22.5
29 3 0 100.0 11.5
30 3 0 100.0 17.7
31 2 0 100.0 26.1
32 1 0 100.0 19.9
33 1 0 100.0 33.5
34 1 0 100.0 27.0
40 1 0 100.0 43.8
41 1 0 100.0 3.2
43 2 0 100.0 19.3
48 2 0 100.0 28.1
50 1 0 100.0 1.3
62 1 0 100.0 12.4
The most interesting observation is that if the number of stocks making new lows is greater than 29.0%, the market has been up 100% of the time 252 days later since 1970 supporting the concept of a selling climax.
But back to our original question, below is all the times where the 5 day moving average of number of issues making new lows was less than 0.1%, that is less than 1 in 1000. I assumed any additional signal within the next 252 days was a repeat
S&P S&P S&P
Date %NLs 63dys 126dys 252dys
701230 0.07 08.71 06.97 10.77
750127 0.08 14.41 17.67 32.25
760127 0.06 02.82 04.45 04.10
800527 0.10 12.35 24.16 20.08
821019 0.10 07.18 16.20 24.78
910417 0.10 -2.37 00.14 05.62
030605 0.09 03.82 07.53 13.37
090421 0.08 12.29 19.57 19.57
#UP - #DOWN 7- 1 8- 0 8- 0
AVG CHG IN SP 7.40 12.09 16.32
Doing a visual examination of the above occurrences, many of these 5 day periods had days where no stocks made new highs. I can not find a reason to think that no stocks making new lows is bearish and to the contrary I think it argues that the market exhibits Listerine clean breadth.
Last Parag should have read
Doing a visual examination of the above occurrences, many of these 5 day periods had days where no stocks made new lows.
(that is, made new lows not new highs)
Dear Wayne,
To be on the same plane, you must take the % of new highs to new lows and highs
for a 10 day period. To say that at 99% new highs to total highs and lows is a good
time to buy is crazy. For example, at the bottom of the market on March 6th,
the percentage of new highs to total new highs and lows for the 10 day period was
.004. Based on your impression, you would have considered that to be a perfect
sell signal.
I have read back through my comments to try to determine where I could have confused any of the readers. Does anyone besides the above reader, interpret anything that I have written on the subject of New Highs and New Lows to suggest that I would have found his percentage of 0.004% reading of New Highs to (New Highs New Lows) on March 06 to be bearish? My intention was quite the contrary. My comment was and I copy directly from my above reply that
“the studies that I have done suggest that either an enormous number of stocks making new highs or new lows is bullish”.
If only 0.04% of such stocks making either new highs or new lows were making new highs on Mar 06, then that would leave 99.6% making new highs, an enormous number, inline with my comment that such readings are bullish.
The only bearish interpretation I stated of NHs and NLs in my comments was that a large percentage of stocks making both new highs and new lows is often bearish.
Also in response to any assertions that buying the market when the majority of stock s are making new highs is crazy. I would advice buying the stock market before the majority of issues are making new highs, but the table of stats I posted above suggest that you don’t want to fade such occurrences either. For those readers interested in hard statistics, you can see from the table posted in the previous reply that when the percent of stocks making new highs over a 5 day period is in it’s extreme high range exceeding 29% of “issues traded”, the S&P has been up 100% of the time a year later (since 1970). I have the same stats using the (NHs NLs) as the divisor rather and ‘issues traded” and the result is similar. If you are looking at periods where there were only 0-2 new lows a day, it is insignificant which of the two divisors that you choose, the % is going to be in the low end (0 to 1 %) of it’s trading range.
Some tops are usually hard to call. Since I believe this is only a timeout in a bear
market, I think we have seen the top. As I pointed out a few weeks earlier,
having zero new lows can be a bearish signal. The number of highs to new highs and
lows on a ten day period was recently at 99.3%. In other words, it can’t get much
better than that. The total of new lows so far have been almost nonexistant.
I was hoping for more sideways action. The 150 moving average is still rising sharply.
In fact, that moving average is taking off the lows of the market in March.
I’m scared that this market could fall apart. I hope my fears are wrong. Technically,
it shouldn’t happen until sometime in early 2010.
You definitely want to be short the NH/NL ratio.
A 50% timeout ?
I have read many financial analyst who have tried to compare the 2008-2009
period to the 19291930 rally and major decline. There is many differences. While the
rally that took the dow to 300, the 200 average was declining near 300. Today’s rally
is far above the 200 day average and is not declining.
Even though I believe we are still in a bear market, at this time I cannot say with
any confidence, that a major decline is underway. For example, the 10 day breath
has turned negative, but the 30 day breath is still positive. Also, the ten day trin or
arms index is at 1.49. This reading is closer to being oversold and not a position to
having a major decline. Usually, this indicator would be overbought when there is
an imminent decline like 1987.
Quote from August three post above
“As I pointed out a few weeks earlier, having zero new lows can be a bearish signal. The number of highs to new highs and lows on a ten day period was recently at 99.3%. In other words, it can’t get much better than that. The total of new lows so far have been almost nonexistant.”
August, it is possible that you are correct and the market is putting in a top, but I wrote a detailed post on why the market can possibly go higher when there are no new zeros based on the 73 occurrences found since 1970, that you might want to give a perusal
http://www.tradersnarrative.com/zero-new-lows-rare-bullish-for-the-stock-market-2955.html
If you have already read it, let me try another angle on this subject and see if this makes more sense.
On October 5, 2009 (yesterday),
1. The S&P closed at 1040.46
2. Number of issues traded was 3162
3. New Highs were 189 and New Lows were 2
4. Your measure of preference NHs/(NHs NLs) would be 99% on a one day level, and if we took the time to look it up, would be similar on a 10 day level, somewhere in the 99-100% range as it has been for the last 2-3 months.
For illustration purposes, lets suppose that by May 1, 2010
1. The S&P manages to make it to 1100ish
2. The number of issues traded is still 3162ish
3. The number of New Highs has probably increased from the 175-200 daily range to something like 350 a day and New Lows are still hovering in the 0-5 range.
4. The NHs/(NHs NLs) ratio as you stated would still be 99-100%
Observation on May 1, 2010 scenario,
The ratio of New Highs to New Lows peaked at 99-100% in mid 2009, but the percentage of stocks making new highs as a percentage of “Issues Traded” continues to rise. Or said another way, although the number of stocks going to zero can not go lower than zero, the number of stocks making New Highs can continue to climb from the current level of 175ish a day to theoretically all the way to the number of issues traded (3000ish).
