Baseline Analytics Blog

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Baseline Analytics updates its TrendFlex family of market trend risk-assessment indicators prior to the market open of each new week, or more frequently as market conditions warrant. 

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Market Tour Update

Not much to complain about on this chart.  

Technical indicators are positive across the board (if not a bit over-played).  The S&P 500 finds decent support above its 200-day moving average, after breaking through two levels of noteworthy resistance (2000 and 2050).

"Known Sure Thing" (KST) closed above the Bull/Bear "0" mark decisively a couple of weeks ago.  Although VIX looks extended on the downside (a sign of complacency as the crowd follows the upswing in equities), stochastics show that overbought conditions can subsist for a while.

Next stop is to breach the summer highs.  

Wouldn't mind a little cautious diversification (more $$ to bonds?) at this juncture!

 

blog102815

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Housing Market Plods Along w/ Serious Disconnects to S&P and 10-Year Prices

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, US housing indicators are still showing a slowing housing market whose improvement continues but at a decreasing pace. This view is consistent across most measures of housing market health and provides strong evidence that the housing market has little upside room in the coming year ahead.

With respect to asset prices, Williams Analytics is currently predicting a continued disconnect between the housing market and S&P 500 E-mini and 10-Year US Treasury Note front month futures prices. This means that "good" housing news is not always considered "good" by the equity and treasury markets.

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

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Credit Market Disagreement Continues with S&P/10-Year Underpricing Predicted

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

As a brief preview, US credit market indicators are showing confusion as to whether credit market dysfunction will continue declining or, instead, increase over the next 12 months. Treasury and Swap markets say all is ok; corporate paper markets, on the other hand, disagree.

With respect to asset prices, Williams Analytics is currently predicting that underpricing will continue to worsen for the S&P 500 E-mini, relative to the WA Broad Equity Index. Conversely, the 10-Treasury Note is anticipated to mostly close its underpricing gap with the WA Broad Treasury Index, mainly during mid-2016.

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

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A Short Term Move In Copper

Written By Aman Khatwani.    

Copper has been in a falling trend for the past six months given the economic slowdown in China and the stronger US Dollar, however tides are likely to change for Copper. Copper has done well to make a double bottom formation at the $2.25 making five successful trading days closing above the level. The commodity has recovered to $2.40 levels and is likely to continue its successful run up to $2.60 (200-DMA).

Copper

One of the major things going for the commodity is the momentum-based indicators with the weekly RSI moving above the 40 levels decisively for the first time in six months. With the daily above 40 and the quarterly charts bouncing from the 40-levels, the strength is likely to support the rally. Additionally, the buy signal on the daily and weekly MACD is likely to aid it too.

However, this rally will not be a very strong move on the upside given the weak set-up (200-DMA above the 50-DMA) and the resistance that is likely to hold the commodity back. The commodity may retrace at $2.45 levels, breaking which will gain to the $2.60 levels.

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Macro Indicators Still Strong w/ Volatility Expected in the S&P

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

As a brief preview, US macroeconomic indicators are continuing to show strength in the face of a slowing economy with Real Personal Income and Real Retail Sales conforming nicely to their long term, mostly-linear trends. Yet, as noted in the blog post, there are concerns about declining momentum in Real Personal Income that needs to be watched in the coming months.

With respect to asset prices, Williams Analytics is currently predicting an increased level of volatility in the S&P 500 E-mini with strong price whipsaws anticipated during the next few months. We are also still anticipating a "U"- or "W"- Shaped price pattern for the 10-Year. Momentum is expected to decline for both the S&P and 10-Year in the coming months.

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

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Technical Status of the Rebound from the August Lows

The S&P 500 has gained 8% since its closing low on August 25th.  Since then, it has breached the psychologically important 2000 resistance level.  Here are a few technical considerations as we characterize the next move in equities.  See the chart below.  

Relative Strength Index (RSI).  RSI dipped to a "correction low" near 20 during the heat of the late August selloff (see the top portion of the chart).  RSI had not bridged that level at all for the previous 12 months, part of which comprised the October 2014 swoon during the Ebola virus outbreak, when its decline stopped near 30.  RSI at 60 is mildly overbought within a corrective phase.

blog101215b

 

Known Sure Thing (KST), developed by Martin Pring, closed below 0 at the August selloff, and has meandered higher since bottoming in September, to close at a recent -9 (still in bearish territory but with an encouraging comeback).  A negative reading in KST has generally accompanied equity downtrends.  

Both Vix and Put/Call (our proxies for sentiment measures) have settled back from extreme fear readings, and now suggest increased complacency.  Both indicators closed  below their respective 50-day moving averages at "quiet" levels. These contrary indicators are worth heeding as potential warning signs on the young age of this bounce.

Stochastics flash the more disturbing signal.  These are useful momentum indicators during sidways markets, as one can argue that the market has been flat (albeit volatile) in a wide-ranging 1870-2000 path.  Stochastics are currently overbought and ripe for likely trading range behavior, if not another downward leg.

As for the S&P 500 price action, an attractive milestone was its close back above the 2000 resistance level.  As the chart suggests, however, further resistance looms near 2040.

So the indicators lean on the neutral-to-bearish (short-term) side as equities struggle to gain a firm foothold.

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Stocks at Bearish Resistance Levels - Is the Rebound Ailing?

Baseline Analytics ran its bearish resistance scans and found over 60 equities and ETF's that have closed at resistance levels and may have extended their bounces from the August lows.

 

SMH is one such item. The ETF has settled back from its 200-day moving average while RSI settles back from a recent high.

 

smh 10092015

 

Subscribers can access the entire list as well as other recent scans and Baseline Analytics TrendFlex family of market timing signals.

For more information, visit Baseline Analytics.  And don't forget to sign up for our Free Trial!

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Labor Market Recovery Stagnating and Flat S&P Forecast

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

As a brief preview, US labor market indicators are continuing to predict a slowing of the labor market's recovery. While measures such as Employment, U3, and U6 are expected to improve, the pace of the improvement is anticipated to decline sharply in the coming year.

With respect to asset prices, Williams Analytics is currently predicting a leveling off in the S&P 500 E-mini and a "U"-Shaped price pattern for the 10-Year. Interestingly, and despite these overall trends, the US labor market is expected to have a positive *incremental* influence on the S&P 500 E-mini and 10-Year Note.

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

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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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