Here is our 35 and 105 day trading cycle chart.  We issue all our market timing research for clients weekly.  For more information, visit www.stockbarometer.com and subscribe to the Daily Stock Barometer.

35 and 105 day trading cycle

Good morning Traders,

Here’s a chart that shows the market’s potential 1 month return based on the
action of the barometer.

stock market future returns

The line on the bottom is the barometer.  The line on top is the 1 month
future return of the QQQs.  As you can see, the right side of
the return line is not filled out yet – that’s because this is a
forward looking indicator, so we do not know what the return 30 days from today
will be…

But we can look back and use this as a basis to see what similar points in
time have returned in the past.  So for example, if you look back at the
first peak in the barometer from 2013 – you can see that when the barometer
turned lower, the market’s future return was around -5%. 

And when the barometer bottomed after that point, the market returned
+5-7%. 

So based on this data, we can make the following observation.  Given the
level of the barometer today, the market’s likely future return is less than
zero to -5% over the next month.  We do look over longer periods, but 1
month is a good focus point, since most trades should last longer than a
month.

What you can also observe from this indicator is that during a bull market,
the negative returns will be muted.  You can look at the period from July
2013 to the beginning of 2014 and for the most part, you could have bought the
Qs at any time during that period and closed your trade in one month with a
positive return.

Let us know if you have any questions in the above.  It’s part of our
research we provide here and we provide it for other indicators as well to
ascertain the data and if it’s useful or not in trading. 

The market is turning lower this am and we’re close to a window where we
would start issuing our covered call and put options trades.  So stay
tuned…

Regards,

www.stockbarometer.com

Good morning Traders,

Here at www.stockbarometer.com we pride ourselves in providing research to help you with your financial decisions.  Here’s a chart from our research that was part of a report we published to clients today: 

To learn more, or become a client, visit www.stockbarometer.com

Stock Market Breadth

Good Sunday morning Traders,

As we review our research, which is available to clients as well as other newsletter writers, we have a key development in our view on the internals of the NYSE.

If you’ve ever seen me speak at the world money show, you know one thing – I believe the markets are random (to a point) and I believe that the common media creates a narrative fallacy, so what you hear has nothing to do with why the market is doing what it does.  When I say markets are random – to a point, all I mean is that, like the output of flipping a coin is random, you know you’ll either get a heads or a tail.  So with the markets, you know you’ll either get an up day or a down day (or flat).  And as it pertains to trading, you know the markets will either trend higher, trend lower, consolidate sideways and so on… 

We’re all about the data, the research, the numbers that actually move with the market and can be used to time the market.  There are a ton of numbers that have no influence on or meaning in the markets that the popular media will reference.  As a trader, your job is to eliminate the noise that creates an improper bias.  That noise will interfere with your ability to trade well. 

So based on the below, we have conditions that are ripe for a potential turn down in the market.  But this is only one indicator that can play into the future movement of the market.   For more information, please visit us at www.stockbarometer.com and if you want to use any of our research in your articles, that’s ok as well.  We encourage spreading the message…

nyse cumulative volume

Good morning Traders,

Here’s the signal from oil inventories:

OIL Inventory USO

To learn more, visit www.stockbarometer.com

As an ETF trader, understanding what data gives you insight, and what data is useless is very important.  This weekend, we looked at oil inventories and the S&P 500…

Before you look at any data series like oil inventories, you have a bias or expectation.  If you look at oil inventories like inventory on the shelf of a store, you would expect a bullish economy would reduce inventories and drive up prices to the point where oil would be too expensive.  Expensive oil would slow the economy, causing inventories to build and eventually it would be seen in the stock market.

Oil Inventories

oil inventories

Here is about 14 years worth of oil inventory data shown with the S&P 500.  We have been seeing oil inventories reduce since the peak last August 2013.  They are also at a relative low level, since the 2008 market crash – where inventories did what you would expect – build.

So is this the holy grail indicator?  Absolutely not.  But it does give us some level of insight.  For more analysis on how to time the oil market, visit www.stockbarometer.com and sign up for the Daily Stock Barometer.  You can try any of our newsletters for only $1.

