S&P 500 Index (SP500)

[DiscoverGold]

Trading Notes: Monday, March 21st
By Brett Steenbarger, Ph.D.

* March 21, 2016

* So often, in our trading goals, it's set and forget. We set goals, but often fail to follow through. This article draws upon recent research to identify how can we become more productive--better at pursuing and reaching the goals that we define.

* Stocks closed higher overall on Friday, and we're now seeing over 90% of SPX shares trading above their 20- and 50-day moving averages. That is unusual strength off the February lows. My measure of upticks versus downticks among NYSE stocks (NYSE TICK) showed solid strength on Fed day and, as the chart below shows, has been in an uptrend on a cumulative basis, eclipsing its previous high. I believe we're pricing in a more favorable environment for equities, given QE overseas and a moderating Fed.



* Yet another way of tracking the strength and weakness of shares is to look at each stock on the NYSE and see if it has closed above or below its Bollinger Bands. (Raw data from Stock Charts). As the chart below shows, we have reversed the pattern of net weakness from 2015 and early 2016 and have been persistently above the zero line in recent days. Bottom line, I'm not seeing the kind of deterioration that would normally precede a major market reversal.



* A while back I mentioned the shares outstanding in the SPY ETF as a useful sentiment gauge and noted that it had been flashing bearish sentiment, even after the liftoff from the February lows. Sure enough, history repeated and we continued higher. Now we're seeing an expansion in shares outstanding (net bullish sentiment). In the past that has led to subnormal returns for SPY.

http://traderfeed.blogspot.com/2016/03/trading-notes-for-week-of-march-21-2016.html

• George.

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