Friday August 4th, 2017

I sent an email blast notifying subscribers of the new post. If you did not get this email, email your user name to admin@navigatethemarketstorm.com so we can fix your email address in my database! 

I have removed all advertisements. In order to provide minimum income to cover costs of running the blog including hardware and software, I ask that you voluntarily donate every so often. You can do so through paypal with your paypal account (if you have one) or just your credit card (without a paypal account) by clicking the Donate button. Doing so will ensure that this site will remain ‘Free to use’, as well as continue to support new modeling efforts!  I honestly appreciate your donations!

Stormchaser80, L.L.C.
Disclaimer: http://navigatethemarketstorm.com/disclaimer/ 
Follow me on Twitter @Stormchaser80 to get new post notifications

=========SIGNALS, NOT INDICATIVE OF POSITIONS=========
Based on Technicals Model:
BEARISH as of 7/31/2017

Based on Unrelated Signal:
BEARISH as of 7/28/2017
=====================MODELING=====================

Click the ‘Trader Platform’ Menu link for access to the Real-Time Technicals Model! 

The new Technicals model (much more sophisticated than the original Daily version) is available in real-time for all subscribers to test it out. Green means bullish and Red is bearish. This is for the SPX at the 5-min, 10-min, 15-min, 30-min, 1hr, 2hr, 4hr time frames depending on your personal trading strategy. New models will be released in the future, working up to a composite model which would encompass several modeling techniques all in 1 chart (which should prove more profitable than using just a signal modeling technique)!!

———————————————————————————————————-

As always, the Monthly, Weekly, Daily, Hourly and so on SPX charts I show are from all hours of the day, and therefore the prices and indicators will vary from charts which only show action during regular trading hours. I believe this method is more robust and encapsulates global sentiment, better capturing trends.

I mark negative divergences in red, and positive divergences in green. Please note that some indicators such as -DI are inverse, so a positive divergence is bearish and a negative divergence is bullish!

First Thoughts…

Ok so is the retrace over, lower, or have already topped?

S&P500 Volatility (proprietary)

I developed the S&P500 Volatility Index to help characterize the volatility of the S&P500 market on a scale of 0 to 20. It has nothing to do with $VIX (which shows the market’s expectation of 30-day volatility, constructed using the implied volatilities of a wide range of S&P 500 index options). This indicator serves to rank the volatility of the current market period using market data from 1990 to 8/9/2016.

Why does this matter? In coming up with BUY and SELL signals in any system, you need to know when to flip quickly, vs. times you can wait and see if your signal is a fluke or not. This is a way to limit position flip-flopping.

Score>15 Market is volatile [flip quickly]
Score~10 Transition zone
Score<5 Market lacks volatility [wait out change in indicators

Recent trading has been more volatile than 1.9% of all trading days since 1990.

Below I plot the momentum scores since 1990. You can see the Bear and Bull markets, but there were also times in Bull markets you needed to trade aggressively (May 2010, 2011, Aug 2015), and periods in Bear markets you could trade with a slower trigger.

MOMO

Technicals Model (proprietary)

The first chart below is the cumulative Technicals Model dating back to 2006. The Model was lower today, for the 1st day in a row. Here you can see the model performance (in blue vs. SPX in black) all the way back to 2006. I added the purple 200 day moving average to help discriminate between bull markets vs. bear markets (although fake-outs do occur such as 2011, and either 2015 or earlier in 2016). The cumulative Technicals Model made a new All Time High on 8/3/2017! The model is well above its 200 dma that it lost briefly October 2016.

I have noted that the model did not confirm the last high for the SPX in 2007 (as denoted by red down arrows on the model, vs. SPX green up arrows).

Below the Model and SPX chart on figure 1, I have the performance of the ratio of the two. I have noted extreme readings (green) as potential bargain buy (such as Brexit which was the last extreme reading in green), and extreme Red readings being bearish for the market. The ratio has been negative for the 8th day in a row.

This next chart shows the daily readings, not in cumulative mode as above. Here you can see which particular trading days are the strongest/weakest technically with the markets as portrayed by the model. Divergences also show up near market Tops/Bottoms.

7 negative divergences since late April indicated a significant change in trend is near. Look how much weaker the model was compared to before the SPX top! But then the model formed 3 little positive divergences that developed vs. SPX in late June and early July. This looks to predict perhaps a New All Time High [DONE]. Now a new negative divergence vs. SPX is in place, making, 9 since mid-April.

I have added a 5 day EMA to the Model (pink), and a new indicator called a Technicals Thrust. Similar to the Zweig Breadth Thrust, it looks for hard reversals. I have preliminary called a 0.50 gain within 5 days (with a peak above 0.35) a Technicals Thrust. 5 have taken place during the past year (noted with orange circles at the top of the chart), all had gains, while 3 of them had a prolonged bullish run. 

What is this model? It’s a comprehensive assessment of a good number of technical indicators on each S&P500 stock. This model does 2 things well. First, it shows divergences from SPX price. Most valuable of all, my model has a lot less volatility than SPX price but does a great job of capturing SPX trend, which should do well with forecasting SPX price movements in the future.

