Baseline Analytics Blog

Market risk assessment tools and tactical investment opportunities driven by curated financial insight

An update to yesterday's report:

The S&P 500 bounced perfectly off its 200-day moving average support, an encouraging sign for resumption of the uptrend.  VIX extreme hints at potential rebound in equities.  Stochastics are now oversold.

tf1104

A quick update on several technical indicators suggests that a rally may be near.  See chart and commentary below.

tf1103

Watching two "fear" indicators, VIX and the Put/Call Ratio have reached extremes that in the past have preceded short-term rallies.  Note the peaks and troughs of the VIX and Put/Call readings and their correlation with shifts in the S&P 500.  Note VIX especially as it gaps higher or lower than its moving average.

BLAVix113

 

The S&P 500 closed off its lows on Tuesday, November 1.  The index settled at major support levels which, if they continue to hold, could pressage another shift toward new highs.

During the tumultous session, our fear gauges hit extremes.  See the VIX and Put/Call (CPC) sections of the chart below.

SPX1122016

We like to see both of these "fear" indicators hit relative extreme levels in order to help confirm whether the market trend is about to shift.  Both closed at extremes on Tuesday.  Although stochastics are not quite oversold, we consider this extreme reading in VIX/PutCall and the ability of the S&P 500 to settle at support, as positive indicators for equities.

The U.S. election certainly throws a wrench in the assessment of market conditions, and hedging bets prior to Election Day has likely been driving recent volatility.

 

dvdsBaseline 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.

Baseline Analytics has published its list of the stocks going Ex-Dividend in September that exhibit favorable technical trends. Perhaps a dividend-payer or two will emerge as a timely, attractive investment. 

This list is offered free of charge.  Please check out our Premium Services , currently offered as OPEN ACCESS!

Click here for the list.

Subscribers to Baseline Analytics receive our proprietary screens regularly, and this screen in particular will be honed even further for more targeted opportunities, including noteworthy fundamental and technical criteria.  Receive these updates as well as our TrendFlex family of market trend signals and risk assessment tools as a subscriber to Baseline Analytics.

Profitable investing!

Baseline Analytics

A brief update on two TrendFlex Indicators that are beginning to support a tactical move to hedge long equity positions.

Note below that the TrendFlex Classic CR (Credit Risk) as shown in the chart below is beginning to converge with its moving average line (see solid black line and dotted blue average line).  A close below the moving average would signal a sell signal for equities.  Classic CR is a short to medium-term market trend indicator.

tfcr10262016

Here we have the NYSE Summation Index.  Note the rectangles- the one on the left shows a bullish trend (S&P 500 is green line) while the red NYSI line is above the 400 level,  and conversely (rectangle on the right) when the NYSI is below 400.  Market timing is not perfect here, but it does provide us a sense of the risk character of the current environment.

nysi10262016

It may be time to hedge longs, especially as we get closer to the general election.  A short position or two in e-Mini S&P 500 futures can provide a bit of cushion to long positions.  

Dow Theory technicals are improving.  We look for confirmation in both the Dow and the Dow Transports.  A bullish environment for stocks is expressed when both hit new highs within a close timeframe of eachother.

Note the chart below.  We had a divergence when the Dow hit a new high July while Transports were bottoming yet firming.

Since then, the Dow has consolidated its gains from that high, while Transports have begun to show a firming uptrend. They have a ways to go to reach a new high, but the trend is constructive for bullish support for equities.

 

DT10252016

We've noted here before that the TED Spread tends to be rather effective in pointing out potential shifts in the market trend.  Note the peak that the TED Spread hit in mid-September.  Although the peak was not a perfect timing mechanism for a setback in the S&P 500, it did seem to foreshadow the decline we have seen in the past several trading days.

Lesson learned: Watch TED for a potential trend shift at TED extremes.

Today? Perhaps TED is telling us that the recent selloff is overdone.  We will keep an eye on TED.

 

TED10112016

We've noted here before that the TED Spread tends to be rather effective in pointing out potential shifts in the market trend.  Note the peak that the TED Spread hit in mid-September.  Although the peak was not a perfect timing mechanism for a setback in the S&P 500, it did seem to foreshadow the decline we have seen in the past several trading days.

Lesson learned: Watch TED for a potential trend shift at TED extremes.

Today? Perhaps TED is telling us that the recent selloff is overdone.  We will keep an eye on TED.

 

TED10112016

dvdsBaseline 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.

Baseline Analytics has published its list of the stocks going Ex-Dividend in September that exhibit favorable technical trends. Perhaps a dividend-payer or two will emerge as a timely, attractive investment. This list was developed following the 8/26/16 market close. 

This list is offered free of charge.  Please check out our Premium Services , currently offered as OPEN ACCESS!

Click here for the list.

Subscribers to Baseline Analytics receive our proprietary screens regularly, and this screen in particular will be honed even further for more targeted opportunities, including noteworthy fundamental and technical criteria.  Receive these updates as well as our TrendFlex family of market trend signals and risk assessment tools as a subscriber to Baseline Analytics.

Profitable investing!

Baseline Analytics

The Absolute Return, LLC.

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