Baseline Analytics Blog

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

Fear and Loathing in the VIX Camp

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

 

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A Jolt of Fear - Market Trend Change Soon?

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.

 

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New Month, New Dividends: Welcome November!

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

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Some Risk to Equities Bubbling Under the Surface

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.  

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What Is Dow Theory Telling Us About the Health of the Market?

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

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Watch Ted: Calling the Shots at Market Turns

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

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Watch Ted: Calling the Shots at Market Turns

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

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New Month, New Dividends: Welcome October!

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

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Pushing Back to New Highs?

At the Thursday 9/22/16 market close, the TrendFlex Classic CR (Credit Risk Premium) signal shifted to a BUY.  See the updated chart below:

TFCCR09222016

At the same time, our TED Spread indicator pushed to a high also.  We take this as an indication of traders and investors chasing the uptrend.  We will not fight the tape however, preferring though to sit on the sidelines and watch this transpire.

Here's TED.  Another jolt upward (and notice how positively-correlated with the S&P 500 over the last two weeks, varying from its typical pattern):

TED09222016

 

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Pushing Back to New Highs?

At the Thursday 9/22/16 market close, the TrendFlex Classic CR (Credit Risk Premium) signal shifted to a BUY.  See the updated chart below:

TFCCR09222016

At the same time, our TED Spread indicator pushed to a high also.  We take this as an indication of traders and investors chasing the uptrend.  We will not fight the tape however, preferring though to sit on the sidelines and watch this transpire.

Here's TED.  Another jolt upward (and notice how positively-correlated with the S&P 500 over the last two weeks, varying from its typical pattern):

TED09222016

 

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What's TED Telling Us Today?

Follow for TrendFlex Signal and Blog Update Alerts! 

The TED Spread has taken another leap to a new recent high at mid-day today.  Extremes such as this have preceded a decline in the S&P 500. Today's activity bears watching.  

ted09162016

 

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TrendFlex Score Update

Follow for TrendFlex Signal and Blog Update Alerts!

 

The TrendFlex Score settled today at 1.71.  This is neither an extremely high reading, or an extremely low reading.  The "neutral" measure of the score suggests that this recent setback may be rather orderly and not indicative of significant further selling. We are impressed with the sharp increase in VIX, as a close 25% above its 50-day moving average (today it was 31% above) is a contrarian positive. 

TFS09142016

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TRIN Reveals a Buying (or short-covering) Opportunity

We look for a TRIN reading extreme as it surpasses its the 3.0 level.  Note that similar extremes preceded a turnaround in equities.  This behavior today convinced us to cover our e-Mini S&P 500 short hedge.  This may be just a short-term buy signal and we will review our other TrendFlex indicators to assess the health of the markets after this week's activity.

 

AATRIN09132016

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TrendFlex Credit Risk Signal Flashed a new Sell

Although the trading day is not over, the TrendFlex Classic Credit Risk signal has shifted to a SELL.  Will provide another update following today's market close.

 

TFCCR09092016a

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TrendFlex Credit Risk Signal Turns Down

It's not quite a sell signal for equities, but note how the TrendFlex Credit Risk Premium indicator has shifted south toward its moving average over the last few days.

This signal's crossing of its moving average has generated S&P 500 trend signal changes since the indicator was established in 2011. This signal has generated a 101% return vs. a 50% return of the S&P 500 since May, 2011.

This bears watching over the next few days.

TFCCR09072016

 

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TrendFlex Credit Risk Signal Turns Down

It's not quite a sell signal for equities, but note how the TrendFlex Credit Risk Premium indicator has shifted south toward its moving average over the last few days.

The crossing of the signal has generated S&P 500 trend changes since the indicator was established in 2011. This signal has generated a 101% return vs. a 50% return of the S&P 500 since May, 2011.

This bears watching over the next few days.

TFCCR09072016

 

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New Month, New Dividends: Welcome September!

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

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TED Spread Warning - 7/29/16

In our daily chart reviews we came across a rather disturbing chart on the "Ted Spread," a price spread of Treasury debt vs. the Eurodollar.

As seen in the chart below, peaks and spikes in the TED Spread have tended to precede declines in the S&P 500. Looking at yesterday's close (7/28/16), a spike in the TED Spread may be a warning that the equity indices may be peaking out.

TED072816

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Index Trend Risk Updates - 7/29/16

Following the market close of 7/28/16, several Index and Sector ETF's have signaled shifts to a potential trend change, based on Baseline Analytics trend-following criteria.  Those ETF's include DIA, XLE, TLT, GLD, XLI and XLP. Click here to see the trend signal changes on our Index and ETF Signals page.

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VIX Extreme Update - 7/22/16

One of Baseline Analytics' key sentiment indicators in the behavior of VIX versus several of its moving average measures.  When VIX gaps well below its moving average, as seen in the chart below (note the blue circles), equity market conditions are ripe for a short-term setback. 

It should be no surprise as equities stretch to new highs, growing participation on the long side has sent VIX to sharply-lower levels.  We are maintaining our hedges to long positions based on this (and other) technical indicators that comprise our TrendFlex products.

VIX07222016

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