Tuesday, October 14, 2014

Are The Bears Finally Gone?

The New York Summation Index ($NYSI), after a couple of years has finally hit the -500 mark. That is an extremely oversold reading. The $NYSI is a long term indicator, that gauges the health of the market in terms of who is in charge (Bears or Bulls). The -500 mark is significant as it indicates two possible scenarios. The first is the Market could be starting the first phase of a bear market. The second scenario, is the Market has finally worked off the overbought conditions due to the incredible bull run over the last few years and is ready to go back up. The second scenario implies that the Market is likely in the process of forming a long term bottom. 

In terms of past Market behavior, the second scenario is more likely. The chart below shows within the last 5 years, the $NYSI has only been below -500 two times. Both times ended up being long term buying opportunities. Unless we hit a recession, it hard to believe we are starting another bear market.


Tuesday, September 30, 2014

Bulls Beware

There is "something" that seems a bit off with this Market. I don't like the lack of new leaders, and the way the market had hit new highs and then retreated. I am also not impressed with the McClellan Oscillator and the Summation Index from a bullish perspective. What bothers me the most is how the VIX is in bearish territory.

The chart below is the S&P 500 and the VIX with 50-1 Bollinger Band settings, which was shown to me by Tom McClellan. When the VIX is above it upper Bollinger Band, the Market gets quite ugly. Take note on the chart below, the VIX is currently above its upper Bollinger band (highlighted with black rectangles). As a result, the VIX has wrecked havoc on the all Market indexes. When this occurs the Bears are clearly in charge. 

Until the VIX retreats below the middle Bollinger Band, consider this market in the bears hands.

Tuesday, August 19, 2014

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Tuesday, August 12, 2014

Will This Bullish Pattern Repeat?

This Market has been very difficult for many traders and investors out there the last year. Last week, I talked about how the Market is likely to bounce strongly. Fortunately, the Market did bounce strongly the following day. However, the VIX continues to be quite problematic, giving the bears control of this Market.

The good news is this Market is pretty strong, considering the geopolitical events happening across the world. However, the bad news is it does seem that this Market is at the mercy of the turmoil around the world. The bulls will not have it easy, until these global events are solved. At the same time, its worth noting the bears haven't done that much damage.

The chart below is the Summation Index (NYSI), a very accurate long term indicator. This indicator spent an impressive amount of time above 500 from February to July. This indicates with high probability the Markets will likely make new highs within the next 6+ months (due to spending so much time above 500). So in other words, its likely we will see the S&P 500 hit 2000 sometime this year