Internals Study

I am attempting (again) to organize a wide array of market internal indicators I use. The problem is - i have them set-up differently at home, at work and at house-by-the-lake. I still refuse to sigh-up for any subscription, including one to Stockcharts-dot-com, where I would be able to keep them set in their Public Lists. So i need to make them compact, and get rid of weak ones.

Here is another problem: T-Theory Volume Oscillator (18,36MACD of $NYUD) is very confusing to me, especially so when using for T's.  I thought its a dead end, but then realized that Im looking at "nested T" - small Volume Oscillator T with center-post at February 25th dip. VO T 2/2013 is about to ran out. Also on same chart: T 11/2012 is the same as BergamotT, but unlike NYMO, Volume Oscillator had a high in mid June and T projected right into Tax-day (give or take a day or two). Green "Irregulat T 4/2013" is missing secondary cash build-up phase and i don't know what to make of it.

This is all fine with benefit of hindsight, and seems to support endless rotation in sectors of S&P. This rotation is increasingly hard to predict and makes for very unhealthy environment, as evident by Confidence Indicator (FAGIX:VUSTX below) still diverging from S&P. This non-confirmation is already big enough, but can get bigger. Golden Indicator also diverging, but this configuration is very unreliable and I decided to ignore it for few weeks/months.

Two studies below deal with Advance/Decline analysis.
        McClellan Oscillator ($NYMO) is basically 19,39 MACD of  Net Advances, the number of advancing issues less the number of declining issues on NYSE. I don't know what to make of it at this time, except that its pushing upper BBand, but at relatively low level. Percent of S&P stocks below 50MA shows a well pronounced divergence, as more and more stocks cannot get above their 50day MA. I wasn't watching Utilities, Staples and Healthcare that rallied strongly over past few months, and my watch-lists show disproportionate share of stocks that broke below 50MA and even already in their own bear market. Bullish Percent Index is similar, normally it lags by a month or two.

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         My Nasdaq A/D Indicator deals with Net Advances in more straightforward way. Its simply 5day EMA and 20day MA of $NAAD. Shaded area are periods when 20day MA is below 0, during which IWM is weak, and its coming back above 0 right now. Also significant lows where made on lower readings of 20dma than most recent in April. Divergence is visible since beginning of the year, and lately it also shows up in weakness of Nasdaq New High / New Low since March.

So I'm asking myself: Whats the bottom line? Really don't know, with so many negative divergences and internal weakness in SPX, Nasdaq, IWM etc, still market is not breaking down. In fact NYMO and My Naz A/D Indicator (MNA/DI) have room to upside and can support a 5-10% rally on major averages from here and last into end of May (if Irregular T 4/2013 works out). 

---------------------------UPDATE-------------------------

Following this post, Market rallied 6-7% and peaked on May 22.

Pretty good analisys....ha-ha

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At last here are two charts I watch intraday. The main version of MNA/DI and VIX. Volatility Index (VIX) looks really strange lately and I give it very little attention.

At close inspection I realized that I use 20 day Exponential MA on MNA/DI and tried to quickly redraw shaded areas in same manner as chart above. I will double check again tonight.

Panem et Circenses

     What the hell was it yesterday, on 2/27/13?
First of all, it had nothing to do with housing data. Reaction at 10am was timid at best. What happened was a relentless short squeeze, as /ES open interest stood at whooping 3.16mil cars. Can't wait until 9am to see if it gotten smaller - I don't see how people would not cover shorts after this. Now, with late-comer longs already stopped-out, its a time for over-eager shorts to be taken to woodshed. Besides, how can anybody have a directional forecast with gigantic moves on VIX, big-range up and down days, and all political BS on both sides of the pond. Big boys are shaking the tree to see what dislodges, I don't want any part of it.

      I didn't exit QQQ short via QID. Although my stop was above 67Q, I decided to wait a bit. Q's still the weakest of indexes and sold-off heavy right before close. There will be no point of keeping this short above todays high and 67.80. I hate to hedge. Makes me so confused - am I long or short? It's like I am not limiting losses, but guaranty that I loose a bit whichever way the market goes. GRRR... One single position QID gives me so much headache, while GEO pushes into new high. Prisons is a leading industry? Buckweats...

UPDATE 2/28 AH:
SLD: QID 27.11  -4%
What a horrible mess I made out of this trade. It was all wrong, shorted at the low - covered at the high. What the hell am I thinking? This is not oops, this is bad-bad-bad.. Atleast I did it with 1pos only, so no big damage.

