Market Insight

Housing Market Slowdown and an Inflated S&P

The Williams Analytics LLC Blog has just posted a new article on the state of the US housing market and what could be in store for the S&P 500 E-mini and 10-Year US Treasury Note.

As a brief preview, housing market indicators are continuing to indicate a general slow down in the post financial-crisis recovery in single family housing. This could prove troublesome given single family housing's significant role and impact in the US economy and, by extension, asset prices.

With respect to asset prices, while Williams Analytics is currently predicting a leveling off in the S&P E-mini and a "U"-Shaped price pattern for the 10-Year, both the S&P E-mini and 10-Year have significant premiums relative to general asset prices, possibly indicating a coming correction.

Gain more insights today by visiting the Williams Analytics Blog and downloading Williams Analytics' many FREE Indicator Reports!

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Market Tour Update: A Few Positive Divergences

Watching the S&P 500 decline from the 2000 level appeared to be a classic technical retracement.  Indeed, a bearish wedge had formed (see below) that underscored the "obvious" technical pattern, which culminated in chart-watchers setting their sell signals and shorting equities. 

wedge

Continuing on our Market Tour, however, there are a few signs of positive divergences.  The problem is that these positive divergences may not be strong enough to counter-act the chart-watchers expectation that the August lows may be revisited.

In the chart below, note how the S&P 500 deflected from the 2000 level as it reacted to the rising wedge. Two positives, however, are the moving average cross seen in the KST, as well as seeing VIX settle close to its 50-day moving average.

BLA109182015

In the next Market Tour chart, two positives are worth citing.  One is the slightly positive divergence in market breadth, which did not take it on the chin as equities did on Friday, and the other is what appears to be a bottoming out of the Summation Index following its match to the October 2014 lows.

BLA209182015 

Finally, our "economic proxy" charts are not announcing much on the bullish divergence front, except for the continued outperformance of discretionary stocks vs. staples, a possible reaction to the pickup in employment and lower fuel prices.

BLA309182015

So despite the technically-obvious chart patterns suggesting a revisit to the August lows (which is perhaps a contrary indicator that it will not happen), we do see some signs of life in a potential bullish rebound.  This could manifest itself (one way or the other however) as earnings season begins in two weeks.

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Techncial Buy Signals from 9/16/15 Market Close

Baseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely, high-probability trades and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

As a special offer, Baseline Analytics is providing a list of stocks issuing technical buy signals from the market close of 9/16/15. 

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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Dow Theory Divergence Update - 9/16/15

Time to post a quick update on Dow Theory divergence.  

The Transports led the Dow on the downside by about 5 months: Transports reached their high in January, while the Dow peaked in May.

Following the late August lows, Transports have bounced back and closed above their 34-day moving average.  The Dow, however, has yet to surpass its 34-day moving average.  Perhaps Transports are leading the way this time, and the Dow will follow. 

 

DowTheory09152015 

False alarms do happen in Dow Theory Divergence.  Note below the weekly chart.  The Dow wobbled its way through an uptrend starting in September 2012, while the Transports remained flat.  The Transports ultimately joined the uptrend.

DowTheoryWeekly09152015

We will be looking for the Dow to catch-up this time and surpass its 34-day moving average.  By then, perhaps both indicators will be resuming at least a short-term uptrend.

 

 

August 12, 2015 Dow Theory Divergence Update

Last time we wrote on the Dow Theory divergence, the Dow was near its May top while Transports languished.

On the updated chart below, Transports have bounced from support near 8000, following retracement action in the Dow.  Could this suggest the resolution of the divergence and presage a climb in both averages? 

 dowtheory08102015b

For those interested in exploring Transports further, Baseline Analytics has run its Volume Surge Report against transportation industry leaders.  Criteria was to include only those Transports trading above their 200-day moving average. The list is sorted by "volume surge," showing yesterday's volume as a multiple of the 50-day average volume.  We also removed Transports that lost ground during yesterday's 1.3% gain in the S&P 500.

Click here for today's free report.  Subscribers to Baseline Analytics receive similar targeted stock lists regularly to identify timely trading and investment opportunities.  