SPX Monthly from July 31, 2017

On the monthly scale, the market has been expanding since a 2015-2016 consolidation period. Its easy to see with negative divergences from the end of 2013 and 2014 on ADX DI, RSI, MACD and MACD histogram. July made a new All Time High.

ADX: Bullish, trading

RSI: Overbought

Candle: Bullish

Volume: Well below the slipping 20 period moving average.

Moving Averages: Close>12>36>72>120 period moving averages

% Bollinger Band: Upper quartile

Bollinger Band Width: Gradually rising from very narrow levels

MACD: Bullish at a positive value, histogram ticked lower for the 2nd month in a row.

SPX Weekly from August 4, 2017

There are negative divergences back to 2013 on the ADX DI, RSI, and MACD histogram. These divergences have only steepened in the past year. The MACD divergence has been reformed in June. With July 27th’s All time High, new negative divergences have extended vs. the March 1st high.

ADX: Bullish, trending

RSI: Overbought

Candle: Doji, indecision

Volume: Well below the steady 20 period moving average.

Moving Averages: Close>20>50>100>200 period moving averages

% Bollinger Band: Upper band

Bollinger Band Width: Widening from near historically narrow levels

MACD: Bearish at a positive value, histogram ticked higher for the 4th week in a row

SPX Daily

With July 27th’s All Time High, negative divergences are in place for ADX DI, RSI, MACD and MACD histogram. HO’s mean Hindenburg Omens. Orange ones mean that the McClellan was positive (likely just a strong rotation), Red is the real deal, the McClellan was negative (Likely pre-drop selling).

ADX: Bullish, trading

RSI: Mid range

Candle: Doji, indecision

Volume: Below the falling 20 period moving average.

Moving Averages: Close>20>50>100>200 period moving averages

% Bollinger Band: Mid band

Bollinger Band Width: Narrowing

MACD: Bearish at a positive value, histogram lower for the 11th day in a row

SPX Hourly

 

What is likely consolidation, continues under the 2479 pivot. No new highs or lows recently to compare divergences.

VIX Hourly

VIX was lower and the hourly MACD remains at a SELL signal. Could be in a bull flag setup. At today’s lows positive divergences were spotted for all indicators except RSI and MACD. Really would like to see the RSI and MACD positive divergence before calling for a change in trend higher.

SPX Breadth

High-Low was +37 today. The McClellan Oscillator was negative for the 5th day out of the past 6. The SPX A-D line is above its 20 EMA and made its ATH on 8/1/2017.

The summation index is in positive range, but topped in July 2016. Negative divergences are shown going back to 2016.

More SPX Breadth

More breadth indicators, note the negative divergences since early 2016 on many of these. 5 of 5 of these signals are BEARISH.

Intermediate-Term Breadth Momentum Indicator:  A SELL signal was given on 8/4/2017.

Swenlin Trading Oscillator: A SELL signal was triggered 7/27/2017.

Bullish Percent Indicator: A SELL signal was triggered 7/28/2017.

Percent with PMO above Zero: A SELL signal was given on 8/3/17.

Percent with PMO giving BUY signal: A SELL signal was given on 8/3/17.

SPX %above MA

The stochastic indicators have signaled a SELL for 5 of the 5 indicators. 

Participation was higher across the board today.

UST10Y-2Y from August 4, 2017 

Each week I will take a look at the UST10Y-UST2Y, though it will be the daily chart. This chart symbolizes whether the yield curve is supporting economic expansion (by increasing the spread), or providing additional head winds (decreasing). The chart topped in mid July after forming a couple of weak negative divergences. It has now recovered to its 20 dma.

What’s interesting here, the spread is at 0.91, while recessions since the 1970’s started when the spread was near zero or negative (shown below). If that trend is right, we are a while away from that taking place. You can see the trend is lower over the past several years, but we are currently at a top or consolidating. The bull leg started before the election, as the tide was turning positive for Trump support. Looking at the short term, there has not been a new high or low put in recently, so no divergences to compare to make a prediction.

TLT:TIP Daily from August 4, 2017 

Deflation risk which steadily climbed in Spring, jumped in early summer. A reprieve lower then  occurred and now there is a lack of trend.

The bond market Deflation vs. Inflation metric (iShares Barclays 20+ Year Treasury Bond Fund vs. iShares Barclays TIPS Bond Fund). Values late in 2014 and pretty much all of 2016 are showing higher Deflation fears than even 2008-2009.

From this chart you can clearly see when the FED stepped in (when this ratio was nearing 1, except things got out of control at the peak of the 2008 downturn until the FED figured some things out).  Clearly things changed since late 2014 and the FED has stepped aside leading to the Deflation fears building beyond the 2008 crisis.

HYG:IEF Daily

HYG:IEF was a little higher today, above all but its 20 dma. Negative divergences on all indicators except ADX -DI and MACD. Should see one more high before a reversal lower.

At the recent high on 3/2/2017, negative divergences have been strengthened since late 2016.