You can trade oil with USO.  In addition, you can trade UCO and DTO for 2x leverage on oil.  Next we will take a look at oil inventories as they relate to the price of USO (oil)…  So stay tuned…

As part of our analysis of the financial markets, we take a look at the gold market.  one thing we look at is gold seasonality.

And when we refer to gold, we are talking about GLD – an etf that anyone can trade and should be a part of your investment portfolio.  That being said, gold made a significant move into a top a year ago.  So while it may rally here in the short term, you should still be reducing your exposure to gold.

Gold Seasonality

Depending on your investment time frame, some will recommend 5% of your portfolio is gold for the inflation hedge.  Basically that means as the US Dollar gets weaker, as does your money, gold will rally to help offset the damage by the falling US Currency.  (If you’re from another country, make sure you view gold in terms of your dollars).

Gold normally peaks in the beginning of the year, as that’s when there’s the highest global demand.  And this year has been no different.  Here’s a chart of gold seasonality:

Gold Seasonality

This is part of our research.  We also maintain seasonality charts for OIL, QQQ, USD, BONDS, and NAT GAS.  If you’re interested in viewing our over 300 research charts on the above, visit www.stockbarometer.com and subscribe to any of our newsletters – we give our research away free with any subscription (for now).

Now we limit our seasonality back to 2005.  We’re exploring other options as far as looking at various years.  Maybe a 3 or 5 year seasonal look back as too much time can allow past events to influence future.

So we expect gold to rally, but reach a peak pretty soon, quite possibly by the end of the month.  But at the end of the day, this is only one indicator, there are much more accurate indicators for predicting the future price of gold.

www.stockbarometer.com

The Week Ahead

Good Sunday Afternoon Traders,

To Learn More about our Trading Advisories – and try for $1 – Visit www.stockbarometer.com

We’re getting the bounce we were looking for, though quite a bit stronger on the Nasdaq than on the NYSE.  That suggests that one of them is right and the other will join in.  Monday will be a critical day.  So let’s go through the charts and make some conclusions…

As the week starts, we like to look at the economic calendar.

Economic Reports

If you do some intra day trading this is even more important as the release times, especially key reports, can represent intra day turning points.

stock market timing

Stock Barometer Analysis

The barometer has moved into Buy Mode – BUT we’ll give it a little room given the large advance in the last two trading days.  Our next key reversal date is 2/16 – which would be our projected top.  That’s next Monday.  And the Friday after that is expirations and we’d expect that to play into the next reversal.  So stay tuned for a signal.    

The Stock Barometer is our proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. We’ll target the next key reversal date for timing. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.

Money Management & Stops

To trade this system, there are a few things you need to know and address to control your risk:

· This system targets intermediate term moves, of which even in the best years, there are usually only up to 7 profitable intermediate term moves. The rest of the year will be consolidating moves where this system will experience small losses and gains that offset each other.

· This system will usually result in losing trades more than 50% of the time, even in our best years. The key is being positioned properly for longer term moves when they come.

· Therefore it is vitally important that you apply some form of money management to protect your capital.

· Trading a leveraged index fund will result in more risk, since you cannot set stops and you cannot get out intraday.

Accordingly;

· Make sure you set your stops so that you can lose no more than 2% per trade (based on the QQQ if you’re trading leveraged funds and options with our trading service).

Potential Cycle Key Reversal Dates

2014 Potential Key Reversal Dates: 1/15, 1/21, 2/5, 2/16, 3/20…  These dates have an accuracy of +/- 2 days. We publish dates up to 2 months in advance.

Our next key reversal date is 2/16.  2/5 played out as a low, so we should see a bounce into expirations (mid month) then a continuation of the move lower.  I’m always hesitant though when a market moves so strongly and one directionally as it has… 

2013 Potential Key Reversal Dates: 1/16/13, 1/29, 2/14, 3/6, 3/15, 3/28, 4/5, 4/25, 5/13, 5/30, 7/19, 8/20, 8/29, 10/4, 11/3, 12/30. These dates have an accuracy of +/- 2 days. We publish dates up to 2 months in advance.