 

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Market Tour Update 9/4/2015

A noteworthy update since our 8/31 Market Tour is a recent development in our "bond risk premium" technical indicator.  Thie indicator, which is comprised of the ratio of the iShares Iboxx Investment Grade Corporate Bond Fund vs. Barclays 7-10 Year Bond Fund, saw a strong bounce last week.

See the top portion of the chart below:

BLA1b

This indicator generated solid returns for our TrendFlex signals, and bears watching.

Other charts in our Market Tour look about the same as they did in late August.  See below and the commentary within each of our Market Tour charts.

BLA1

 

BLA2

Equities remain deeply oversold.  Opportunistic long positions for traders and long-term investors may not be too risky at this point.  We look forward to an eventual resumption in the uptremd, characterizing the current setback as a correction in a longer-term bull market.

 

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Market Tour Update - 8/31/2015

Despite the rally off the depth of Monday's lows, equities appear poised to struggle gaining upside in any convincing fashion.  Damage has been done as we note below that RSI (Relative Strength Index) collapsed through the "bull trend" 30 level and tries to battle back to the more bullish 50 zone. Resistance appears firmly at the 2000 level of the S&P 500.

BLA Tour 1

Known Sure Thing (KST) surely dipped below 0 confirming the trend shift.  VIX's extreme reading was a give-away to load up on speculative longs at the height of last week's selloff, and remains rather elevated while the Put/Call ratio settles back a bit from its extreme reading.  Note how these extreme readings in VIX and Put/Call precede sharp comebacks.

Market Breadth and momentum are rather dismal, as seen below.  We are particularly leary of the lows in the summation index, which matched the lows from last October.  Perhaps the bottoming out of the summation index is a potential sign of capitulation; we will see if it manages to change direction along with a turnaround in equities.  Too soon to tell right now, however.

 BLA Tour 2

Our "economic proxy" charts are bearish.  The ratio of corporate bonds to Treasuries remains below its 34-day moving average, despite a recent noteworthy bounce.  This bears watching for a potential shift in equity trend, however past bounce-backs have failed at resistance.  

 BLA Tour 3

Copper vs. Bonds remains at multi-year lows, while the stock/bond ratio and Small Cap vs. Large Cap ratios shift to downtrends. Discretionary vs. Staples has been see-sawing recently, the relationship remaining in a trading range.

The weight of the evidence suggests caution; no clear buying opportunity has surfaced. For opportunistic traders, as well as for long-term investors, going long at future market extremes (such as VIX shooting upward toward 40) may be a prudent move. Decent-yielding blue chips may be interesting at these levels for conservative long-term plays.

Otherwise, wait out this turbulence.

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SPY Support and Resistance Levels

We continue to view 197 on SPY (1970 on the S&P 500) for initial resistance (see red line below), with additional resistance at the 2,000 level.  This is based on prior support and resistance levels and last week's low.

Support is drawn at the lows from Monday.  

ote today's rally on stronger volume.  Also, as noted recently, see the weaker volume on the sell-offs.  

With significant "backing and filling" going on, we would not be surprised to see a partial retracement of today's gains. 

 

spy08262015

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Searching for Gems in the S&P IQ 5-Star Stocks

Baseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely, high-probability trades and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

As a special offer, Baseline Analytics is providing a list of the S&P IQ 5-Star Stocks and their recent performance.  Perhaps a 5-Star gem or two will surface that is uncommonly oversold, representing an ideal investment opportunity for long-term investors. This list was developed following the 8/25/15 market close and is offered at no charge. 

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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SPY Support and Resistance Levels

We are looking at 197 on SPY (1970 on the S&P 500) for initial resistance (see red line below).  This is based on prior support and resistance levels and last week's low.

Support is drawn at the lows from Monday.  

Note the weaker volume on the sell-offs; most likely a function of the summer holiday season.  

 

spy08242015

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Fear Levels at an Extreme - Buying Opportunity?

We have previously noted on this blog that extremes in VIX and the Put/Call Ratio tend to precede short-term market trend turns.  

