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McClellan Summation Index vs SOX. This is a ratio adjusted chart and a reading of +1000 or -1000 points indicates an imminent direction change in the markets. It is basically an indicator of market breadth and displays the amount of bullish or bearishness in the market. Shown here in 6 month and 3 year charts. Extreme readings usually precede market turns:
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3 Year Charts
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Newsletter Investment Advisor's Latest Survey shows market top numbers:
Date
Published Percent Bullish Percent Bearish
5/7 55.8 24.4
Summary: We frequently discuss the sentiment data produced by Investors Intelligence. Their Index of Bullish Market Opinion of newsletter writers has particularly telling implications for stocks. High readings suggest excessive optimism, which typically occurs when buying strength has been tapped out, and low readings represent depleted selling strength, and tend to precede market rallies. We normally view a bullish percentage higher than 55 combined with a bearish reading lower 30% as bearish for the market. On the other hand, overwhelming investor pessimism is reflected in Investors Intelligence bearish readings that are in excess of 55%, which normally translates into bullish market
conditions.
http://www.schaeffersresearch.com/streetools/inv_intel.asp?ticker_symbol=INTC
RtS
BPNDX ratio to the VXN. This shows the height of complacency recently reached:
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3 Year Charts
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RtS
BPNDX ratio to the VXN. This shows the height of complacency recently reached:
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3 Year Charts
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RtS
NASDAQ Record High Percent Index vs SOX. 6 Month and 3 Year Charts. Moves over 0.80 may indicate an impending top. Moves below 0.20 may indicate an impending bottom but as the 3 year chart shows the readings can go much lower to 0.02 or so:
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3 Year Charts
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TRIN and TRINQ vs SOX 3 Month Charts. More moving averages. Extreme readings above 1.5 are bullish, and readings below .85 are bearish. These signals don't occur often and tend be early, but when they do, they can signal significant market turning points.
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RtS
NASDAQ - New Highs vs SOX - 6 Month and 3 Years - Go long at 15 or less. Go short at 165 or higher.
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3 Year Charts
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RtS
KLIC Canary or Red Herring? You be the judge:
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NASDAQ Stocks Over 200 Day Moving Average vs SOX. 2 Year Charts. Horizontal Lines Show Potential Tops and Bottoms:
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When the number of NASDAQ stocks over the 200 day moving average drops below 100 this indicator ($NAA200 in the chart above) is supposed to have some predictive value for major bottoms. As for tops? Well only time will tell.
NASDAQ Stocks Over 200 Day Moving Average vs SOX. 6 Month Charts. Horizontal Lines Show Potential Tops and Bottoms:
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This one may be better at marking potential bottoms when the number of NASDAQ Stocks over 200 day moving average drops below 100.
RtS
BPNDX vs SOX 6 mo's and 2 Years:
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Stan, I specifically set most of these charts up so they would update automatically. There are still more that I hope to get to as time permits. It will take a while for us to find out just how useful they are.
I've always been fond of the old KISS rule. Keep it simple stupid. Perhaps just using the BPNDX extremes will prove to be the best of all possible indicators.
RtS
NAHLR vs SOX. NAHLR > 5 impending top. Below 0.02 impending bottom.
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3 Year Charts
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When this indicator drops below 0.02 it tends to indicate an intermediate-term bottom. When it rises above 5, it tends to warn about an impending top. According to Vesselin this indicator is not very precise for picking the exact moment of the top.
I thought I would line it up with the SOX to see what it has to show us.
RtS
Could be a long time Gottfried before we see a real sell off. As you have noted the BP Indices are not at real overbought extremes yet. It was interesting for me to read the differing opinions on the future for the SOX from Briefing.com and 2020Insight.com.
Anyway, I just wanted to get the charts lined up tonight since we got the NASI above zero. We will have to wait and see how things play out since we are getting ever closer to the Summer months.
Lots of good reasons to be bullish. Lots of good ones to be bearish too.
RtS
NASI vs SOX. NASI > 0 - Indicates an impending Top. Below -1000 a Bottom.
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3 Year Charts:
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When the NASI rises above zero, it indicates an severely overbought condition and an impending intermediate-term top. Similarly, when it falls below -1000, it indicates a severely oversold condition and an impending intermediate-term bottom. Note, however, that the indicator can remain in overbought or oversold territory for a few weeks while the respective top or bottom is forming and the actual extreme of the indicator is not known until well after the fact. In order to facilitate the trading of this indicator, use a 20-day EMA of it and trade the cross-overs - Buy when the indicator crosses above the EMA after having fallen in oversold territory and Sell when it crosses below the EMA after having risen to overbought territory.
Many thanks to Vesselin.
TRIN & TRINQ and SOX. Short When 5 Day SMA is below 0.8. Go long when it is above 1.8:
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Gottfried, that particular chart is probably the most worthless of all the brilliant charts that Vesselin shared with us here. There are two simple moving averages. One short term showing as green is the 21 day sma. The other in red is a 200 day sma. The idea proposed in Vesselin's post was to short when the shorter term sma moves above the longer term and visa versa. However it looks like it is at best too early an indicator to have much use to me.
The ability to post charts here is really helping me to get a better grasp on the indicators I follow and the effect they have on the SOX. Of course the same principals should be checked against other indices. No matter what these charts can easily be compared to the performance of an index. They should allow me to put some of the theories I have been pushing around in my mind to better use.