2012 Potential Reversal Dates: 1/12, 1/27, 2/16, 2/23, 3/16, 4/9, 4/25, 5/26. 6/2, 6/15, 7/2, 7/25, 8/13, 8/30, 9/8, 9/25, 10/7, 10/30, 11/15, 12/17, 1/15/13.

Our IRG Market Timing and Sentiment data service shows the performance of these forecast turn dates going back to 2003 and for the remainder of 2012.  Our additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.

Timing Indicators

Use the following timing/momentum indicators to assist in your trading of the QQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal ‘above zero’ is more bullish than a buy signal ‘below zero’.

QQQ Timing Indicator (NASDAQ:QQQ)

 QQQ

The QQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It’s meant to give us a big picture idea of the next turn in the market relative to the barometer signal.

Bonds Timing Indicator (AMEX:TLT)

 Bond Timing

Want to trade Bonds? Use our signals with Lehman’s 20 year ETF AMEX:TLT. The direction of bonds has an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.

US Dollar Index Timing Indicator (INDEX:DXY)

 US Dollar Timing

Want to trade the US Dollar? Use our signals with the Power Shares AMEX:UUP: US Dollar Index Bullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.  The dollar direction can have an impact on the market and multinational companies – as the dollar goes up, it lowers the earnings for multinationals and can weaken the stock market and more so the Nasdaq.

Gold Timing Indicator (ARCX:GLD)

 Gold Timing

We’re getting close to a signal on our commodity options services, so stay tuned…

Want to trade Gold? Use our signals with the Gold ETF AMEX:GLD. Gold gives us a general gage to the overall health of the US Economy and the markets.  Want to trade gold options – try our Gold Options Trader service at www.stockbarometer.com – trials are only $1.

OIL Timing Indicator (AMEX:USO)

 Oil Timing

Want to trade OIL? Use our signals with AMEX:USO, the OIL ETF. We look at the price of oil as its level and direction has an impact on the stock market.  Want to trade OIL (USO) options – try our OIL Options Trader service at www.stockbarometer.com – trials are only $1.

Secondary Stock Market Timing Indicator

 Stock Market Timing

We maintain hundreds of popular and proprietary technical indicators that break down market internals, sentiment and money flow to give YOU unique insight into WHEN you should BUY or SELL the market. We feature at least one here in support of our current outlook.

As a subscriber to ANY Stock Barometer Newsletter, you also get access to all of Investment Research Group’s charts and research on Market Timing.

Daily Stock Market Outlook

We remain in Sell Mode, as the market bounced a little more strongly than we expected.  I’d like to see how Monday trades before going long for a retest of the highs.

We’re looking at the EPCR above again because of the increasing fear as the market bounces, that on a contrarian basis has be leaning a little more bullish.  Though somewhat cautious of a retest.

Here is another indicator to chew on:  I would say it is bullish…

 Stock Market Timing

That’s it for this weekend.  Normally I’d jump into Buy Mode here, but I like to see how futures set up in the morning before making the call – and I also like to get this article out with enough time for you all to absorb it.  So stay tuned…

If you want to participate in a discussion of some of our indicators in Social Media, please visit and “LIKE” our FaceBook page. I’ll have periodic updates on there and I WANT your feedback. This will be a good way to share your views with other traders.

http://www.facebook.com/InvestmentResearchGroupInc

Here’s our current positioning.

Last Recommendation –  1/24/14 Short QQQ at Open @ 88.06     (Previous trades –  12/12/13 – Short QQQ @ 85.24 – Stopped out 12/23/13 @ 87.41.  11/25 In cash. 11/8/ Short QQQ @ 82.54 closed at $84.29 on 11/25.  8/23 Long QQQ @ 76.73 closed on 11/8 @ 81.73, 8/16 Short QQQ @ 75.54 (closed on 8/23 at 76.63) 7/22/13 – Short QQQ @ 74.87 (stopped out) – 5/23/13 Short QQQ @ 72.95 (stopped out) 3/5 Long QQQ @ 68.10, 5/23 closed at 72.95, 2/5 Short QQQ @ 67, 11/19 long at open at 62.97 closed 2/5 @ 67)

If you want to learn more about some of my models and indicators, we use my blog to cover them in more detail. If you’re looking for more information, please visit our blog – We’ll have updates and publish other articles there.

http://investmentresearchgroup.com/Blog/

Regards,

www.stockbarometer.com

Copyright © 2004-2014 Investment Research Group, Inc.

d/b/a www.Stockbarometer.com. All Rights Reserved.

