HIGN trade ideas
NYSE New highs - New Lows15 week moving average of New highs minus new lows for NYSE. Readings below zero not been kind for SPY.
8 Reasons to Short the Stock Market (Part Two) #stocksBreadth Deteriorated Sending a Serious Bearish Signal
(6) The different between NYSE stocks making new highs and stocks making new lows spiked sharply lower, indicating a strong bearish internals behind the selloff. For a clear description of what that could mean, please read the observations marked on chart..
(7) Another breadth indicator which is the stocks above the 200 days SMA has been showing extreme bearish divergence for more than a year, before falling sharply with the ongoing selloff.. www.tradingview.com
To be continued...
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Technician
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Market Breadth Update: No News is Bad NewsMarket Breadth
HIGN/SPX:
The number of Stocks contributing to new highs continues to deteriorate and we haven't seen any improvement despite the gradual upside seen in Stocks indices..
This is the percentage of stocks on the New York stock exchange making new highs divided by the whole spx. The breadth shows that the bull market continues to be driven by fewer and fewer stocks, as the spx breaks to new highs however fewer and fewer stocks on the NYSE making new highs, driving the ratio down, especially within the recent months.
Stocks above long term average:
Swings from excessive bullish and bearish sentiment have been a good contrarian market indicator for the past years. Every time the indexes of stocks above or below 200-days Average reached an extreme of 90-100 percent a correction in SP500 was close.
Instances where the index started falling, diverging away from the SP500 index (indicating internal strength is weakening) were bearish signals, as at least a hefty correction followed. The chart below Illustrates these divergences, where periods of prolonged divergence followed by a more severe downside move, while minor divergences followed less severe corrections.
The ratio remains biased to the downside, failing to confirm rallies in the SPX ......
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SP500 - SPY - DAILY - STILL IN THE "SELL ZONE"When you look at the NYSE New Highs - the pattern is to retest the price zone where you see at least 260 New Highs.
We are doing the test of the November buying wave here for a 3rd time.
The pattern has always been:
1. Make new highs
2. Sell off and spike up VIX
3. Make new highs
4. Sell off and spike up VIX
Either way, we didn't get a new high after the January spike up in VIX to over 22 and now that prices are coming back down, it could be giving traders the green light signal to not only exit longs but to establish short positions and go for stops under the lows of January. You can imagine that there are stop orders there and if they get tripped, we could have a dramatic drop back to the 190-184 level.
Earnings season has just started with Alcoa kicking it off - so - either sit back and watch the fireworks or get in there and trade with the rest of us.
Cheers.
Tim 1:04PM Wednesday, January 14, 2015 199.67 last SPY
SPX:Contribution Continues to Deteriorate, Reaches a Danger ZoneThe number of Stocks contributing to new highs continues to deteriorate.
This is the percentage of stocks on the New York stock exchange making new highs divided by the whole spx. The breadth shows that the bull market continues to be driven by fewer and fewer stocks, as the spx breaks to new highs however fewer and fewer stocks on the NYSE making new highs, driving the ratio down, especially within the recent months.
This is not something new, and i believe this ratio should be taken into consideration only in an aging bull market.
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UPDATE: New High-New lowsUpdate to previous chart linked below Looking at a moving average of the NYSE New highs minus new lows. My thoughts in the first chart were that observing the prevailing trend of the moving average would give clues to the health of the market.
If the prevailing trend of New High-New Lows holds, the current pull back may be short lived. A break here similar to Sept will likely lead to a more significant pull back.
New Highs - New Lows: SPYSomething I just started looking at, maybe it could add some clues as to whether this recent pullback and sharp rally are a part of a topping process or setting the stage for a new leg higher. The upper indicator is the 10 day MA of the New highs - new lows. I decided to use a ma of the underlying indicator to smooth out some of the spikes and to see if any trends develops.
Two recent examples to compare to that offer different outcomes:
2007 - during the topping process we saw a quick 12% pull back followed by a 15% rally to new highs. However the NH-NL moving average did not break the upper trend line. In the following three rallies on the way to the ultimate bottom the moving average did not pull above the trend line. It was not until March 09 after the market bottom that the trend broke to the upside. This set up a new trend that was developed off the NH-NL, which saw a higher count of NH-NL during each market rally.
2010 - The NH-NL bottom trend line was broke during the 2010 sell off. The first two rallies off the initial selloff stopped short of breaking the downward sloping trend. The first rally ultimately led to new lows, the 2nd rally set up a higher low that once the market pivoted from was able to break out of the downward trend. Similar to March 2009, breaking this trend set a nice new NH-NL upward sloping trend which also corresponded to higher highs.
2014 - The current NH-NL trend is similar the one in 2010 in that the bottom support trend was broken which led to a quick sell off. With current ~12% rally off the lows we are now approaching the downward trend. It would seem reasonable to see prices take a pause somewhere around here (202-204), but maybe we continue to march higher. Either way, I'll be watching to see how prices handle the next attempt to break the downward sloping trend line. Maybe the action around here will give a clue as to whether the current setup is similar to 2007 or 2010.
Add This To Your Toolbox ~ Technician Breadth Indicator!Maybe its just the beginning... I am examining the market breadth by subtracting the number of NYSE stocks making new highs from the stocks making new lows, the study points to a potential major reversal could be at hand...
If for example:
-500 stocks making new highs and only 20 stocks making new lows then we will get a 480 stocks sum, and there for the index will spike higher
-Oppositely, if only 20 stocks making new highs while 500 stocks making new lows, then we will -480 sum, and the index spikes lower.
This is a clear indicator of the internal strength of market.
So if we add a tool to gauge the behavior of this index, and spot instances where the index deviates substantially from its mean, that might give us valuable information. Therefore, I added a 52-week Bollinger bands, with 3 standard deviation. Three STD means that the upper and lower bands deviates 3 times from the mid band (the 52-week average). Note that the possibility moving 3STD from the mean is very low.
That resulted in a very interesting indicator... Where instances of up and downside spikes out of the bands hinted extreme cases and potential key turning points. The interpretation of these spikes depends mainly on the prior price trend, please see the different cases I plotted on chart in numerical order.
I believe this is a very valuable indicator, and am happy and satisfied to share with you, where If you like it... Give a thumbs up and share it..
Comments are welcomed..
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My best regards,
Technician