RtS
Direct and Inverse Relationships on CandleGlance Charts
Nasdaq - New Highs Directly Related to SOX Tops and Bottoms
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Note that the number of new highs fell on Thursday despite the market rise. An ominous sign of things to come?
RtS
In 1998/early 1999 the low put/call ratios did not matter near as much:
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Just pointing out that a real bull market blows away sentiment readings. Is this a real bull market starting here?
RtS
Inverse relationship of Put/Call Ratio and SOX Performance
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RtS
CPC:Vix cross over directly related to the SOX. It is shown here over the last two years for the SOX:
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I found this exercise to be a complete surprise as Vesselin suggested that an investor should short when the shorter term moving average moves above the longer term one.
http://www.investorshub.com/boards/read_msg.asp?message_id=475463
This does not look like good advice to me from these charts.
Gottfried, on the 1998 data. It was simple to find from previous work I did on the Wennerstrom thread. Glad you liked the charts!
RtS
Direct relationship between the BPNDX and the SOX:
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The BPNDX is considered overbought above 75 and oversold below 20 to 30 depending on how low it can be expected to fall at market cycle lows.
RtS
SOX charts from now and 1998/99 with 1998/99 VIX below.
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These charts show the recovery in 1999 was stronger than what we have seen so far. However the SOX is now above the 200 day sma just as it was in 1999. Could it be that we are just early in a recovery? If so it needs to be noted that the VIX rose from lows below 20 to over 30 without ever causing the SOX to fall.
RtS
The inverse relationship of the VIX to the SOX shown below
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Stan, as you have noted the current chart pattern looks similar to what we saw in January for the SOX. If things play out the same way as they did then we may see further gains next week as the index completes a high level distribution pattern before falling.
However, now that we have won the war in Iraq and the threat of terrorism is apparently lower there is a case that can be made for a new bull market. A new bull market can occur if it is supported by a strong business led economic recovery.
Technically it is very important to note that the SOX now has the 200 day moving average (where bulls live) under it. Can this important average begin to serve up support for the index or will this latest rally turn out to be nothing more than another bear market trap for the bulls.
And as Gottfried has stated the BP Indexes can run quite a bit higher before the whole market is completely overbought.
RtS
Will this year play out as May to October did last year?
Is another sell off coming? So far it looks likely to me.
Unless the economy really takes off soon then I'm afraid that we have another leg down coming for the bear market. What happens if fear does return to a highly complacent market.
If the VIX does start to rise dramatically again the SOX will fall:
The put to call ratio is too low. Low readings like that seen today often precede market sell offs:
And this cross over in particular is ominous in that it looks exactly like it did in January of 2002:
[chart]stockcharts.com/def/servlet/SC.web?c=$CPC:$VIX,uu[h,a]dallyyay[dc][pi!d21,2!b200!b21!f][vc60][iLg]&pref=G/[chart]
As you will recall the market attempted to rally many times in 2002 and until October it never maintained any momentum for long.
Prediction, another long summer for those who remain too bullish.
JMHO, RtS
Will this year play out as May to October did last year?
Is another sell off coming? So far it looks likely to me.
Unless the economy really takes off soon then I'm afraid that we have another leg down coming for the bear market. What happens if fear does return to a highly complacent market.
If the VIX does start to rise dramatically again the SOX will fall:
The put to call ratio is too low. Low readings like that seen today often precede market sell offs:
[chart]stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$sox,uu[h,a]daclyyay/[chart]
And this cross over in particular is ominous in that it looks exactly like it did in January of 2002:
[chart]stockcharts.com/def/servlet/SC.web?c=$sox,uu[h,a]daclyyay/[chart]
As you will recall the market attempted to rally many times in 2002 and until October it never maintained any momentum for long.
Prediction, another long summer for those who remain too bullish.
JMHO, RtS
The VIX is now close to a potential bottom. If the VIX starts to rise then we may well see the SOX fall as it has done all too often in the past:
[chart]stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$SOX,uu[305,a]dallyacd[pb20!b50][chart]
Thanks Tom. I like JBL a lot but I was hoping to start a new position there at around 14.
Do you follow the VIX much? It has an X in it! <gg
Long term monthly VIX Chart:
http://stockcharts.com/def/servlet/SC.web?c=$VIX,uu[l,a]mhclyiay[d19950101,20020708][pb50!b200!d20,2...
It really blew me away today with a near unabated rise. As long as the VIX is rising the market will be falling but it actually closed above the upper Bollinger Band today.
I had thought that we might need to see a military action by GWB like the invasion of Iraq to get capitulation but now that both the President and Vice President are getting so much negative media attention I'm not so sure.
Earnings so far are coming in pretty good maybe we get a brief summer rally after all?
Best to you!
RtS
The only industries up today were Gold and Disk Drive. Volume was high but could have been higher to help confirm a final bottom. There is a lot of fear out there right now but ultimately things could get a lot worse.
What's on your shopping list Tom?
I have not been at the Hub for a while. Seems like a lot of Silicon Investor regulars are here now.
Looking better than ever I might add in case Matt is reading any of these posts!
RtS
The problem with speed reading is total lack of comprehension. Ok, it's just me!
LOL, Sender
I just clicked on next and my pop up box wanted to save it as a file on my hard drive.
Anyone else seen that happen?
Glad to be here. I will help as much as time permits.
RTS
Looks like you're off to a good start to me Matt. I like the large box to post in and the simple uncluttered interface. Of course as time goes on I'm certain that it will become much more busy but simple is always nice.
I'll keep clicking!
RTS