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How oversold can the stock market get?

Here are a few quick charts for your consideration.  If you like these charts – you can access all of them with a subscription to any of our newsletters at www.stockbarometer.com  – or you can sign up for our free weekly newsletter at http://www.stockbarometer.com/freereports.aspx – Thanks for viewing our article…

First, we have the AAII data – the red line is the weekly data – it’s reaching a relatively low level, as you would expect from a sell off.  This is weekly data, so it is not the best timing data.

AAII

Next, here is the barometer:

stock market timing

The barometer continues to push lower.  What’s driving it?  If you look at new highs and new lows, they are continuing to weaken.  That leaves the market vulnerable.

And finally, a measure that I call efficiency:

stock market efficiency

I would consider this a very short term view of the barometer data and its movement relative to the stock market. 

You can see at the first and second peaks, we had a bearish divergence. And we are now seeing a turn lower below zero for the third peak.  This downtrend suggests we have one more move lower to go for the market to potentially set this bottom. 

That’s it for today.  Good Trading!

www.stockbarometer.com

Largest single day loss since 2011…

Most equities lose two percent or more…

Recommendation:  Take no action.   

Click here to access our stock market chat rooms today!  For a limited time, try our chat room for free.  No subscription necessary to give it a try.

Stock Market Trends:

 Stock Market Trends

– ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.

– The State of the stock market is used to determine how you should trade.  A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will. 

– The BIAS is used to determine how aggressive or defensive you should be with an ETF position.  If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance.  The BIAS tells you to exit that ETF trade on “weaker” signals than you might otherwise trade on as the stock market is predisposed to move in the direction of BIAS.

– At Risk is generally neutral represented by “-“.  When it is “Bullish” or “Bearish” it warns of a potential change in the BIAS.

– The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

Best ETFs to buy now (current positions):

Long DIA at $161.48 as of December 19, 2013

Long QQQ at $85.99 as of December 19, 2013

Long SPY at $181.19 as of December 19, 2013

Click here to learn more about my services and for our ETF Trend Trading.

Value Portfolio:

Long SDRL at $35.00 (Shares were put to us when options expired on June 15, 2012.  We were paid $1.10 per share when we sold those options).  We have collected significant dividend payments since entering the position.

Short FXE at $124.19 on August 24, 2012

Long UUP at $22.43 on August 24, 2012

Short FXE at $134.48 on October 4, 2013

We publish new reports to our free newsletter every month. If you’re not a member, sign up by clicking here: Free Stock Market Newsletter

The major indexes opened lower then rallied into positive territory in the opening minutes before rolling over and beginning a day of continuous selling.  All three major indexes finished down two percent or more.  All finished below their 20- and 50-Day Moving Averages (DMAs).  For the first time this year, the Dow finished below its 200-DMA.  It is the only equity index we regularly monitor to do so although all equity indexes we regularly report on are in downtrend states.  The Dow shifted to a Bearish BIAS and the S&P-500, Bank Index (KBE 30.78 ), the Regional Bank Index (KRE 36.84 -1.41), and the Finance Sector ETF (XLF 20.53 -0.53) all shifted to a NEUTRAL BIAS and we expect all of them to shift to a BEARISH BIAS by the middle of the week.  The Semiconductor Index (SOX 517.46 -11.72) and Russell 2000 (IWM 108.65 -1.51) saw losses of less than two percent but the Dow Jones Transports (IYT 126.23 -4.17) was punished with a three percent loss.  Longer term bonds (TLT 109.32 +1.04) added nearly one percents and sits atop its 20-, 50-, and 200-DMAs.  It remains in an uptrend state with a BULLISH BIAS.  Trading volume was unchanged from Friday’s average 922M shares traded on the NYSE.  On the NASDAQ, trading volume was quite heavy with 2.588B shares traded.

