Saturday July 16th, 2016

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Stormchaser80, L.L.C.
Disclaimer: http://navigatethemarketstorm.com/disclaimer/ 
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Trading Account: At 1041 AM Eastern 7/1/2016, bought SDS SEP 16 2016 17.00 C for $1.19 
401K: Bearish
Long Term: Bear Market, targeting SPX <666 by 2022

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.

First Step

After many hours of coding, I have successfully created a proxy for the S&P500 market, back to 2006 (this is how back I could go with the data I needed). It is not meant as a forecast. This step is going to be used to create a forecast for BUY and SELL indicators.

When you inspect the image below, the first thing that probably comes to mind is, so what? Until you realize that I have not used any stock prices in this historical model. Its all based on technicals.

Now, why is this important? The biggest thing that should jump out at you is while the big moves go with the market, there are times of divergence. Second, notice how much less volatile the green line is vs. SPX price (black). The next step will be slapping a bunch of technical indicators on my model, which should be much more reliable than indicators on a more volatile price chart.

More to come in the coming weeks!

index

First Thoughts…

Quite an interesting week. Are we jumping aboard the bullish wagon? Need to check the charts first…

SPX Weekly

W

ADX: Bullish, trading range

RSI: Upper quartile

Candle: Bears were able to knock down a bullish run

Volume: Very very low, well below the now slackening 20 period moving average

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

% Bollinger Band: Above the top

Bollinger Band Width: Narrowing

MACD: Bullish at a positive value

SPX Daily

D

ADX: Bullish, trading range

RSI: Upper quartile

Candle: Bears were able to knock down a bullish run

Volume: Very very low, well below the now slackening 20 period moving average

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

% Bollinger Band: Upper quartile

Bollinger Band Width: Slowly rising

MACD: Bullish at a positive value, histogram ticked lower first day in the last 13

SPX Hourly

H

Above the 2131 pivot

ADX: Bearish, trading range

RSI: Middle of range

Volume: Bearish during the morning

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

% Bollinger Band: Lower quartile

Bollinger Band Width: Quite tight

MACD: Bearish at negative value

VIX Hourly

VIX

$VIX had a negative day. Lower lows continue though positive divergence on the RSI and MACD has been in place during the past 2 weeks.

Positively diverging MACD since late March which is good for VIX Bulls in the medium term, with a relatively narrow Bollinger Band width supportive of an upcoming large move.

SPX Breadth

Breadth

New Highs and McClellan Oscillator  have been negatively diverging with the market (blue arrows), accelerating negative divergence on Friday.

SPX %above MA

SPX_MA

Percent of SPX stocks above their 20/50/200 have been negatively diverging with the market (blue arrows), though now most of these are negligible. Values look a bit toppy and are in the RED overbought zone.

Huge negative divergence seen on the Full Stocastics (red arrows).

NOTE, that the market can stay in the BUY or SELL range (green or red) for quite some time.

TLT:TIP Daily

TLT_TIP

TLT:TIP has shown weakness after the record high for deflation fears occurred on Monday. Note we are still way above the 2008 crisis levels.

The bond market Deflation vs. Inflation metric (iShares Barclays 20+ Year Treasury Bond Fund vs. iShares Barclays TIPS Bond Fund). The previous peak was 10 Feb 2016. 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

The bond market signals a sideways move in greed vs. fear since mid March, while MACD/RSI/ADX is negatively diverging indicating a large bearish move is expected in the medium term.

Note how far we are from the highs in early 2014! Danger!

Oil Daily

OIL

Oil is toast, making its high on 6/8, over a month ago. Nothing favors oil here, not seasonality, nor technicals. Oil is hovering near Summer lows.

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Summary

The weekly chart showed the first close above the upper Bollinger Band since June 2014. Yet, something is off, suggesting this is a ‘fake’ move. ADX is firmly in the trading range, RSI is already at its highest levels since Dec 2014, volume is almost non-existent, negative divergence on MACD histogram, and the Bollinger Band Width is narrowing. I would not expect such a setup if we were launching into a bull run here. Instead, the technicals suggest to me that this is a head-fake, before so the real move emerges.

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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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