Also it doesn’t hurt that by mid 2010, the 2009 twelve month trailing range for stocks will be much lower than it is today with the 2008 year having dropped out of the range, thus making it much more conducive for stocks to make new “12 Month” highs.
And mathematically, even if every stock on the board made a new high on the same day sometime down the road, the market could continue to rise as the individual stocks simply continue to make repeated New Highs.
Your comment that the ratio of NHs to NHs NLs can not get higher than one can not be argued with, but it doesn’t mean that the number of NHs can not continue to increase and that the market can’t go much higher.
Good luck with your trading/investing.
Although the Dow made a new high, the S&P cash did not make a new high. I’m
still worried that you could possibly have a double top in the S&P cash at 1071.
There are still a number of positive readings left for this rally. The breath figures
made new recovery highs, and the major averages (50,150,200) are still rising.
Volume has been light and the Transportation and Utilities have been weak.
Next week, with options expiring, should give more clues to the next direction
of the market.
Keep an eye on the DOW JONES UTILITY AVERAGE. The 52 week high is 389.92
on November 4th of 2008. Today the utilities closed at 387.70. This could be a
major double top,which is very bearish. To break this pattern the utilities would
have to close at 390 or above. Remember in 2007 there was a major double top
in the 450 area. I previously had pointed to this indicator, because no one had
noticed it. At this point in time keep a close eye on this indicator.
My error. the major double top in 2007-2008 was in the 550 area.
This could be another disastrous sign for the market. The advance-decline line is about 4600 away from its previous peak. If the Dow were to make a new high today, it would not be confirmed by the breath of the market. Remember, in 2007 the advance-decline line confirmed the high as of June 4th of 2007. The Dow high was then at 13600. The market was able to hold up until October, when it made its final high.This was one of many signs that told me of the impending collapse in 2008. This was a similar pattern in 1987. The advance-decline line peaked in April, even though the market held up until August 1987. The rest is history.
Be forewarned.
Adding to the total picture of the previous statements is the fact that the S&P cash did not make a new high today. The high close on October 19th is 1097.91. Even though the Dow closed 130 points higher than the previous recover high, the S& P cash was still 4.83 lower than the high close on October 19th. Unless these situations are resolved, these are super bearish patterns.
Sorry about my english, I’m from Argentina. I’ll give you a link from which you can see the comments about 150-day moving average and 200-day moving average made by Stan and how he use them. The book is “The Heretics of Finance” , you can see there interviews to famous traders (Stan is one of them), the explanation is very clear I think
Regards
Eduardo, thanks for the heads up. That looks like an interesting book. But on which page does he mention the use of the 150/200 MA? I can only find one which is a fleeting reference. A proposito, si prefieres tambien puedes escribirme en espanol.
Hola Babak: haz click en donde está el link en mi post e irás directamente a la página donde está el comentario
Hola Babak: do a click on the word “link” in my comment and you will go directly to the page in which he talk about this.
Market advance -decline line is giving a servious sell signal. From a historical
point of view the decline should set in April or May.
Even though the Dow Industrials made a new high, the S&P cash, transports,
utilities, and the advance-decline line did not. Fewer stocks are participating
in this rally. I pray that this market can hold up for a couple of months.
These are serious bearish signs that can only lead to eventual disaster.
I accidentally came accross to this blog site as I am looking for some materials regarding the 30 weeks MA. I am just beginning to learn the trade and have a long way to go. As I discovered from the book, take the last Friday’s closing add that with the last 29 previous weeks closing, the result divide with 30 is this weeks MA. To get the MA for the last remaining weeks, you have to do then same, until you get to the last 30th weeks. Will anyone help me for more informtion as to the application of MA.
Eddie
August,
not to mention that volume is slowly drying up.
the action today after the Jobs announcement was truly schizophrenic.
also Pete Najarian over at CNBC’s Fast Money says a lot of put option
action in a lot of issues (Apple, Goldman, a few others) has been
happening recently.
not for the queesy.
I would like the Global Trend Alert
So would we all, Don, so would we all. Got $40K to contribute to the cause?
END OF THE YEAR THOUGHTS
Even though I still believe this is nothing but a time out in a bear market, there still has been no breakdown yet. The main moving averages of stocks are still climbing. The 50,150,200 averages at this point are 50=10183, 150 =9422, 200 =9038. This Monday’s close will take off the day the Dow closed at it’s low on March 9th, that effects the 200 day average.
As of Friday’s close, the ten day average of the Trin, is somewhat oversold at 146. This indicator shows to much pessimism. On the other hand, the 10 day high- low
percentage is still at 97.7%. There isn’t much room for improvement. I have seen many years when you could give a good call for the new year. At this
time it is still somewhat opaque. I still lean on the March - April period when this market should fall apart.
I have read Stan Weinstein’s ‘Secrets for Profiting in Bull and Bear Markets”. Does anyone use any stock screening software, which may be available, to create a scans for the principles outlined in his book such as:
- price breaking above 30 week moving average.
- find a way to scan for stocks breaking out from a basing period (with IncredibleCharts I can use a crossover of 14 day ADX above the 20 within the last trading day to get some results).
- volume at least double the previous month’s average
- RSI as defined by Stan (stock’s price relative to the market).
Thanks for any assistance and direction you can provide.
Market may be nearing a short term peak. The percentage of highs to highs and lows
is at 95.5%.To put this figure in perpective, on March 9th, the percentage was
at 99.6% new lows to highs for four days in a row. The market turned around to this
present advance. At this point, you cannot call for a bear market yet, but it is a
a possible reversal. The 150 day moving average is at 9596 and climbing. The
longer the market waits to break, the easier it will be to recognize.
One of the missing tools has been the 10 day trin. Right now it is finally at a neutral
1.08. For this indicator to be bearish, it should drop to under .80.
Despite this market advance, I still believe this rally is only a time out in a bear
market.
The high low percentage is not 95.5% but should read 99.5%.
Quote from August Locallo in this series of comments from Sept 7th,
“To say that at 99% new highs to total highs and lows is a good time to buy is crazy.”
Mr. Locallo, how much higher does the S&P need to go before it is not crazy?
Although the ratio of New highs to (New Highs plus New Lows) is >99%, there are still only about 10-12% of issues on the NYSE making new highs. Although a correction is likely in the cards soon, many more stocks have the potential to make new highs and if they do, the above ratio will still be in the 99-100% level as it has been for much of the last four months.