There were six economic reports of interest released:

  • ISM Index (Jan) came in at 51.3 versus an expected 56.0
  • Construction Spending (Dec) rose +0.1% as expected
  • Auto Sales (Jan) came in at 5.1M versus Devember’s 5.3M
  • Truck Sales (Jan) came in at 7.0M versus Devember’s 6.6M

The first two reports were released a half hour into trading.  The other two really amalgamate many reports released throughout the day.

We are watching gold for a potential reversal in the Gold Miners Index (GDX 23.30 -0.18) posted a fractional loss as gold prices rose one percent.

Apple (AAPL 501.53 +0.93) rose modestly.  AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500. 

The U.S. dollar fell three tenths of one percent while the Euro rose a like amount.

The yield for the 10-year fell nine basis points to close at 2.58.  The price of a barrel of crude fell -$1.06 to close at $96.43.   

The implied volatility for the S&P-500 (VIX 21.44 +3.03) rose sixteen percent.  The implied volatility for the NASDAQ-100 (VXN 21.44 +2.47) rose thirteen percent.  The VIX and VXN closed well above their 200-DMAs at their most extended levels since October of last year. 

Market internals were bearish with decliners leading advancers 6:1 on both the NYSE and the NASDAQ.  Down volume led up volume 16:1 on the NYSE and by 10:1 on the NASDAQ.  The index put/call ratio fell -0.01 to close at 0.69.  The equity put/call ratio fell -0.05 to close at 0.61Note: It is quite odd that put/call ratios are falling as the market saw its biggest one day drop since 2011.

Conclusion/Commentary

Monday was all about false promise.  Clearly, many money managers made a decision over the weekend to lighten up on long positions.  This sort of percentage move lower in a single day has not been seen since 2011.  It should be noted that a bottom usually follows all but immediately when this size move has been seen in past years.  You have to go all the way back to February 2007 to see such a move lead to more selling but then, that was the start of a bear market.  Stay tuned.

We hope you have enjoyed this edition of the McMillan portfolio.  You may send comments to mark@stockbarometer.com 

Hello Everybody

To learn more about my Fat Pitch ETF Advisory, please click here.

Trade Actions: Sell  PRN ( Dynamic Industrials ) at 48.7

                         Buy SH ( Short SP ) at 24.5 or Better             

My service is typically a 10-position limit service.  What that means is that you should limit your buying of any recommendation to 1/10 of the assets that you want to earmark for this account.  Example:  If you decide that you only want to have $ 50,000 dedicated to this advisory, that means that only about $ 5000 should be made available to each position.  So if I recommend a ETF with a price around 30, you would then buy about 170 shares. But if I recommend a fund with a price around 170 , you would only be buying 30 shares.  Now this is just a guide and reality is everybody is going to do different things.  There are times that I might only have 4 or 5 positions on.  That means the rest of your money is sitting in cash.  There are times that I might recommend 12 positions on and I will point out that the last two positions are only for somebody that has the extra money and is willing to take on the extra risk that the two positions are giving.  That is usually when I am either super bullish or super bearish on certain markets.  Does not happen often.

Remember this is a 10-position account .  We now have 4-positions on.

 

 

Market Outlook/Potential Opportunities:

 

Un-bold is last week’s commentary.  Bold is this week’s commentary.

Stock Market ? 

 We are Long one Stock Fund PRN ( Dynamite Industrials )  I am going to keep this on a short leash as I do not have a lot of confidence that the Stock Market can hold onto gains here.  I feel the economy is getting Bullish but prices are already baked in.  Try to close it out for a Short Term Profit. Look for a Trading market . Sell Rallies and Buy Breaks       

Energy ?

We are out of the Oil Market at this time but we will be looking for a good entrance to get back in.  Oil might of bottomed here.  Starting to look a little closer here.

