Market Thoughts and Analysis

May 1

2013-05-01T15:56:00.000-04:00

Crazy up and down market the last few weeks. 60-min system back on a sell. The short-term VIX divergence observed in the last post is met with even more divergence recently. (Chart below has the inverse in the main panel as well as SPX)

Apr 18

2013-04-18T10:12:00.002-04:00

I think we are in the midst of a decent correction. One of the reasons why I think so is that we have an approximately month long short-term VIX divergence. This has tended to signal a decent correction in the past.

However, this same chart is yet another reason why I don't think this is a major top / end of the current cyclical bull. The last recovery high happened in conjunction with a new VIX recovery low. We are still not seeing the several month / year VIX divergence that occurred with the 2000 and 2007 peaks. Does this have to happen? No. But I think the odds that we do have a major top without a major VIX divergence is low. And so this is one reason (among many others) why my expectations are for a continuation of the cyclical bull.

today

2013-04-17T10:21:00.001-04:00

Daily sell signal at 1551 on SPX if it gets there today. won't be able to send out in real time.

Apr 11

2013-04-11T09:52:00.001-04:00

Apologies, but I was unavailable yesterday and am still swamped today. 60-min buy signal was triggered at yesterday's open but I could not execute until now, and that is reflected in the newest signal.

Apr 3

2013-04-03T13:48:00.003-04:00

My 60-minute system issued a sell signal this morning just after 10 am. I also think this is the end of the current up wave and that we are in store for a decent correction. And no, I don't think this is the 'top'. I think this is just a correction and the cyclical bull market will continue.

For anybody who cares, here are my wave counts:

Some More Thoughts on Long Term Sentiment

2013-03-22T11:37:00.000-04:00

Cullen Roche has a good post up discussing the lack of bearish sentiment in the market right now: Where Did All the Bears Go?. And I think this is right on track. This recent wave up has been a real bear killer combined with the fact that the Dow Industrials are at a new all time high.

This is yet another reason why I don't think the end of this wave will be 'the top'.

As I have said many times over the past couple of years now, we need to see some serious internal divergences take shape to even begin to consider that we have seen the top. And so far, absolutely none of them have manifested: http://marketthoughtsandanalysis.blogspot.com/2013/01/update-on-long-term-projection-011913.html.

So this chart caught my attention and is telling the same story that I have been saying. If you indulge me in some interpretation, which I lay out below:

I think we are still somewhere in 'Phase 2': sentiment has shifted and the investor community is seeing this bull market as a bull market.

Now we could be at the end of Phase 2. But even if that were the case we should still expect another leg up to make a higher high after the next correction to show a divergence in sentiment. We would also need to see confirming divergences in a number of other internal indicators.

So in short, I am still not expecting the market to have peaked with this peak.

Mar 9

2013-03-09T11:54:00.002-05:00

No posts recently because there is not much to say. We had a very sharp volatile sell off at the end of Feb followed by an even sharper rally out of that low. This spike low and the subsequent rally out of it looks and feels something like the March 2011 correction going into the Apr-May 2011 rally and the March 2012 correction going into the Apr 2012 rally. I have no clue how it this plays out, but the seasonality plus the fact that this was a relatively small correction relative to a 3+ month surge makes me suspicious of a more severe correction in the near term (next several weeks).

However, I still maintain that we are not near the end of this cyclical bull market and that we have further to go. I am still not looking for 'the top' here.

Feb 25

2013-02-25T16:56:00.000-05:00

Crazy busy day, could not watch the market in real time. The 60-minute system issued a sell signal on 2/20 and that has stayed intact (and re-confirmed today ... boy howdy). But the Daily System also issued a sell signal today. However, since I could not send the signal out in real time, I will enter the signal at the open tomorrow. Just letting you know the situation.