Dear Wayne ,
If you look back at the period of September 21,22,23rd, the high low percentage
was at 99.3%. then preceded to drop to 85.7% on November 6th. It has been slowly
going back up to the current 99.5&. If you use this as your only indicator (not smart),
you only get a sell signal when it drops below 70%. So far there have not been
many red flags to call for an immediate decline. The longer the market holds up,
the easier it will be to see the end of this current rally. The first average to have to
decline will be the 50 day average. This average is only 3 days from taking out its,
and then you will be taking off this current strength in the market. This doesn’t
prevent the market from going higher, however, it makes it more vulnerable to a
possible correction. The S & P 50 day average is now at 1100 and climbing.
The 150 day average is about a month away from taking off the July 10th
market low. Again, the higher that average rises, the more vulnerable the market
can possibly turn bearish. I still feel that the March - April period will start to see a
number of red flags.
Forgive me August, I’m slow on such complex matters. On Sept 7th I was crazy to be long the mkt with this ratio in the 99s but today when it is in the 99s, it is not smart use this indicator without confimation from other sources?
You still don’t get it. It is one of many indicators to be used for overbought and
oversold. Usually, there would be at least a maket correction with the indicator
at 99%. I am long this market, but am waiting patiently for the bearish signs
to buy puts. Do you realize that you have to go back to March 12th, to have 20 or
more new lows in a given day. The high low indicator is still at extreme levels.
The major moving averages are not even close to turning bearish. Like I said before,
the 50 day average will be the first to start to decline. It doesn’t necessarily mean
that it will be a bear market, but you would at least have a serious correction.
Take a look at the last 50 days closings. In a short period of time there will be
no closings on the S&P below 1090. The higher the market goes, the average moving
averages will continue to go higher. I hope the 150 day average gets to 9750 and
the 200 average gets to 9500. If those average continue higher, the better
to see the breakdown.
yea, i do get it, you come in here and make comments without any statistical basis and then call those that disagree crazy. Then when your called on the table five months later, your not man enough to say you blew it and try to wiggle out by giving a different interepretation of what you previously said and what your position was at the time. But the proofs in the pudding,
Quote from August Locallo in this series of comments from Sept 7th,
“To say that at 99% new highs to total highs and lows is a good time to buy is crazy.”
Quote from August Locallo on October 1st,
“I think we have seen the top. As I pointed out a few weeks earlier,having zero new lows can be a bearish signal. The number of highs to new highs and lows on a ten day period was recently at 99.3%. In other words, it can’t get much
better than that.”
Then today you state that your new high low angle needs confirmation from other indicators.
From Sept 5,
“There now is a triple top in the DOW JONES UTILITY indicator at the 3.81 to 3.849 . Also the number of new lows is almost non existant. This is a bearish sign. Never, since 1975 have I seen two days in a row without any new lows. The HIGH- LOW INDEX which is the percentage of highs to highs and lows is at 99%. The current bottom of this market in March, the high low index was at 99.6 four days in a row.”
and then when someone actually goes to the trouble to do the research on the statistical history of zero new lows, you ignore the statistical evidence and say they don’t get it. See below study on actual history of zero new lows.
http://www.tradersnarrative.com/zero-new-lows-rare-bullish-for-the-stock-market-2955.html
Mr. Locallo, we all make mistakes in this endeavor, I have made many and will hopefully stay in business long enough to make many more, but I try to do my homework and play the odds and support my trades and comments with research.
I’ll discuss any market angle angle with any reader in this forum as long as it is done in mature fashion. I’ll even go do your homework for you. But don’t insult me with comments that I am crazy or I don’t get it.
wayne-
You can’t reason with an irrational person. I doubt he even read your posts. There are always some ratio(s) showing overbought that justify fighting the trend that people will use to try to pick tops. I think we all did it when we first started out.
I still stand by the statements, when the 10 day high- low indicator is at
or above 99%, it is usually not a good time to buy. The fact that this market has
continued to progress, is fine with me. I am still very nevous about this market,
and waiting patiently to take a bearish stance. Historically, you never use one
indicator to support your decision. Without today’s close, the high-low indicator is
at 99.5%. It is the only indicator that is extremely overbought. I still believe this
is only a time out in a bear market. For the market to get people to invest,
it has to convince enough investors that its ok to put money into the market.
The bigger the top, the bigger the bear market.
Dear Wayne,
If you would reread the September 5th responce, I wrote that”keep in mind
you never use one indicator for your choice to get a signal from the market.”
Nothing has changed.
New lows have been non existant. That will change.
ok, points I am willing to agree with you on.
1. If the ten day NH/(NH NL) ratio is greater than 99%, you should only go short the market if it is confirmed by a short signal from another indicator which actually has a reliable track record of predicting downside in the market.
2. When this market peaks, the ten day NH/(NH NL) will be above 99%. (This is mathematically inevitable since the ratio has been above 99% on all the up moves over the last six months.
3. New Lows are nonexistant and will eventually return. (Nothing goes up forever).
Where I disagree,
I will bet you a years salary that when the ten day NH/(NH NL) ratio goes above 99% that it nets out as very bullish on average. I have done this study and it is documented as well in the “Encyclopedia of Technical Stock Market Indicators” (Colby and Myers) and in Stock Market Logic (Fosback) . The one angle that I think may be worth studying now is what happens when it has been there for an extended period. For example, what are the odds for the market, if say the 100 day moving average of NH/(NH NL) is greater than 99%. I’ll see if I can look at this sometime over the next week.
Augusta, if nothing else, your persistant stubbornness has inspired some new research.
Dear Wayne,
I don’t even remember seeing a 99% figure, other than this year. The highest figure
in 2007 was 97.6%. Remember, that was the final stage of the bull market.
This indicator is extremely overbought. It is basically a momemtum indicator. The
history has shown that it stays there for a couple of days, and then there is usually
a sharp decline. This rally will exhaust itself , but it does not mean it will turn
into a bear market. There is hopefully a few months left before the Great Bear
comes back with a vengeance.
I may have 5 day and 10 day averages confused, but very close to 100% either way. I’ll check the numbers when I get to the office tomorrow. I seem to recall like 500ish to two today.
Dear Wayne,
You are started to get silly in regards to betting on the market. However,
if you want to bet in theory, on the next 200 point move in the market,
I will short it after Monday’s close and you will buy it at the same time. In other
words 10400 before 10800. Whoever loses will have to acknowledge the winner
for this time only.
i guess the bet should read 10463 before 10863.
I can’t take that bet, as the odds are not as bullish as they were on Sept 5th when you stated that it was crazy to buy the market.
But my offer stands, I will bet you that it has historically been profitable to be long on the days when NH/(NH NL) is greater than 99%
Wayne and August
Can’t you two just agree to disagree and stop the pissing contest?