This is still a Neutral Market even though it has shown some recent strength.

 By George, I think the Oil Market has made a bottom here.  Buy USL at the Market.

Just when you think the getting’s good.  They pull the rug out.

Metals ???      

Throw away Gold and Silver Wait for a possible January bottom

Has a bottom been established.  That is possible.  Butch Cassidy once told the Sundance Kid.  This is no time for heroes, you go first.  That is the way I feel.  Not sure that I want to be that hero

Bonds ?    

 

The bond market has broken down.  The long term uptrend in long term rates has officially started. Key Reversal Up on this Fund

 

We might be there.  Buy TBT at the Market.  We know where interest rates are going now

We hung on too long.  Now we sit through a nasty correction.  Slowing economy driving rates lower again.  Seems to be swing our way again. Hanging on for the Long-Term.  Thick or Thin.

 

 

Currencies ?

 

            Buy CNY ( Chinese Yuan ) at the Market.  We had a good outside week to the upside.  It could be time to move on this. 

A number of Heavy Advisors are calling for a run up in the Yuan.  Might as well join the party.  We are now back in. 

 

Herky Jerky here, but the trend is in our favor. We might be finally breaking up here

Who is the Victim of this debt confrontation.  Our Dollar is getting hit.

Lots of volatility here.

Commodities ?

 

            Nothing at this time. Maybe something by next week

Current Long Portfolio

 

PRN ( Dynamic Industrials ) at 47.5                                   It closed at 48.3

Bought USL ( Oil ) at 43                                                        It closed at 40.9

 

Bought TBT ( Short Bonds ) at 69.9                                      It closed at 74

Bought CNY ( Yuan ) at 41                                                   It closed at 42.9

 

 

 

Current Short Portfolio:

 

None

 

 

Recently Closed Positions

 

 

 

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Thank You

If you want to contact me send me an e-mail  bill@stockbarometer.com

Good morning Traders,

Let’s walk through some charts and then discuss where we think gold is heading…

First, is an indicator that looks at two time frames we try to capitalize on.  The yellow line is the short term, the white line is the mid term.  These are both at higher levels, which means the bounce may be over. 

 Gold Market Timing

The next chart shows the action of option writers, if the trend is to write more calls, that’s generally bullish for gold.  When we showed this last week, it was starting to turn lower.  For now, it’s briefly turning higher.

 Gold Options Open Interest

Now, just looking at how option traders are positioning, they’re buying more PUTS.  More often than not traders are wrong, so this is technically bullish.  Though Gold’s been through some significant volatility in 2013 – that caused it to get a bit out of sync.  I see it normalizing now…

 Gold Options Put Call Ratio

This is a relatively simple indicator that suggests we’re close to a top, but maybe we’ll see another push higher before the gold market sells off.

 Gold GLD Up Down Ratio

Now this isn’t a formal recommendation, but I wanted to throw out some ideas because I do believe we’ll see a continuation of the bounce, but I’m not quite onboard with a significant advance in gold at this point.  I’d prefer to wait for gold to get overbought and position in PUTS when everyone is buying calls…

 Gold CALL Option Recommendations

If you’re interested in viewing our research charts on gold, here are links to the images in our various data bases:  Note, these will be updated again on Saturday with this week’s data.  You need to be logged into our site to view our research.

Regards,

www.stockbarometer.com 

PS – You can try any of our services for only $1 – click here.

Gap down open is bought by the bulls…

Equity indexes finish split…

Recommendation:  Take no action.    

Click here to access our stock market chat rooms today!  For a limited time, try our chat room for free.  No subscription necessary to give it a try.

Stock Market Trends:

 stock market trends

– ETF Positions indicated as Green are Long ETF positions and those indicated as Red are short positions.

– The State of the stock market is used to determine how you should trade.  A trending market can ignore support and resistance levels and maintain its direction longer than most traders think it will. 

