All in all, the banks have not learned their lessons from the 2007/2008 financial crisis. They continue to make risky bets, arguably far more risky than before. In 2006 and 2007, it was sub-prime mortgages; now derivatives are spiraling out of control. It is hard not to wonder, if the big banks, which handle our money, truly have our best interests at heart at all. If they blunder on a large scale again, like they did in 2007, they will be too overexposed to be saved.



Seems they have learned their lesson very well. They make risky bets, and if they fail, they get bailed out and the executives don't have to give up anything.

Have our best interests at heart? You've got to be kidding.

For Friday, I'd have to interpret the signal as CAUTION, though still on a SELL. How's that? The signal does not turn on a dime. It is designed to catch the "meat" of most moves.

If NDX, INDU and SPX were to get down to their 200 day MAs I'd be confident of a good sized relief rally. Those three are sitting within spitting distance of their 200 day MAs. NYA has already breached its 200 day MA and so has RUT, though just today.

The market is very oversold by some metrics. For example, the $NDXA50R and $SPXA50R (percent of stocks in the index above the 50 day MA) are both below 20, levels from which strong rallies have started. Though they of course can go lower.

Hi nlightn, good to hear from you. I read through YE just about every day. Will try to post more.

gloe

Looting from the poor:

http://www.tomdispatch.com/post/175543/tomgram%3A_barbara_ehrenreich%2C_looting_the_lives_of_the_poor/

Still on SELL.

That weekly MACD cross on the SPX . . . nice. Still, we should be getting a bounce sometime soon.

Still SELL.

Main signal (MVI) still on SELL.

Still SELL.

Thanks, but I don't see how the Force indicator shows a positive divergence. It looks really weak to me. But the CO on the daily charts has a positive diver at these lows.

Have no idea what will happen. A bounce up to at least retest the 20 day MAs and maybe the 50s could easily happen. Then down we go. I can see that.

gloe

Main signal (MVI) still on SELL.

Totally agree. Price is the ultimate indicator.

4 range is pretty fast/small. And nothing can pick a top in an irrational short covering ramp.

Hi Murray, I always thought GH and VT worked the best. My favorite patterns.

MVI still on SELL. Good TNA buy for a trade against the main signal. Market is oversold and various indicators on 60 min charts are showing bullish divergences with today's test of yesterday's low.

Thought so . . . it's the only thing I see there. I didn't think Woodie ever used it. I learned it from someone who used to be in Woodie's room. He used it on a 5 min chart of RUT futures.

G = Ghost. I see that one. What is an S?

MVI now on SELL. That "caution" Thursday was right on!

CCI 20 on IWM daily has a decent TLB also.

Yeah, we could get a 3 day buy this time.
=======================
The StockCharts.com Market Message

NASDAQ LEADS REST OF MARKET LOWER -- A DEEPER CORRECTION NOW APPEARS LIKELY -- WEAK COMMODITIES ALSO WEIGH ON STOCKS AS BONDS RALLY -- YEN RALLIES AS AUSSIE DOLLAR WEAKENS

By John Murphy


"STOCKS INDEXES WEAKEN ON RISING VOLUME... It looks like traders and investors took the "sell in May" mantra seriously this week. Stocks fell sharply after Friday morning's weak April jobs report was released. The worst performance came in . . . QQQ . . . tumbling 2.5% on Friday on huge trading volume. That's a bad combination. In addition, the QQQ fell well below its 50-day moving average . . . and negated the "island reversal" that formed the previous week (see top circle). That puts the April low in jeopardy. A close below that low would initiate a pattern of "lower highs and lower lows" which is symptomatic of a deeper correction. The next level of potential support would then be the early March low near 63. The QQQ/SPX relative strength ratio (below Chart 1) also shows the QQQ underperforming the S&P 500 over the last month. That shows loss of leaderhip by the technology sector which is another negative development. . . From a sector standpoint, technology was the week's worst sector. . . The three top sectors -- utilities, consumer staples, and healthcare -- are all defensive sectors. That type of defensive rotation is consistent with market weakness."

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

Then he goes on to discuss commodities, bonds and currencies, all indicating the "risk-off" trade is on.

TLB on the VIX this week. See it?

The last VTO before this one -- the break below the 50 day MA looked so ominous, yet the market recovered.

RSI 5 above 70. Maybe above 60 to allow for a little bit of wiggle room.

Hi Murray. Maybe persistently low VIX readings = strong bull move.

Yeah, that's what we discussed as a possible filter. Let's see how it turns out.

Gap fill on IWM from the 4/25 gap up. You knew it had to happen. Qs and SPY gap still not completely filled.

My MVI went into "caution" mode yesterday.