Winston,
I am actually a “live and let live kinda guy” but that changes when I my comments are referred to as crazy and that “I dont get it”. Hopefully this will be my last post on the subject, I hope you enjoy.
The comments need some modest editing,
Zero new lows on March 23rd, not March 09, 2007
Last 12 months, 99% readings from Sept 3rd through Oct 21 and then again this week as Augusta previously pointed out.
Six previous periods of 99% readings, not four.
No change in observations
It is very difficult for most psychologically to stay long when market is making new 12 month highs, very difficult, especially after such recent market turmoil. I have set out the S&P futures everyday of Jan except the first day of the year. Difficult for all of us, even us guys viewed by some to be permabulls.
Dear Wayne,
I have not had time to look at my emails. In all the years of trading-from
1975 to present, I don’t recall seeing a 99% figure in the 10 day figure. I still
do not believe it is a good sign. The reason being, it can only get worse. If you
cannot accept the bet, then you are hedging on your bullshness.
Guys,
I have long been contemplating a site dedicated to ‘fans of Stan’, forum, ideas, explanations, unanswered questions - the list goes on.
Since there is so much heat in these pages just now I thought it might be a good time to canvas the idea and get your thoughts?
Would you use it? (all things being equal).
Sam.
Am a great fan of Stan, last i heard he was bearish of the market, the last innings he called it, due to decling technical features.
He may have changed his mind, with a record number of stocks making new 52 weeks highs.
His opinion is always worth following, but we could do it our selves really, just follow the moving averages, and work out which stage we are at!
Wayne, I think it is quite pointless to argue whether extremely high readings on the NH/(NH NL) are bullish or bearish unless you layout the time frame to be taken for this trade. E.g. Is it going to be bullish for the next day, next week, next month or next year. Else, at some point, the bears are going to be right when the market turn and before the market turn, the bulls thinks they are right so that’s why the argument on this issue will never ends.
Tim,
As for timeframes, I don’t know how readable the table I listed above is, but I laid out the six time frames since 1970 in which the indicator had reached levels of 99% or higher. Being long during the time frame resulted in no losses and holding onto the long positions for 12 months after the readings was 5-1. This is only six data points and it is very possible that this may not be the case in the future. I suppose, I could have done 3, 6, 9 mts, as well, but I don’t even use this indicator and would rather study something else now.
Since the debate has died down tonight and will hopefully go away soon, I’ll let sleeping dogs lay and keep my comment to a short agreement with you that if permabulls/bears can stay the course and have deep enough pockets they will eventually be able to say they are correct.
I’m all for having civil debate on another subject. Boy those sentiment ratings are high. How come individuals say they are bullish but have record amounts in bond funds? Do sentiment readings even matter? When do shortterm rates go up? If earnings come in at 15 this quarter, is the market cheap or expensive? Who has the best trend following system for trading the S&P and other commodities? Do any of them make money on the short side?
Very nice post Wayne, thank you! Regarding the sentiment, have you ever seen the analysis on Investor’s Intelligence data in Stocks for the Long Run? It’s worth taking a look at if you haven’t seen it.
August to Wayne on Sept 12th
“If you cannot accept the bet, then you are hedging on your bullishness”.
There is no doubt about that August. If you will do a search on my name in the ’search blog acrhives’ above and read all my post over the last six months since I became a reader, you will see that the post were predominantly of a bullish nature and I have just in the last recent month (2010 Outlook), stated that although I still think the market will have a double digit return in 2010, the sentiment numbers give me reason for concern and that I believed that a 10% correction is in the cards somewhere in the first six months of the year. So yes, I think it would be safe to say I have hedged my outlook a bit. If my life depended on it, I still think I would play the long side. But at some point, the road signs will change and I hope to be flexible enough to change with them at that time.
I had no real incentive to take your bet because if you will read my prior comments, my argument had been solely that it was not crazy to be long the market when NH/(NH NL) was > 99%. It is not a reliable enough of an indicator for me to stake my reputation on. I see a greater possibility that the market could go down now than I did in September for reasons other than New Highs. I agree 100% with you that this NH/(NH NL) ratio can not go higher. If I knew how to short the NH/(NH NL) indicator, I would be “all in”. But I think that it is very possible that the market and the actual number of stocks making New Highs can go higher. There are something like 3300 stocks traded on the NYSE each day. In September, when this NH/(NH NL) ratio went above 99%, there were 250ish issues a day making new highs. This week, when the measurement returned to 99%,there were 500ish a day making new highs. Although, it is very unlikely that they will, in theory, the number of issues making new highs could potentially reach the number of issues traded. Now that the trailing 12 month trading range is starting to contract, the market could actually stay where it is and and number of new 12 month highs expand.
January Observation
I am at home and do not have data files with me, but I believe that we have quietly managed to post a 2.50ish% profit for January so far. A > 4% January has translated into up Febs-Decs, 18-2. A 1.5-2% move upward over the remainder of the Jan would give us the 4% up January and would reinforce my previous bullishness. Let’s see how it plays out. Of course the reverse January rule didn’t play out in 2009, but as one observer noted, that is why we play the game.
Biscosc - Sentiment Study
Do you have a link for this sentiment study that you refer too? My thoughts today, as I was reading some stock market material from a colleague, is that I have probably been too concerned recently about bullish sentiment numbers. As has been stated in several articles here, the retail customer was a net big time seller of stocks in 09 and net big time buyer of bonds. This trend was still very prevalent in December as AAII sentiment numbers suggested ow. This is no guarantee that the market will go higher, but usually they (individuals) have to come back to play. Babak, you have access to those fund inflows. I encourage you to post, the first month that this trend is reversed.
Biscosc, - Sentiment Observation
Concerning sentiment readings, some of your comments suggest to me that you are hip to what I am about to bounce off of you, but if not, I want you and other young readers to think about this next statement some. I have touched on this before. “You have to be very careful about how you interpret any indicator that is range bound”. Any indicator that is expressed as a percentage, has this characteristic. Using sentiment as an example, It is range bound by 0 and 100. If you go back through market history, you will be able to see that most of the major tops were formed when sentiment was at it’s high for the trading period in interest. On the Investors Intelligence polls, I want to recall that this is usually somewhere between 70 and 80. But if you went back over the history of your sentiment database and you backtested the profitability of going short the market everytime the market went to 70 or 75, I am fairly confident that it would be a negative trade. If you waited till it got to 80, you would have a reasonable trade, but would have missed the majority of plays. I have used this analytical analogy before, but it really does apply here and that is “If P then Q, does not imply If Q then P. That is, if the market always had a reading of greater than 70 at tops , does not mean that a reading of 70 means we are at a top. Just as recently at the decade of the 90’s, most all range bound indicators were repeatedly violated. Any indicator that is expressed as a percentage has this characteristic. An example of an indicator that is not range bound is something like the cumulative advance-decline indicator, which can continue to expand as the market does. It probably took me most of the 80’s to understand this.