     Which brings me to ongoing Treasure Hunt.
Panem et Circenses is latin for "Bread and Circuses" (or bread and games). Pretty good place to start, considering a peculiar situation with grains and latest legislation about online gaming. Play legal poker online, while high on legal pot and who cares how expensive munchies are...

        Ag-complex
http://stockcharts.com/freecharts/candleglance.html?DBA,JJG,soyb,corn,bal,moo,tsco,de,cnh,lnn,mon,mos|B|P5,3,3
       Soy via SOYB is ready to go today - strongest of grains. JJG has to be bought back above 53. Cotton via BAL really doesn't belong to this group, but its strongest of all softs, buy above recent high. Although MON has a law-suit going on, hard to argue with its straight. TSCO need to buy asap.

    UPDATE 2/28 AH:
    BOT:
TSCO - 104.10
JJG     -  52.04 Half pos.   I really wasn't suppose to buy it until tomorrow, but all grains where strong in the morning. Put limit order for SOYB, but it was not getting filled. This is my third time going for grains.
BAL run away while I wasn't watching, now need to wait for pullback.
DRYS - 1.98 Half pos. I was staking it ever since breakout in January, with my eyes on 1.8-1.9 level. Needs to hold it.
FB     - 27.19 Half pos. Bot on close. High volume hammer. Last couple of days looked corrective. May be it will not get to 25.
FNV  - 48.36 Half pos
GDX  - 37.40 Half pos.
Damn the torpedoes! No stop for now. Bullish percent miners is at 3 or 4 for a reason - they all are in downtrend. Will watch for a day or two, then add.
I outlined some thoughts on PM and miners in previous post. Today's double bottom was too good to pass-up.  I was keeping an eye an FNV and RGLD. They are not so much miners, but a royalty companies. Last summer they where some of the first to bottom and then rally hard, for whatever the reason

To be sure - I am NOT buying the dip. I'm going into these selected situations, and lightly - most Half Position Size only.

       Gaming
BOT:
2/27 - MGAM  @ 18.30 half pos

       Pot-trade: I really need to have a detailed look at these companies
http://stockcharts.com/freecharts/candleglance.html?MDBX,CBIS,MJNA,HEMP,PHOT,AVTC,TRTC,ERBB,SRER,GRNH|B|P5,3,3

More on this later...

On Pins and Needles

Yesterday, around 11am I wrote here (http://evilspeculator.com/?p=34229#comment-811871439):

That's a pretty aggressive sell-off, little bit more than i would like to see.
End of day will be really telling, except i will have to be away from comp.
Set stops for almost 3/4 of portfolio, on a top of some that I already sold.
Internals are kinda confusing.

 Over the next couple of hours I moved  some of them closer, sold some by-hand and then BOOM, power went out in a whole building. Luck favors prepared, I had my stops on already, but that was close.

SLD:

BRK/B - 99.49
CG       - 32.30 Needs to cool-down. I'll be back.
EWS    - 13.65
EZA     - 66.03
 HAO   - 24.16
 RSX    - 29.23
Emerging markets whipping me around all over the place. First EEM and now these 4. Need to reevaluate this whole EM thesis. Correction on weekly EEM still looks good, but where is the turn? 
GE       - 23.05
IWM   - 90.19
IYR     - 67.65
JJG      - 51.03  Grains and ag-stocks failed again. No re-entry for 4 days. Cheap food? - I don't believe it for a second.
MOO  - 53.71
SSO    - 67.11
TBT    - 66.75   TLT goes UP from bear flag. Resistance 120-121. Trap again?
XHB   - 27.45
 2/26 - GOOG 787.41 this seems unnesesarry
2/26  - FB 26.74 stopped out on LOD. Damn it. Will re-enter

BOT:
2/26 - QID 28.20 may be I'm overreacting and I really don't need this hedge, But QQQ couldn't even do a half/back of that bid 2/25 candle. 50Dma and 5Dema right overhead, stop above 67(qqq)

Now what?  VIX step 1 and 2 had been blown to pieces, more - I don't remember seeing such a big candle in recent past. Almost 40% jump in one day. Based on what - our and Italian politicians? Seems unlikely. Confidence indicator setting up a divergence, but its not big enough. Half Point notion from this post (link) is out the window. Volume is heavy, as it should be on down days. SPX is almost at bottom of 25BB (Bolinger band)

