Friday January 5th, 2018

Thank You for your donations to cover server/software costs during 2017! I’m hoping to delay going to a subscription model as long as possible! Thank You.

Stormchaser80, L.L.C.
Disclaimer: http://navigatethemarketstorm.com/disclaimer/ 
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=========SIGNALS, NOT INDICATIVE OF POSITIONS=========
My Best Signal:
BULLISH since 1/5/2017 @ SPX 2743.15

Signal Based on Technicals Model:
BULLISH since 1/4/2017 @ SPX 2723.99

This chart represents BUY and SELL signals using my favorite signal since late 2016. I will attempt to add tests to filter out a few flip-flops such as early in 2017, and the early exit call in October.

=====================MODELING=====================

The Modeling Feature is down as my data source pulled the plug. I found a work around but will need to find the time to do the coding.

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)!!

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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…

 

Finally both signals are now BULLISH!

S&P500 Volatility (proprietary)

I developed the S&P500 Volatility Index to help characterize the volatility of the S&P500 market. 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.

Recent trading has been more volatile than 46.9% of all trading periods since 1990.

Technicals Model (proprietary)

The first chart below is the cumulative Technicals Model dating back to 2006. The Model was higher today for the 34th 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 1/5/2018! 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 positive for the 2nd 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.

There is negative divergence in the Model vs. SPX between late April and mid October, as well 1 in September and 3 since October. One was wiped out on 11/30. Almost a Technicals Thrust on 11/30 but it took more than 5 days to achieve so not quite fitting the definition. A strong negative divergence of the model from SPX is occurring in December into January.

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.

HYG:IEF Daily

Its clear this ratio has escaped resistance and continues the uptrend since mid December. It will be interesting to see whether or not it gets above the October high.

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

SPX Monthly from December 29th, 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. December 2017 made a new All Time High.

ADX: Bullish, trending

RSI: Overbought

Candle: Bullish

Volume: At the declining 20 period moving average.

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

% Bollinger Band: Top of Bollinger Band

Bollinger Band Width: Steady

MACD: Bullish at a positive value, histogram ticked higher for the 3rd month in a row.

SPX Weekly from January 5th, 2018

There are negative divergences back to 2013 on the ADX +DI, and MACD histogram in 2016.

ADX: Bullish, trending

RSI: Overbought

Candle: Bullish

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: Increasing from near historically low levels this past summer

MACD: Bullish at a positive value, histogram higher for the 1st week in a row

SPX Daily

With 1/5’s All Time High, negative divergences are strengthened for ADX +DI, RSI, MACD and MACD histogram, most peaked in March 2017. 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, trending

RSI: Overbought

Candle: Bullish

Volume: Better, at the slackening 20 period moving average.

Moving AveragesClose>20>50>100>200 period moving averages

% Bollinger Band: Above Upper band

Bollinger Band Width: Increasing again

MACD: Bullish at a positive value, histogram higher for the 4th day in a row

SPX Hourly

At today’s All Time Highs, negative divergences strengthened, some as far back as early December or late November. At today’s highs new negative divergences have developed so start to be onguard for a change in trend.

VIX Hourly

VIX was flat today, with hourly MACD on a BUY signal. Only 1 positive divergence at the last low, so this run higher is not expected to become strong or sustained.

VIX 15-min Intraday

15-min VIX chart shows no significant negative divergences at recent highs, so the VIX run at this scale may continue at least in the very short term.

VIX 442-hr Which Side of Trade? From 1/5/2018

Traders who prefer to trade one side, should be trading with the BULLS.

This chart attempts to use a long term average for VIX to identify Bull markets. I use a 442 hour EMA of VIX as that is approximately how many trading hours there are in a quarter of a year. When this value is below 17.5, those who like to trade one side at a time should make sure to be trading the long side. This chart makes no comment about the other times, meaning the inverse is not necessarily true.

SPX Breadth

High-Low was +88 today. The SPX McClellan Oscillator was positive for the 4th out of the past 6 days in a row The SPX A-D line is above its rising 20 EMA, with its ATH made on 1/5/2017. 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. 4 of 5 of these signals are BULLISH.

Intermediate-Term Breadth Momentum Indicator:  A BUY signal was given on 1/5/2018.

Swenlin Trading Oscillator: A BUY signal was triggered 1/3/2018.

Bullish Percent Indicator: A BUY signal was triggered 11/13/2017.

Percent with PMO above Zero: A BUY signal was given on 11/28/17.

Percent with PMO giving BUY signal: A SELL signal was given on 12/20/17.

SPX %above MA

The stochastic indicators have signaled a BUY for 3 of the 5 indicators. 

Participation was much higher today.

SPX:VIX (Daily)

This should peak when SPX is high and VIX is low. Today was a new high for the ratio, which only strengthened negative divergence across the board since September or October.

SPXEW (Daily)

A chart that study’s the stocks in the SPX as if they all had equal weighting. Negative divergence have formed since early October, showing momentum is waning for many individual stock members of the SPX (though the MACD neg div broke). No significant difference in slope between SPXEW and SPX.

UST10Y-2Y from January 5th, 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). Despite long and strong positive divergences since last summer, this measure of the yield curve is well below the level of the Trump election. In fact, I had to go back to October of 2007 to match levels that are this low!

What’s interesting here, the spread is at 0.50, 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.