A slightly similar story. In 1994-95, I spent about three months doing computer analysis of candlestick patterns. I had a colleague who argued that you could go back through his decade of hand drawn charts and see that at all the intermediate tops in the market over the last N years, had one of two different candlestick pattern days. I programmed my computer to go through my database and look for these patterns any time the market was making a new rally high and found that they were at best a 50/50 proposition. He argued that I wasn’t actually picking out tops. My response was that the market was at New highs at the time of the observation and they looked as much like the tops at that time to the machine or anyone else that didn’t have knowledge of the future as his hindsight tops did at the time they occurred. The same principle, If P then Q, does not imply if Q then P. Do you follow? Just because there was something called (i want to say) a dark cloud at many previous tops, did not mean that all dark clouds were a top. In case you were wondering, I don’t employ any candlestick theory in my trading. Actually, I probably don’t use 75% of the indicators that I have studied, most of which have been touted as reliable somewhere.
Expiration weeks are interesting, my day trading model thinks the sps have a positive bias tomorrow. Lets get some sleep and see how it goes.
Wayne -
I don’t have a link because it’s in the hard copy of the book that I own. I’ll get the book out tonight and summarize the findings. If I remember correctly, the sentiment indicators worked well in the 70’s, ok in the 80’s and not at all in the 90’s. I’d guess this is the case with most oscillator indicators as you described.
Wayne -
Here is the data from the book. There is more than I listed below but this is the overall summarized data. Like I said before, timing based on these sentiment numbers worked the best in the 1970’s and less in the 1980’s and 1990’s.
Investor Confidence and Subsequent Dow Price Returns from Investor’s Intelligence
Data from Jan. 2, 1970 - Jan 18, 2002
BULL/(BULL BEAR) Frequency 12-Month%Return
0.2-0.3 1.32% 20.74%
0.3-0.4 9.56% 15.81%
0.4-0.5 17.33% 13.71%
0.5-0.6 28.57% 10.70%
0.6-0.7 25.46% 7.54%
0.7-0.8 12.49% 7.21%
0.8-0.9 4.54% -1.51%
0.9-1.0 0.72% -10.94%
Biscosc
You know that is not bad stuff to know. I’m actually surprised at the strong correlation shown. As with most indicators, much easier to get good bullish signals than bearish. If you are bullish, you would prefer to see more bears than bulls. Thanks for sharing.
I am not too impressed with the way, the after hours trading is responding to Intels earnings.
We are going to have get use to the old market, average 1% mtly gains, 5 days up 2 sharp days down kind of patterns, 8 mts up, 4 mts down kinda trading, but hopefully double digit gain by the end of the year.
Ive been spending a lot of time trying to apply some of my stock market models to other commodities and am having a lot of fun with that. A lot of work maintaining all the databases. But backtest are encouraging and some early trading success. This is something I should have done a long time ago.
Danger Mr. Robinson, Danger
Even though I am still looking to short this market, you still have to be patient.
New lows are still alsmost nonexistant. The ten day trin is 110, but all next week
you are taking off low trins. There are plenty of dark clouds forming, but no rain yet.
New lows will almost certainly expand as time goes on. There are only 18 trading days
left to get to July 10th. You might say the market is working off the base, then
you will be taking off this almost non-stop rally. The bigger the top, the bigger
the bear market.
August,
It makes me uncomfortable when we agree, but I put a trading short on for Mon-Tuesday.
I still think the odds favor an up year for 2010. I can’t help but wonder, when have we had a > 20% down year (2008), put in a capitulation bottom (Oct 2008) and not had a least 4 years off the bottom? Investor’s memories are too short for another big selloff, two big sell offs in 02 and 08, make it difficult to get bubble type characteristics for awhile. The II numbers are hard to ignore, but a 10% selloff will bring predictions of apocalyse, and I think we would then turn around and head sharply back up. Maybe even 5% correction.
I would have expected most expiration weeks, that make it the 1140’s, to have had enough strength to tag the guys short the 1150 cls last week. I thought that was a shortterm sign of weakness. Figuring the odds are 60% for down Mon-Tuesday. I will then be very interested to see if we can put together enough to post an up Tuesday.
Side note, Not predicting such, but it was this 3 day weekend, when we got hit hard in 2008.
jeez, babbling this morning, meant to say ,
‘interested to see if we can put together an up January’, not tuesday
and meant to say
It was this same 3 day weekend in January, when we got hit pretty hard in 2008.
I still believe that this is only a time out in a bear market. I think it should
start sometime this year. The potential trouble should be the March -April
period. Obviously, time will tell.
August,
What would make you change your mind and start to believe that this is a new bull market?
There is nothing that would change my mind that this is nothing but a time out in a bear market. The reasons are that the bottom of the market in March, was not grossly undervalued or oversold, to have a true bear market bottom. Another feature of a bull market is going up on great volume. I can remember trading in January of 1976, when there was record volume and many a delayed tapes. Historically, the true bottoms of a bear market , would have much higher dividend yields and much lower price earnings ratios. Presently, the major moving averages are getting higher and higher. There are only
17 trading days left for the 150 day moving average to take off the important July 10th close of 8146. This represents the base of this rally. After July 10th close you will start to take off an impressive rally that should doom this market in the next couple of months.
August,
It’s always possible that P/E’s could go to the 8’s but it’s not something I’m personally waiting on. Just because it has happened for the few long term bull markets we’ve had doesn’t mean it will always happen going forward. That’s a very small sample size you are looking at. I guess for me I try not to impose my views on what the market should or shouldn’t do. The market doesn’t care what I think it’s true value should be and it doesn’t care what you think it should be either. I’d just caution fighting the tape, especially an up tape when stocks tend to move up over long periods of time on average.
Biscosc,
His first sentence spoke volumes, ‘nothing could change his mind’, As you suggested before, no reason to debate.
The market is 50% off the 09 March lows, Does it make any difference to your 401k, whether it was on low of high volume, or whether 10 years later market historians called it a timeout, or a bear mkt rally, etc. ? All that matters is that as a market trader, you missed a chanced to increase your portfolio by 50%.
Dear Wayne,
So sorry you did not take up my bet. If you would have , you would already eating crow. It doesn’t matter whether I believe the market is a bear or bull. I never said I didn’t make money on this rally. I have said that this is still only a time out before the bear market will come back with a vengeance. If I am right, we will test the March 2009 lows again.