Bottom line is this: I am not buying or re-entering anything just yet. Not even with System 10, although its still on. Sitting and watching on pins and needles, observing reaction to key support levels:
1480/SPX - 50Dma; monthly pivot
1460/SPX - January break-out
1450/SPX - 20Wma

Positions (35% invested):
http://stockcharts.com/freecharts/candleglance.html?$CEX,TSLA,IBB,SCTY,TAN,CCJ,FB,GEO,SCO,goog|B|P5,3,3
 $CEX is for tracking intraday for FSCHX (1pos)
GOOG (leftover from S12T), SCO and TAN are Half Position size
SCTY is 1/4 pos

Starting Treasure Hunt - looking for stocks and groups, undisturbed by this manic sell-off.
Some of my own positions display these characteristics: IBB, SCTY, CCJ, FB, GEO and TSCO (that I sold on 2/20). I will sell any and all of them on break-down just the same, but so far they look very impressive and I am searching for more. Pot-trade is a keeper - MJNA was up 20% while all this going on, will add to it and others.

Some thoughts on PM (Precious Metals) and miners from Sunday night here (http://evilspeculator.com/?p=34187#comment-810731060):

           I'm not about to make a prediction, but this sure has a smell of capitulation. Even gold bugs are throwing a towel, saying that gold miners are so mismanaged that we are not going to see any kind of performance for years. This of-course does not included the crazies, who are always bullish, regardless of losses that would make their investors run for exits long ago.
          You know, I always keep away from "catching falling knives". Now I look at this industry and asking myself: Could this be a finest example of value investing? 

And later on Monday:

This collapse last week sure has all ingredients of capitulation.
I'm not saying it's THE bottom, but....fighting a strong desire to buy some miners down here.
           Darth Gerb on GDX:
long term - no go, until..
I want to see a 50% retrace down to $33, later this year.
no one wants to own a hole in the ground.
           My reply:
"no one wants it" - is exactly my point.

Chris Norman is amazing even 30 years later. This is how I remember it:
http://www.youtube.com/watch?v=ZwbXWwTHKtQ

Battle of 1510 /ES Continues

1510 /ES presented itself as a resistance in a beginning of February and I noticed that this is where battle lines are drawn here (link).

Well-well, what do you know, this is really where they had the stops. ES had to go past 1510 and this morning System 10 kicked in. I'm using a lighter version, not futures, but SSO. So far so good.

Got step 1 of VIX buy signal.

My A/D indicator closed -470, and that is at-least short term bottom. It can come down some more, but i think most of damage is over.


During the day I surveyed a bunch of internets. Remember how everybody where waiting for a dip to buy? Well, the dip is here, and nobody is buying.  People are bearish as shit, talking about Mark Fabers' down 20%, Tom Demarks' 9-13's.   Nobody is talking about Bergamot's 1600+
Good, that is just how I like it.

          What if I'm wrong? What if 1510 can not be taken over by bulls?
          It's possible.
But my thinking is this: to have a big selloff, the beginning of Bear Market we need broken support, or some kind of formation (double top or something), or moving average cross, or PF bear price objective, or blow-off on large volume... you get my gist. I see bearish engulfing / maribozu candles all over the place, but they have lousy reliability.  So far all I have is Canadian Time magazine cover and  2 of my friends who just found out that there is a Bull Market going on. No joke - people find out about this bull run only a week or two ago. Now they are thinking : "What to invest in?"

I figure we have until tax-day, the LATEST!
I am being very serious now - this bull run is on its last legs, but last leg is always explosive, so...
I am 80%+ invested, long stocks and grains, short bonds and oil until further instructions.

 I'm wondering what industry group will rally the most off this low? Homebuilders?
          BOT:
SSO
XHB
IYR
MJNA added a little at 0.25, just like planned here (link)

More on this later.

IBergamot BOT: SSO. VIX buy signal.

BOT: SSO at 48.66.  Stop on close below 47.70.
                                   Stop raised  50.15  -  6/14/12

Here is a VIX buy signal, but its not the only thing Im looking at. Also A/D Indicator having pos. divergence (if it sticks). Other than that, doji  and couple of oscillators - this market is a pile of crap. Crash is still just around the corner, unless...

Things are Getting Interesting

A/D Indicator is oversold.
Market is in correction of unknown price and time.
Gold, Silver and miners are at the bottom of the list. Time to buy?