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Market Comments For May 19th 2010 at Trader’s Narrative





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This is a guest post by recent Charles H. Dow Award winner, Wayne Whaley (CTA) of Witter & Lester:

There was a gap over last weekend between 1107.0 and 1144.50. Market has a tendency to want to fill these gaps. We traded down to 1113.0 on Monday, but didn’t completely fill it. Market will often go back and clean this up before moving onward. If tested, I would look for ~1107 to hold.

My daily work is slightly positive 55.7 at midday and has gotten stronger as we have sold off. The remaining models are:

  • Short-term Seasonals - 49.97
  • Daily Tape - 60.17
  • Intermediate Model - 68.49

The Intermediate Model has five components, one of which is a tape model. The tape model has been firmly entrenched in positive territory since early 2009. The model takes into consideration thrust signals, capitulation signals, measures of market confusion, and market trend analysis. Ratings range from -1 to +1. The green areas in the chart below approximate all times in which the signal has been predominantly above zero. The red areas indicates bearish conditions in which you would want to be out of equities and often short. Today’s rating is a positive 0.59.

Click for a larger version in a new tab:
Wayne Tape Model May 19 2010

The Tape Model’s current strength comes from the three strings of thrust signals that were recorded in the last 12 months. For example, on September 23, 2009, a ten day ADT rating of 68.42 was recorded, meeting the 66.6 threshold and giving this particular signal a 0.5 out of a possible 1.0.

The second signal, that occurred between September 10 and 18, was a strong signal with both Five Day Breadth and Volume signals registering. The third signal occurred on March 9 and March 11, after a broad one month rally triggered signals for the 20 day ADT measurement.

The odds of the market going into an extended bear market after three such thrust measurements in the last 12 months is possible, but unlikely. Especially, as long as the market stays above the 200 day moving average, which is currently at 1101.63. The recent pullback in the market was quick and fast and did not lead to signs that the market was entering a stage of confusion, which I am closely keeping an eye on.

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5 Responses to “Market Comments For May 19th 2010”  

  1. 1 steve brophy

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    …a little late to be posting the 61% fib…and hasn’t Precther been right only once since 1982.

  2. 2 Wes

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    Wayne,

    Nice market call. In fact, so far, it’s spot on.

  3. 3 Jody

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    Wayne,

    This chart is the best I’ve seen in long time. Larger version was easy on the eyes . Will you be sharing any additional details at the awards ceremony this weekend?

  4. 4 Warren Peary

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    Mr. Whaley:
    How can I keep track of your Intermediate Model on an ongoing basis? It looks like the best intermediate market timing model I’ve seen to date. Do you publish an advisory or do you plan on keeping us up to date in Trader’s Narrative’s posts like this? Great technical work.

  5. 5 ww

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    Warren and anyone interested.

    I have for the last couple of years been sending out a daily email most days around 3pmE that has my thoughts for the next trading day based on what statistics are grabbing my attention that particular day to anyone that has ever shown an interest in receiving them. I will soon be making a formal offer to send this out for free, for some period yet to be determined, to anyone who wants to offer me their email address and request for such.

    I have 5000 lines of self written computer software that generates pattern recognition statistics for me on a variety of indicators, (fundamental, seasonal and tape analysis). For example, I can share with you at 3pm on anyday what 30 days in the history look the most like today in terms of price patterns and what the odds are for the next day. The code will give me the current pattern of 9/1 volume days and automatically give me the stats on all similar similar patterns, all thrust signals in the last 12 months, what 100 days in history look the most like today in terms of interest rate levels and IR trends, volume, New High, New Lows etc. etc. If trading activity allows, I usually pass along whatever is catching my eye on that particular day before the close.

    I am about six months into a 12 month process to apply this software to multiple commodities. I am building the databases as I can.

    This is my personal email address. Please don’t hit with a lot of solicitations. Just request that your email address be added to my mailing list. My email address is waynewhaley@comcast.net. I’ll probably try this thru the end of 2010 and see what kind of interest developes.

    I have been out of town for a couple of days and will have some detailed market comments sometime Sunday.

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