Replies to post #409 on Chart Ideas

[rimshot]

SPX weekly closes displayed in histogram format, with the JPM (JP Morgan) price line shown as an overlay in orange color:

* notice the SPX 200-week sma has not yet been violated by a weekly close during the current decline (as of August 12, 2011)

* JPM now resides near its June, 2010, weekly close low (as of August 12, 2011)



chart #2 -repeat of the SPX Equal Weighted Index daily closes in histogram format -

* bulls want the SPX-EW to remain above the $1726 level, and this week has seen a good start to this chart achievement by the price action

* notice the RUT $642 horizontal value has not yet been violated by daily closes during the current decline, as of August 12, 2011



chart #3 - repeat of NYA monthly with SPX monthly closes:

* be vigilant about future NYA price action vs. the $7311 horizontal value shown in pink color



*** the charts at this IHub board update "live" with the current price action when you refresh your browser in the future ***

[DowDeva]

Rimshot,

How does one duplicate the second and fourth charts FOR THE FIRST CHART SERIES ($NYAD) on Stockcharts, and what exactly does one look for, for clues to market performance when reading these two charts?

I refer to the ones with the horizontal line, and histogram above and below the lines. The first one is depicted in gray and red, and the second is in pink and blue.


tiA\\~d

[rimshot]

Barry Ritholtz's August 15, 2011, blog post on the topic of possible selling climax during
the August price and NYSE breadth decline - http://t.co/21DmbYZ
(Barry is not the author of this specific blog post)

excerpt -

Let’s return our gaze to the present day. Was the low achieved on August 9th at exactly 2:44 pm, when the S&P 500 Index traded within pennies of 1,100? So far, that intraday low is the bottom. As we know, the subsequent rally has carried the market higher, notwithstanding very high volatility.

If we look at the entire period of the selloff from the peak on April 29th to the intraday trough on August 9th, we find the high for the S&P 500 Index is 1,360 and the intraday low is 1,100. Does this mark the completion of a fast, 20%, bear-market correction? Did the climax on Tuesday mark the final bottom of this drastically unsettling period?

The answers to these questions will not be known for months. There is a very good chance that we have seen the bottom of the selling climax. Alternatively, we may retest it. There is a chance that another substantial down leg lies ahead. The debate among investors is fierce.

2nd excerpt -

Our conclusion, “simply put,” is that stocks are now very inexpensive. When an equity risk premium is estimated at 6% to 7%, it is in the very remote outlier section of history. It says that you are being paid handsomely and in an extraordinary amount to own shares of fine American companies.

History would suggest that every time you had the opportunity to enter the stock market with an equity risk premium this high, you succeeded. There is no evidence in history that a strategic, serious investor was able to obtain an equity risk premium of this amount on a continual basis. Why? Because stock prices rise when the equity risk premium is this high, which is how the equity risk premium gets back to a more normal range, like 2% or 3%.

We believe the stage is set now for the US stock market to double by the end of the decade. The equity risk premium is giving us the guidance to make that statement about the valuation. It is quite possible that the Standard & Poor’s 500 Index could see 2,000 before the end of this decade arrives. The implied level for the Dow is 20,000.