HYG:IEF ratio is a way of looking at Greed vs. Fear in the more sophisticated bond market.

Oil Daily

 

Had expected the oil pullback early in the week, and expressed that I thought it would trade sideways a few days, which has been the case. Still expecting another high due to lack of negative divergences at the early week highs.

It’s performance during the seasonably strong Spring and Summer has been very poor. Perhaps a major leg down in oil is due in the coming months?

Summary: Bulls vs. Bears

Flat market, however beware that the Internals, Breadth and Participation, are well off of recent highs, have been pulling back, and certainly would support a bigger drop in the market. Today however participation rose across the board again. VIX finished lower, and remains in a hourly MACD SELL signal. The pattern could be a bull flag, so that’s something to watch, but for that to be valid I would like to see positive divergences where there are only a few as of Friday.

My proprietary cumulative Technicals Model DID NOT make another All Time High today, with its daily reading just below zero. Neither SPX nor SPX A-D made a new ATH either. Both my swing trade signals are bearish (7/28 and 7/31). SPX Weekly and Daily would support a major top at anytime due to long lasting negative divergences. Yet I am skeptical that the ATH on 7/27 with a Doji candle would have been THE TOP. Daily readings of my model are now negative, while the SPX McClellan has been negative now 5 of the past 6 days.

SPX Daily had a string of 7 real and 10 total Hindenburg Omens since late May. Be careful this run-up as it may be the last before a BIG turn lower. I say this as my proprietary Technicals Model made its 9th negative divergence vs. SPX since mid-April, and the second one of its kind since 3 positive divergences since late June. Yet another higher high in SPX is still possible to once again negatively diverge with my model, but you can clearly see that the technical indicators on SPX stocks are weakening quickly.

Been calling this Oil rally pretty well. Got the pullback that I warned about. Give it a few days, and I think a new high forms in oil to put in widespread negative divergences.

Bullish

  • The SPX A-D line made an All Time High on 8/1/2017
  • The SPX A-D line is above its 20 EMA
  • SPX Daily above its 20, 50, 100 and 200 dma
  • Cumulative Technicals Model made a new All Time High on 8/3/2017
  • Technical Model (cumulative) is above its 200 dma
  • SPX 20 dma above the 100 dma for the 180th day
  • SPX 50 dma above the 100 dma for 159th day
  • SPX 20 dma above the 50 dma for the 65th day
  • Monthly continue in a small upward run
  • Oil rising, likely still on

Bearish

  • Technicals Model is negative for the 1st day in row
  • McClellan Oscillator negative 5 of last 6 days
  • SELL signals on 5 of 5 of Number of stocks above their 20/50 dma
  • SELL signals on 5 of 5 of other Breadth indicators
  • UST10Y-2Y (Yield curve flattening to neutral)
  • Technicals Model is diverging negatively 7 times since mid April, but had 3 minor positive divergences since 7/2/2017. Since 7/19/20117 2 more negative divergence appeared, making 9 total.
  • Summation Index has been negatively diverging since last summer
  • SPX weekly has been negatively diverging since 2013/2014

Levels to watch

  • 2479 pivot
  • 2456 pivot
  • 2444 pivot
  • 2428 pivot
  • 2411 pivot
  • 2385 pivot
  • 2336 pivot
  • 2321 pivot
  • 2286 pivot
  • 2270 pivot
  • 2212 pivot
  • 2177 pivot
  • 2148 near 50/100 dma
  • 2131 pivot level
  • 2128 20 dma
  • 2116 pivot level
  • 2089 SPX 200 dma
  • 2085 pivot
  • 2070 pivot

==============================================================

Feb-March 2016 Posts: https://stormchaser80.wordpress.com/ 

==============================================================

Note: I want you to know that although I have taken the steps to start the subscription business, I will continue to offer the free service through May 2016. I want there to be a good record of (hopefully) accomplishment. Plus I don’t want to spring anything on anyone unfairly. I thought 3 months was enough lead time. I also want to present something nice, and well worth your visit (and subscription).

Can’t see my post above? You need to register for a free account first! If you are a member, please login here! If you have login problems try these steps:

  • Check to make sure you are using the correct username (not email) and password
  • Clear your web browser cache (search for instructions for your browser)
  • Try a different web browser
  • Take a screen shot at the point you are getting stuck and send it to me

Please, if you find any technical issues that the above steps do not solve, email me at admin@navigatethemarketstorm.com

Not a member? You need to register. Don’t worry its free and fast!

Register New Account

Free Trial – Total access to all posts through at least May 2016. In the future Free accounts give you access only to weekly posts more than 3 months old, limited access to other tools. Site will have ads.


 

  1. All I ask, is for you to create a user account. No payment information will be collected at all at this time.
  2. After you create your user account and agree to all the terms and conditions, you will be granted access to posts like you are used to, only upgraded!
  3. It may take 24 hours for you to be able to login and see content, please check back! Only submit your information once. I have to manually activate your membership. If it has been more than 24 hours since you registered, please email me admin@navigatethemarketstorm.com.
No votes yet.
Please wait...