50 DAY AVERAGES FOR THE FIRST TIME HAVE BEEN PENETRATED
With today’s close the 50 day average has broken below the moving average which is 10453 and closed at 10389.88. This average at this time is still rising, but at a much lower rate. The S & P cash is still slightly above the 50 day average of 1114.
The close of the S&P cash figure was 1116. The Transportation 50 day average is 4089 and it closed at 4093. The Transportation average has been acting much weaker than the industrial average. I believe this average will lead this market to the downside.
The most new lows without today for the last 30 days of trading has been 8. Keep an eye on the new lows. For this market to become weaker, there has to be an increase in the number of new lows as well as a decline of new highs.
No need to yell man! And yes, the Dow is below its 50 day moving average but the S&p 500 isn’t (yet).
August ,
Two day selloff
You are the man.
Please let us know when you turn bullish
August,
As my late grandfather used to say, even a broken clock is right twice a day
In case anyone cares. A 50 day moving average Study.
I will post a more detailed summary of this study at some point.
Wayne,
Great study. Thank you. I follow your comments with interest.
Question: in your study on the MAs, did you take into account the angle (up or down) at which the MAs where pointing as an extra filter in order to go long or short?
Thank you in advance for your comments.
Gonzalo
I don’t use such analysis in my work and am hesitant to get started into the almost infinite number of permutations that could be done. I was simply curious to see the implication of the S&P testing the 50 day moving avg.
It is likely that you could use a fast moving average crossing through a slow moving avg. Many also use exponential moving averages. You have to be careful or you tend to form fit the parameters to fit your particular commodity data. Maybe others can comment on such.
The primary benefit of trend following is that it eliminates the big drawdowns. The cost for this benefit is that you increase the number of smaller losses. Lots of small losses for the opportunity to hit a homerun occasionally.
If all it took to be a successful trader is a moving average system, the floor would be overwhelmed with 8th grade algegra students.
I failed to comment that all six above moving average studies had negative gains on the short side. This is obviously due to the fact that we were in a period that had an average 9% annual gain. Naturally, if we go into a prolonged decade bear market as some fear, the statistics on this study would be altered tremendously going forward, possibly even reversed.
I have S&P data back to 1930, but ran the study from 1970, because i had daily tbill data during that period.
Omar,
Your grandfather was a man of wisdom, rest his soul.
Putting the Week into Perspective (or trying to keep it real)
From March 9, 2009 to Jan 11, 2010, the S&P 500 rallied from 676.53 to 1146.98 for a 69.5 gain%. In the last 9 trading days, we have given back 4.81% of that 69.5% move.
This 10 month rally has been almost unprecedented in it’s absence of corrections, which led me tonight to ponder where does this week’s selloff fit into the pullbacks since the rally started on March 09. This correction turns out to currently be the third biggest correction since the rally started. If I visually scanned the data correctly, the four 4% corrections since Mar 09 are,
Jun 12-Jul 08, 7.04%
Oct 19-Oct 30, 5.63%
Jan 11-Jan 22, 4.81%
Sep 16-Oct 02, 4.07%
Whether this correction turns out to be more than one in a series of small corrections will be determined in due time.
Coming into the year, there were more people in the ‘bullish but looking for a correction camp’ than I could ever recall. Most of these forecasters and newsletter writers looked for a correction in the 2nd half of the year. Even the majority of bears, hedged their bets by predicting that the selloff would probably start in the spring after the traditionally strong beginning of the year I agreed that a correction was in order, but keeping in mind that the market normally does what it can to fool the most people possible, I made the following observation in my ‘2010 Outlook’ posted on Dec 31st.
“The bullish sentiment numbers suggest that a shakeup is in order. We should get a double digit correction at some time in the first six months of 2010. This selloff will likely come at an unconventional moment, possibly earlier than many market timers expect. Given that the bear market of 2008-09 is still fresh on investors minds, this correction should lead to a swift shift in sentiment, shake out the weak hands, and lay the foundation for another push up in the major indexes.”
I think it is still possible and even somewhat likely that some version of the above observation will still play out.
However, I try to not to let my stated intermediate perspective impact my trading, as i view flexibility as an essential ingredient for trading. In terms of disclosure, I have been long the SPs 4 days this January and short 3 and set out 8 and have a modest loss for the month todate after today. With this weeks VIX expansion, I sold some Feb 1000 puts on Thursday and on Friday’s close, I sold some 950’s. My daily model is giving me the most bullish number for Monday that I have received in over a month. If we don’t get an up day on Monday or Tuesday and post a down January, I will be compelled to reevauate my outlook. It is one thing to be wrong, it is a much different thing to stay wrong, especially when selling options.
The bulls would like to post a positive January in order to have the January Rule at their back. As bad as this week seems after the last couple of days, we are still only down 2.1% for the month with a reasonable chance to post an important positive number for month. Next week should be interesting to observe as well as important.
Have a good weekend.
Dear Wayne,
Do you still think 2010 is a bullish year? Obviously, I will take the bear side to this year. This is the last time I will mention the high-low index. If you can explain when that index gets to 99% bullish, you feel it is a bullish sign. In March of 2009 when the high low index was down to 99.5% lows, then you must have been bearish.
More Work For The Bears
With this sharp expected decline, trader’s have to be a little careful before deciding that this decline will continue to be the beginning of the bear market. Two major events have not happened at this time. The first is the 30 day breath is still positive by 7355. When the market gets ready for the bear market, that average will be negative. I would like to see some sort of rally. Many times you can get a better picture when the market rally’s. The other factor that has not happened , is the number of new lows. For the last 30 days the most new lows in a given day has been 7, and that comes off on Monday. New highs have contracted, but new lows have not increased. The ten day average of new highs is now below the 30 day average. The 10 day average
is 249, while the 30 day average is 263. The high-low index is now at 98.7%. Using that index alone, you would get a sell signal when it drops below 70%. Obviously, more time is needed. There are only 15 days left, for the 150 day average to get to the important July 10. Then this market will have more pressure on it.
I have some thoughts, give me a day.
STUBBORNLY RIGHT
Dear Wayne,
Where is your responce along with the other bulls? I have to check on the
highs and lows to see if there has been a reported huge increase in those figures.
If there has been a large increase in new lows, that will signal the beginning of the
end for this temporary rally in a bear market.
August
check your personal email
Checked out the new lows. There must have been a typo, because the number
of new lows is still an anemic 6. I was emailed a figure of 64 and got a little
excited. No damage, but there is still time for the bulls as long as new lows
don’t show any increase. Trader’s should be watchful for any change in these figures.