BUT WAIT…THERE’S MORE ON THE YIELD CURVE

I downloaded US Treasury data (all maturity periods) for every day since 1990. Then I preformed a linear regression on the yields for every maturity period each day and calculated the slope of the linear regression line. This is more robust than merely just subtracting 10Y-2Y as many (including me) do. The resulting graph shows the periods slope were negative in light red. See how nicely they line up with the SPX top in 2000 and just before the 2007 top? Now look from 2009 to present day. The yield slope is quite stable and actually rising! Remember, there are lies, damn lies, and statistics!!

TLT:TIP Daily from January 5th, 2017

Deflation risk which steadily climbed in Spring, jumped in early summer before going sideways.

The bond market Deflation vs. Inflation metric (iShares Barclays 20+ Year Treasury Bond Fund vs. iShares Barclays TIPS Bond Fund). Values early in 2015 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.

Summary: Bulls vs. Bears

I find it necessary to make an announcement to my readers. As some of you are aware, I was gone a few times last year undergoing procedures (for pain), and I missed several other posts. I have been battling ME/CFS for many years, but over the past several it has gotten unbearable at times (especially considering my rotating shift full time job and young one running around the house). I really do appreciate your readership and when I feel well I enjoy writing this blog and working on website development.

I am not saying that I am ending this blog, or anything like that. Most days now it takes 3-5 attempts at the computer to do the analysis and writing for one post. I used to do it all at once. I am writing here to say that there will be some days I don’t post, and I have to be ok with that, and now you know why. I only want to present the best for my readers, and hope in the coming year I also find the energy to continue development on my website once again.

I also wanted to let you know I am fully aware that my signals have ‘sucked’ recently, the worse performance since I have started tracking it. I am ashamed of this and will look into it when I am closer to sound body and mind. Bless You!

Friday both of my swing trade signals are BULLISH, yes much much too late this time.

HYG:IEF formed negative divergences across the board with its peak on 10/25. It is now making a run higher above all major resistance. Watch here to see if it can get above October peak levels.

SPX daily hit All Time Highs today. Negative divergences remain for all but ADX -DI since at least March 2017, and countless Hindenburg Omens have occurred since this past summer. Still feel its likely that the next top will be a SIGNIFICANT TOP. At the All Time Highs, SPX hourly shows negative divergences back to late November for many indicators, and has now formed a second set of negative divergences in the past week, therefore I am expecting SPX to turn lower soon.

My proprietary Technicals Model was higher for the 34rh day in a row, with a positive divergence at 9/1’s peak vs. SPX, foretelling of this bullish run. On 11/30 it fell just short of making a Technicals Thrust. The Cumulative version of the Technicals Model made a new All Time High 1/5. My statistically driven Volatility Model is is expanding once again!! Big move ongoing.

VIX finished flat, on a hourly MACD BUY signal. At the recent lows, there was only 1 positive divergence on the hourly chart so this run-up is not expected to be long or strong. With positive divergences across the board at this week’s lows on the 15-min chart, we saw a bounce. At the peak there was little negative divergence so I wouldn’t be surprised if this uptrend is not done, even though I dont expect it to go far.

Market Internals, participation and breadth indicators, were all positive today. Many of these are in positive territory, yet are well off peaks from last year. SPX A-D line made a new All Time High on 1/5, obviously above its 20 dma which is rising. SPX McClellan has been positive for the 4th day of the past 6 days.

Economically, while most talking heads are yammering about the downward trend in 10Y-2Y (The Yield Curve is flattening to 2007 levels), my work dating back to 1990 using the slope of linear regression at all maturity levels shows since 2010 the yield curve has been rising (Bullish Economy) and is well off the levels that foretold a recession in 2000 and 2007. In fact, rising to these levels, matches up well with 2005, 1997 and 1995. Not bad years for stocks, eh?

Bullish

  • The SPX A-D line made an All Time High on 1/5/2018
  • The SPX A-D line is above its rising 20 EMA
  • SPX Daily above its 20, 50, 100 and 200 dma
  • Cumulative Technicals Model made a new All Time High on 1/5/2018
  • Technical Model (cumulative) is above its 200 dma
  • SPX 20 dma above the 50 dma for the 77th day
  • SPX 20 dma above the 100 dma for the 285th day
  • SPX 50 dma above the 100 dma for 32nd day
  • SPX Monthly continue in a upward run
  • Strong run in SPX Weekly
  • Technicals Model is positive for the 34th day in a row
  • BUY signals on 4 of 5 of Number of stocks above their 20/50 dma
  • BUY signals on 3 of 5 of other Breadth indicators
  • Slope of full yield curve is stable and rising since 2009
  • SPX McClellan Oscillator was positive for the 4th out of the past 6 days in a row
  • HYG:IEF well above resistance, but can it continue higher?

Bearish

  • UST10Y-2Y at levels not seen since October 2007, major yield curve flattening
  • There is negative divergence in the Model vs. SPX between late April and mid September, as well as 4 since October
  • Summation Index has been negatively diverging since summer 2017
  • SPX weekly has been negatively diverging for years
  • SPX:VIX negatively diverging
  • SPXEW negative diverging

Levels to watch

  • 2594 pivot
  • 2575 pivot
  • 2525 pivot
  • 2479 pivot
  • 2456 pivot
  • 2444 pivot
  • 2428 pivot
  • 2411 pivot
  • 2385 pivot
  • 2336 pivot
  • 2321 pivot
  • 2286 pivot
  • 2270 pivot
  • 2212 pivot
  • 2177 pivot
  • 2131 pivot
  • 2116 pivot
  • 2085 pivot
  • 2070 pivot

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

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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).

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