– The BIAS is used to determine how aggressive or defensive you should be with an ETF position.  If the BIAS is Bullish but the stock market is in a Trading state, you might enter a short trade to take advantage of a reversal off of resistance.  The BIAS tells you to exit that ETF trade on “weaker” signals than you might otherwise trade on as the stock market is predisposed to move in the direction of BIAS.

– At Risk is generally neutral represented by “-“.  When it is “Bullish” or “Bearish” it warns of a potential change in the BIAS.

– The Moving Averages are noted as they are important signposts used by the Chartists community in determining the relative health of the markets.

Best ETFs to buy now (current positions):

Long DIA at $161.48 as of December 19, 2013

Long QQQ at $85.99 as of December 19, 2013

Long SPY at $181.19 as of December 19, 2013

Click here to learn more about my services and for our ETF Trend Trading.

Value Portfolio:

Long SDRL at $35.00 (Shares were put to us when options expired on June 15, 2012.  We were paid $1.10 per share when we sold those options).  We have collected significant dividend payments since entering the position.

Short FXE at $124.19 on August 24, 2012

Long UUP at $22.43 on August 24, 2012

Short FXE at $134.48 on October 4, 2013

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The major indexes opened lower and sellers drove prices lower for the next forty-five minutes before buyers stepped in to recover most of the losses within a half hour.  From there, trading was mostly sideways to slightly higher.  This left the Dow finishing with a modest gain and with fractional losses for the S&P-500 and NASDAQ-100.  The only other equity index we regularly follow to record a gain was the Dow Jones Transports (IYT 128.83 +0.05).  The Russell-2000 (IWM 112.04 -0.84), Semiconductor Index (SOX 517.78 -3.29), the Bank Index (KBE 32.56 -0.19), the Regional Bank Index (KRE 39.76 -0.27) 40.03 +0.57), and the Finance Sector ETF (XLF 21.58 -0.03) all recorded fractional losses.  All equity indexes closed above their 20, 50-, and 200-Day Moving Averages (DMAs) and are in trading states.  Longer term bonds (TLT 102.67 -0.10) fell modestly.  It remains below its 20-, 50-, and 200-DMAs.  It has a BEARISH BIAS and remains in a trading state.  Trading volume fell to a light 701M shares traded on the NYSE.  On the NASDAQ, trading volume fell to average with 1.788B shares traded. 

There were five economic reports of interest released:

  • Initial Jobless Claims for last week came in at 379K versus an expected 333K
  • Continuing Jobless Claims came in at 2.884M versus an expected 2.760M
  • Existing Homes Sales (Nov) came in at 4.9M versus an expected 5.0M
  • Philadelphia Fed Index (Dec) came in at 7.0 versus an expected 5.0
  • Leading Economic Indicators (Nov) rose 0.8% versus an expected 0.6%

The first two reports were released an hour before the open.  The other three came out a half hour into trading.

All reports were released an hour before the open. 

Apple (AAPL 544.46 -6.31) fell one percent.  AAPL constitutes about 20 percent of the NASDAQ-100 and nearly five percent of the S&P-500. 

The U.S. dollar rose two tenths while the Euro fell three tenths of one percent.

The yield for the 10-year rose four basis points to close at 2.93.  The price of a barrel of crude rose +$1.34 to close at $99.14

The implied volatility for the S&P-500 (VIX 14.15 +0.35) rose two percent while the implied volatility for the NASDAQ-100 (VXN 14.92 -0.09) fell fractionally.  Both closed above their respective 200-DMAs.    

Market internals were bearish with decliners leading advancers nearly 3:2 on the NYSE and by 5:3 on the NASDAQ.  Down volume led up volume on both exchanges by 5:4.  The index put/call ratio fell -0.18 to close at 0.82.  The equity put/call ratio fell -0.10 to close at 0.52.

Conclusion/Commentary

Thursday saw buyers step up after the bears became emboldened.  They did not drive prices higher for the most part but were willing to stand their ground.   This is bullish after the torrid gains seen on Wednesday.  We opened long positions at the open yesterday and will continue to monitor trading into the Santa Claus rally.

We hope you have enjoyed this edition of the McMillan portfolio.  You may send comments to mark@stockbarometer.com.