Wall Street Journal New Highs and Lows with available trailing database
http://online.wsj.com/mdc/public/page/2_3021-newhinyse-newhighs.html
Dear Wayne,
Never got a message in my email.
August,
I’m weary of the, as on reader adequately referred to it, public pissing contest. I thought I mailed you on FB, but maybe you are one of many August Locallo’s. If you are willing to share your email , I will send you my comments.
New Highs and 30 Day Breath
There has been a dramatic drop in new highs with only a slight increase in new lows.
The 10 day average of new highs has dropped from 329 to yesterday’s 173. The
30 day average of new highs has dropped from 270 to 257. These figures do not
include 1/27/2010 data. The high low percentage of new highs to new lows on a
10 day basis is also dropping. That figure if 97%. Let’s see how much of a decline
we get. That figure makes me very nervous.
On another point, the 30 day breath is still positive. Keep in mind, with the next
10 days of trading, the 30 day breath has to compete with 8 positives and only
2 negatives. There is a reasonable probability , that the 30 day breath can go
negative.
London Bridge Is Falling Down
With today’s close, the 50 day average of the Dow, S&P Cash,and the Transports
all declined. New highs are contracting sharply without today’s decline. New lows
are increasing, at a small increase. The 30 day breath without today’s decline was
at 4986. At the end of today, the 30 day breath will be barely positive. I can say
that because it was taking off a positive 1466, and being replaced with a reasonable
negative breath. I do not have today’s figures yet.
There is a possibility that you might see a market that would mirror the advance
in March, except this would be a major decline. At this time it is still to early to
say it is a bear market. For example, the 50 day average would have to contract
below the 200 average. There are only 11 trading days left before you take off
the important July 10th close on the 150 average. Once that day comes off,
the market loses its “insurance”.
Stock Market Questions
At this point in time there are a number of unanswered questions. While new lows have picked up, there still has not been any large increase. Part of the reason is that new lows, as well as new highs, are on a 52 week basis. In other words, until you get past March, the prices of new lows, in many cases are at rock bottom prices.
The biggest question right now , is how bearish do you become. Right now, I am cautionary bearish. I cannot at this time be an aggressive bear. Not enough stocks have fallen below the major moving averages. Also, the 200 day average is not close to turning negative. The market still has a week to go before you take off the last time it closed below 8000. We are seeing a number of red flags. The decline and destruction of this market is not a question. To trader’s, timing is essential.
Let’s see what declines show up next week.
I have read the book and found it interesting and easy to understand. I’m trying to apply the concepts to real world and finding it challanging. As an example I picked MSFT stock and tried to analyze its stage formation. I looked at the chart over a 1,3, and 5 years using 200 Day MA. I’m not sure which stage it is in. It is above 200 day MA, so could be in Stage 2, but to determine that I need to find its resistance and support. But unable to determine that using the chart.
Could you guide me how to analyze it using MSFT as an example. Any help will be greatley appreciated. I think if I understand MSFT, it’ll help me to understand others.
My biggest confusion is over what period of time you should study the chart? (1, 3, or 5 years)
How to identify resistance and support to determine breakout? In MSFT case I’m trying to understand where stage 1 being formed so I can see where resistance is, so I can figure out breakout point.
Thanks
30 DAY BREATH
I had stated previously that for the market to turn bearish, the 30 day breath would
have to be negative. As of Febuary 2nd, the 30 day breath was a positive 5487.
However, the 30 day breath is going to be challenged in the next couple of days.
For example, assuming the breath figures were negative today, the 30 day
breath took off a positive 570. So let’s say the 30 day breath is a positive 4000.
I won’t get the accurate figures (Wall Street Journal) until tomorrow.
The next couple of days are positive 1348,783,1320,1455, and a positive 77. Either
this market will have a sustained rally, or you will see another bearish sign.
Keep in mind that the 150 day moving average , already, is at 9805. The 150 day
average on the Transportation Average is 3836. The Dow Jones Utility 150 day
average is 378.81. The S&P cash 150 day average is 1053. The 10 day high-low
percetage has dropped to 92.8%.
The next couple of days should be exciting to watch. Keep in mind that the
all important July 10th figure is only 7 days away.
Looks like no one is willing to respond to me. Any words of wisdom?
Dear Newbee,
The best way to look at a stock is the moving averages. The most important
averages are the 50,150 and the 200 day averages. To explain everything you
want to know , will take to much time. Probably, the best way to look at support and
resistance lines is by a point and figure chart of the stock you are interested in.
If you do not know what a point or figure chart is, I will explain at another time.
Hopefully, others will contribute to give you the information you need.
That helps. I’m studying P&F chart. Thanks for your help.
Newbee,
The best advice I ever got was to concentrate on buying high quality blue chip companies. Then when they go up, sell them, and if they don’t go up, don’t buy them. It’s really quite simple. Be careful, Locallo will try to confuse you.
Newbee,
Seriously, I wish it was that simple, i read weinstein’s book 20 years ago and it didnt really register with me at the time. Maybe I should look at it again. Much like the Wave theory stuff, it all seema obvious in hindsight but difficult to negotiate in real time. As much as we would like to turn the market into a science, in this person’s opinion, it’s more a matter of quantifying the risk and positioning yourself accordingly.
Responce to Wayne’s Comment
First of all, nobody responded to Newbee request for help. Second, he didnt ask
when to buy stocks or sell stocks. He wanted to get an idea of support and resistant
lines for individual stocks. The fact that you think I would purposely confuse Newbee,
is being a pompous ass. Third, what lamebrain advice is it to tell someone, if the
stock doesn’t go up, don’t buy it. What a worthless piece of garbage that comment
is.
More Rain Clouds For The Market
You had more new lows than highs for the first time since the ever important July 10. Also, for the first time in 8 weeks the 30 day breath is now a negative -893. Keep in mind, what comes off in the next three days are a positive 1320,1455, and plus 77. Even if the market were to rally the next three days, the 30 day breath is not going to improve much.
Also, on all indexes, the 50 day averages are all declining.The Transportation index, is actually trading below the 150 day average. It closed at 3822 and the 150 day average is at 3844. The 200 day average on the Trans is 3683. Take a look at the Dow Jones Utility average. It actually closed below the 200 day average of 370. This index closed at 369.45. The 150 day average is 379.
The 10 DAY AVERAGE OF HIGHS TO HIGHS AND LOWS HAS DROPPED TO 85.5%. Remember, just using that tool, you don’t get a sell signal until it drops below 70%. There are only 5 days left for the 150 day average to take off the all important July 10. Then there will be more pressure on this market. Again, next week should be an exciting market to watch.