People have asked how to "trade around" the main MVI signal and whether there is ever a way to trade against the signal. I do have other tricks up my sleeve. My "sling shot" trade for example had a SELL signal on IWM a few days ago. It triggered at the close on 4/30. It also flashed a SELL at the close on 4/18. (At the time, the MVI had just triggered a BUY signal and I was looking for dips to buy.)

My VIX model has also been on a SELL signal since the sell off last month, but the trick is, it only triggered SELL near the bottom. It didn't catch the top or anything close to it. It is definitely NOT a "next day open" type of signal that changes alot and can catch all the little wiggles.

My SMDI (the smoother signal I talked about) I have decided may not be worth watching. It is too smooth.

I have volunteer commitments and so cannot watch the market all the time. When those commitments end, I can be more attentive to all the little wiggles in the market. The thing is guys, when I post a signal (even the "end of day signals" based on daily charts) I feel responsible that people are following me, and I like to be able to be around all day the next few days to "manage" the trade in public on this board. I don't want anyone to get hurt in their wallets because I posted a signal and then wasn't around to say "the trade isn't working; get out" or "here is where you need to take profits." For those who asked.

gloe

Hi, you're welcome. In general, I would use the main signal to buy dips when the signal is on a BUY like now (sell rallies when it is on a SELL). Right now I am not at home and don't have my charts available.

I don't see what you're trying to say. Do you think the DI is better?

Great article. Thanks for posting.

Still on BUY.

thanks sammy.

The signals have been working well using IWM and its derivatives (leveraged ETFs, futures, etc., even options)

Not so well using the Qs. Why? Because the Qs are currently dominated by one stock: AAPL. And AAPL had a huge strong rally which looks like a parabolic frenzy, and now what looks like a blow off top, followed by relative weakness. Can't trust the Qs. Might as well trade AAPL if you're going to trade the Qs.

Long term signal (MVI) still on BUY.

Previous MVI signals:

BUY APR 12
SELL MAR 29
BUY March 7
SELL Feb 13
BUY 3rd week in Dec. 2011
SELL mid-Dec.
BUY late Nov.
SELL early Nov.
BUY early Oct.
SELL 3rd week Sept.
BUY mid-Aug.
SELL mid-July.
BUY 3rd week June.
SELL early June.
BUY late May.
Some whip in April (Fast sell-buy-sell).
BUY mid March.
SELL 3rd week Feb.
BUY 3rd week Jan.
SELL a few days earlier in Jan.
BUY mid Jan.
SELL late Dec. 2010
BUY mid Nov.
SELL early Nov.

MACD cross was averted!

I am working on a second market direction indictor that is a good guide to determining when to buy dips or sell rallies. It sometimes gives a different signal from the volatility indicator I have been posting about (the long term signal). The volatility indicator is better (faster) at picking bottoms after a hard sell-off than the other smoother market direction indicator. So I'll call one the MVI (market volatility indcator) and the other SMDI (smoothed market direction indicator). I cannot really call the MVI a long term indicator as it does switch around a bit, yet keeps you in strong trends up or down.

As an example of their signals, both went into SELL mode last June, during which one could short rallies, or, (looking at various market structure considerations) hold a short for a while. But then the SMDI went into BUY mode last October, while the MVI chopped around a bit until the BUY signal just before Christmas, when both signals were on BUY and stayed on BUY for awhile. Then the whippier MVI had a SELL in mid-Feb, flipped back to BUY in early March, then another SELL, and finally a flip back to BUY recently. All during this time since last October, the smoother SMDI has been on a BUY.

I haven't decided how I will take into account their differences. One could make a good argument for GO TO CASH when they are on different signals, maybe except for an MVI BUY signal after a significant sell off.

Just thinking out loud.

ah well . . . resistance broken.

Personally, for me, I took my profits on my TNA and QLD. Both IWM and Qs have too much Resistance right ahead for me. IWM the 50 day MA, and the Qs, the 20 day MA.

Long term signal still on BUY.

Yes, the long term signal is still on BUY. Maybe I should call it an intermediate term signal, since there have been times when the signal changed quickly -- but I did list the trade signals going back more than a year so you get the idea.

During long trends, like the move up from last December, the signal can last for months.

citybird, been trying to reply to your e-mail, but I keep getting a "server error" warning from gmail. So hopefully, later.

gloe

Got ya.

sammy it's a daily signal, so don't know until after the close. Even if it did flip back to a SELL here, I will tell you that most of the time, a SELL signal that comes when the market is already oversold hasn't usually done very much.

As I have been posting, the market has been looking weak with bear flags on the charts of most of the major indices . . . but I'm still buying dips. The Qs gapped below their 50 day MA this morning, but are likely to rally up to retest it from below. At some point.