Note in the chart below, the black circles highlight extremes in VIX and Put/Call.  Extremely high readings in these indicators (as we are seeing this morning) have tended to precede a bounce or resumption of the uptrend.  The block arrows demonstrate the upward turns in the S&P 500.

Probably not a bad time to wade into partial longs or an opportunistic e-Mini S&P 500 futures contract on the long side.

 

fear

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Which ETF's Fared Best During Thursday's Sell-off?

Baseline Analytics screened over 1400 ETF's to find those that excelled during Thursday's 2.1% decline in the S&P 500.  

But instead of presenting the obvious ETF's such as ultra-leveraged inverse ETF's, VIX-based ETF's  and Gold ETF's, we pruned the list of these instruments to identify yesterday's "other" relative strength winners.  These ETF's can be considered as hedged to a well-diversified, risk-managed portfolio.  

We DO show some bond ETF's (you can imagine that there were many winners in those categories).  One such ETF is the "Build America" municipal bond ETF (BAB), with a 4-Star Morningstar Rating and a 4.7% yield.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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1271 Hits

Buys and Sells for a Crazy Market; ETF Signal Updates Tonight!

Two new Wrapper reports were added today: Buys and Sells, Overbought and Oversold Stocks (and a similar report for ETF's), based on 8/18 market close.  Our "Volume Surge" report format provides further insight into relative strength, trend power and accumulation or distribution based on volume comparisons.  

Following the close of markets today, we will update our ETF signal list.  Below is a snapshot of the results posted last week.  It will be interesting to see what has changed!

signals

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1453 Hits

Dow Theory Divergence Update - 8/11/15

Last time we wrote on the Dow Theory divergence, the Dow was near its May top while Transports languished.

On the updated chart below, Transports have bounced from support near 8000, following retracement action in the Dow.  Could this suggest the resolution of the divergence and presage a climb in both averages? 

dowtheory08102015b

For those interested in exploring Transports further, Baseline Analytics has run its Volume Surge Report against transportation industry leaders.  Criteria was to include only those Transports trading above their 200-day moving average. The list is sorted by "volume surge," showing yesterday's volume as a multiple of the 50-day average volume.  We also removed Transports that lost ground during yesterday's 1.3% gain in the S&P 500.

Click here for today's free report.  Subscribers to Baseline Analytics receive similar targeted stock lists regularly to identify timely trading and investment opportunities.  

 

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Swing Trade Gold? -- 7/26/2015

Baseline Analytics runs a collection of 54 system tests to find the top-performing four systems for various ETF's over the year-to-date timeframe.

We ran GLD (the SPDR Gold Trust Shares) and the top-performing four systems all flashed BUY signals.  These signals were generated as early as the market close on 7/16 and as late as the market close on 7/23 (when 2 of the 4 flashed a BUY signal).

Per the chart below, note GLD's surge on Friday. A few maybe smart contrarians stepped in to buy.

GLDDaily

But then look at the weekly chart.  Feels more like the falling knife scenario.

GLDweekly

Finally, bringing in our Italian mathematician Leonardo Fibonacci (also known as Leonardo of Pisa and Leonardo Pisano Bigollo - I guess if your system does not work you can hide under a different name), the monthly chart shows GLD closing in on the 61.8% retracement drawn from the peak in mid-2011 to the low in 2005, at a price of 94. GLD closed on Friday at 105.35, but perhaps we are close enough to that low to warrant partial long positions.

GLD Monthly 

If you decide to bit the golden bullet, mind the large gap between 106.50 and 108.50.  Also are be prepared to get hit by those traders that bought near the bottom on 7/24, looking to get out with your purchase.  

GLD60

Gold has come a long way from its peak in 2011.  But price carnage like this awakens the opportunistic traders (and long term investors). It is worth watching GLD as well as GDX and the various gold miner ETF's.

 

 

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Shorts Candidates in a Toppy Market

Baseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely trade and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

As a special offer, Baseline Analytics is providing our latest potential "Short Sale" list, developed after the market close on Wednesday July 22, at no charge.  This list comprises stocks that are overvalued based on several fundamental criteria. See the list's instructions to identify potential short candidates.