August, it was a comment made in jest , meant to be humorous. To suggest that you should only buy stocks that are going to go up, is in self meant to be a play on comments. The problem with internet exchange is that one can not see the persons expression, when something is typed. My comment , that you would try to confuse him, was typed, with a wink and a smile toward you, not really to Newbee. It was very gracious of you to offer him advice. Talk to you soon.
August ,
and by the way, before I left the office Friday, I ran the case where the daily number of new lows exceed the number of new highs for the first time in at least 100 days. I seem to recall that I found about 12 cases. I could present the results, but they were not extremenely interesting. I recall that the results for 3, 6 and 12 mts later were not bearish, but a maybe a little below avg. I want to say something like 1%, 2% and 6%, resp.
The bulls and the candlestick guys are going to like the late day reversal friday. I have no positions in the sp futures, but in the options, I took the vix expansion as an opporutunity to work into options. Im short 2 feb 1000 puts, 1 feb 950 put with a short mini as a hedge against them.
I took a short position in the british pound on Friday, take a look at the chart on the BPH0. Below its 50, 100, 150 and 200 day ma’s and broke major support of 1.57 on Friday.
I find it interesting that all the AAII guys are turning bearish so quick, I have thought for sometime, that their response on a survey is skittish and subj to change in a moment. Just them and everyone else by what they do, not by what they say
And for all you beginners out there only buy the stocks that are going to go up (wink).
MORE TIME FOR THE BULLS
From the past trading days, one can see that there is still time for the bulls. There have been cracks, but not any total breakdowns yet. They have not been enough new lows to feel that this market is ready for a major decline at this time. Without looking at all the stocks, there are to many stocks with rising moving averages. I have mentioned before that new lows and highs are on a 52 week basis. Until we get past March 9th, when the Dow was at 6567, the market will not pick up many new lows. A good example, is Monday’s close. The Dow was down about 100 points , yet new highs outnumbered lows 29-15. If you are bearish, be patient.
DOW JONES UTILITIES
Although this market does have some time left, there is a major problem brewing
at this time. The Dow Jones Utility averages are 50-391,150-379,200-371. The fact
that it closed on Friday at 364 is an ominous sign. The 150 day average has only
5 days left and you take off a 359. That is the lowest close for 150 days of trading.
In other words, the lowest buyer for 150 days will be 360 and above after 5 more
days of trading. This is not a timing tool. This is definitely an ominous sign.
For those that think this market is going to be bullish for the year, this is a major
warning sign. For those that think this market is getting ready to have a major
decline, this indicator should give you more confidence of the coming decline of this
market.
TREND IS YOU FRIEND
The stock market trend at this time is still bullish. Although there can be some short term declines, the overall patttern is still going up. Highs and lows, still impressive with new lows the last two days of only one. The high-low percentage is up to 91.6%. The 150 day average has only 4 more days to take off below a 9000 figure. The 150 day moving average, easily will hit 10,000 in a little over 6 trading days. Finally, the all important 200 day average is rising , and will easily be past 9600 by the middle of next week. For the bears, be patient, be selective.
POSSIBLE STRONG UPTREND NEXT WEEK
There are a number of indications that this market should have an upward bias this next week. First, the 10 day breath takes off all positive figures next week. These numbers are a positive 207,2033,1093,1166,and a positive 580. For this market to show bullish numbers you would think it would have a strong week. Second, the high low index is at a remarkable 97%. Still no breakdown in that index. Finally, the ten day high low index is above the 30 day average, with only 3 more days left, before the 30 day numbers contract sharply, so the 30 day average is going head up.
Major moving averages are 50=10369,150=9985,200=9618. There are some eyesores in this market. The most glaring is the Dow Jones Utility Average. It is trading below the 200 day average of 372. On Friday, the 150 day average declined for the first time. This average is an early indicator. As always this week should be exciting.
August, can you please write your comments corresponding to the recent post on the blog? it isn’t helpful to write unrelated notes like this. Also, can you please stop with the carriage returns and spacing? Just write and everything will be ok, do not press [enter] over and over again when you write unless you want a new paragraph. Thanks.
Hello to Newbee, Stan’s book is one of the best books I have ever read on investing and trading. Stan appears, about once a year, on National Business Review on PBS tv. His last appearance was 11/20/2009. I would also recommend reading “Trend Following” by Michael Covel. Which is also a great book.
Dear Mr. Babak,
What I have to say is more important than what is on the blog. For example, I had
predicted that last week’s market would be strong.I am giving anyone that reads
the information the best technical advice on this market.
August, your comments are appreciated here, that’s why I asked you to write them on the most recent blog post because that’s what most people read on the blog. That way more people can benefit from it. Have a good weekend.
Next 3 weeks
Regardless if the market is going up or down, the next three weeks will still
show upward momentum. I can say this because the 30 day breath and highs and
lows are taking off very weak numbers. In other words, there is not much chance
for the 30 day figures to show weakness.For example, 11 out of 14 days on the 30 day basis are negative breath figures. Even with occasional declines in the market,
the 30 day breath should still be positive.For those looking for a down day,
Tuesday has the reasonable probability for a decline. You are taking off a 3.03 trin,
and a decline in the breath of 1100. I would give it a 70% probability. I have seen
much higher probabilities, but this is the best I can predict at this time.
Babak,
don’t waste your breath about Mr. Locallo.
anyone who says “What I have to say is more important than what is on the blog” is obviously so full of himself that he’s not going to respect anyone else’s opinion.
Thanks you Scott. I’ll look into the book. Much appreciated.
Interesting site. Found your website from reading stans book. Hope u all had a restful weekend and looking forward to another profitable week. wishing u all a profitable year. Remember to pay attention to the charts and tweek it a little with your 6th sense for those of you who can use it. Keep an eye on citi, the charts will not help u with this.
Thanks Pips, glad you dropped by.
HERE WE GO AGAIN
The high low index after Friday’s close is back up to 99.5%. The ten day
breath is overbought at 8873. I consider 7000 or higher as overbought. As usual,
not everything is perfect. The 30 day breath, still has 7 days of protection. Five of the
next 7 days are negative. This prevents the 30 day breath from any major impact.
The ten day trin is still only neutral at .90. The 30 day high low average is 2 weeks
away from any deteriation. I am going to have to make a major decision on this market. Sometime this week I will start buying some April puts. I believe we are close
to a major top.As always, it is going to be an exciting week.
Thanks for your comment August, as I politely requested before, in the future please write your comments under the most recent blog post or related post. Thanks.