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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1255 Hits

High Probability Trades At Your Fingertips

Baseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely, high-probability trades and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

As a special offer, Baseline Analytics is providing our latest "Buy Signals" list, developed after the market close on Thursday July 16, at no charge.

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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Key Divergence Warns of Waning Momentum - 7/15/15

As the S&P 500 looks to attempt another new high and volatity settles back, a key momentum indicator continues to linger near its recent lows.

Note below our Breadth and Internal Strength chart, a familiar layout in the Baseline Analytics Market Tour.  The continuation of the S&P 500 uptrend following December, 2014 (brown line, top portion of chart) was met with a lagging summation index (blue line, bottom portion of chart).

bs07152015 

Note also that following the market top in April, the summation index has fallen to new depths, an extreme not seen since the October 2014 correction, while the S&P 500 traveled a wide sideways pattern between 1860 and 2010.

You will similarly note that the NYSE Advance-Decline line (top portion of chart) struggled to achieve new highs while the S&P 500 peaked.  In addition, the middle part of our chart shows that the moving average of the NYSE new highs vs. new lows too has waned since peaking in March.

At Baseline Analytics, we keep track of several key technical indicators and watch for such diverging signals.  Diverging indicators are not ideal for short-term market timing, but they do help to characterize the internal market activity going on behind the scenes of the major market indices.  

At some point, these diverging indicators will resolve their divergence.  Given seasonal weakeness and the aging bull market, we would accept these signals as a caution to preserve capital.

 

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High Probability Trades At Your Fingertips

Baseline Analytics has refined a series of stock and ETF-screening algorithms that pinpoint timely, high-probability trades and investment opportunities.

The results of Baseline Analytics' stock and ETF screens are delivered in a downloadable Excel file.  This file can be sorted to identify various performance and technical criteria to help provide a further edge to your trading and investments.  Instructions are provided to guide you through your review. Our goal is to deliver such opportunities at your fingertips, with minimal research and analysis needed on your end.  We do provide a link to Yahoo Finance for each of our timely picks should you want to delve further into particular equities or ETF's.

As a special offer, Baseline Analytics is providing our latest "Buy Signals" list, developed after the market close on Friday July 10, at no charge.

Subscribers to Baseline Analytics receive our proprietary screens regularly, as well as our TrendFlex family of market trend signals and risk assessment tools.

Click here for the report.

Sign up for a Free Trial and check out our reports and TrendFlex signals for the next 30-days.

 

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893 Hits

Market Tour Update

Here's a quick synopsis of key technical indicators followed daily by Baseline Analytics.

 

Look for resistance on the S&P 500 at 2080.  My biggest concern here was the extreme values reached by VIX and the Put/Call Ratio, as these contrary indicators (at their extremes) failed to spark any significant bounce in the market (so far).  Feels like summer doldrums to me, if not risk-hedging to protect returns.

 

SP07012015

 

As for market sentiment indicators, advance-decline activity as well as the summation index reinforce market weakness. Note how the advance-decline line for the NYSE failed to push to a high while the S&P 500 stretched toward its recent high.

 

Likewise, we are concerned about the "bear market" in the summation index, haven fallen below the bull-bear border of 400 in May and heading slowly toward the lows of past October.

 

sent07012015

 

In summary, I'm not convinced to add to long positions in anticipation of a resumption of the uptrend.  My preference is to hedge and short on any market bounces.  Perhaps it is time to take off for the summer!

 

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Market Tour Update

Here's a quick synopsis of key sentiment technical indicators followed daily by Baseline Analytics.

  

Advance-decline activity as well as the summation index continue reinforce market weakness. Note how the advance-decline line for the NYSE failed to push to a high while the S&P 500 stretched toward its recent high. Breadth has certainly lagged index performance.

 

We contiue to be concerned about the "bear market" in the summation index, despite a modest bounce since the July lows, haven fallen below the bull-bear border of 400 in May and heading slowly toward the lows of past October.

 

breadth07222015

 

The resumption of the uptrend from the July lows is on soft footing. My preference is to hedge long positions and refrain from adding to longs at this time. 

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