Systematic Trading Strategies and Next Level Trading Setups
Stocks plunged into early April and surged into early May, suggesting that a “V” reversal is in the making. There are two parts to the V reversal. First, there is the V, which is the plunge and the rebound. Second, there is the breakout move that completes the reversal. SPY fulfilled the V part, but
Zweig Breadth Thrust with an Exit Strategy Read More »
Besides the Zweig Breadth Thrust, chartists can identify bullish thrusts using short-term breadth indicators, such as the percentage of stocks above their 20 and 50 day SMAs (simple moving averages). Breadth thrust signals reflect a sharp turnaround in participation that can foreshadow an extended uptrend. Thrust signals start with a setup that shows very few stocks
Thrust Signals using %Above SMA Breadth – Theory, Practice, Reality Read More »
Developed by the late great Marty Zweig, the Zweig Breadth Thrust uses advance-decline data to identify material shifts in participation. This indicator sets up with when the advance-decline data becomes oversold and triggers when there is a sharp broadening in upside participation (advancing stocks). It is a time sensitive indicator that must trigger within a 10 day window.
Zweig Breadth Thrust – NYSE Original – Modern Version AD% Read More »
Today’s report starts with the Zweig Breadth Thrust, which failed to trigger for the S&P 500, but remains a possibility for the S&P 1500. Follow through in the coming days is needed to trigger. We then turn to detailed analysis of SPY, which is below its falling 200-day SMA and near short-term resistance. Stocks are still broadly out of favor with eight of the eleven sectors
Market & ETF Report – Thrust Shortfall – SPY Resistance – Defensive Groups Lead Read More »
The weight of the evidence remains bearish, but stocks are currently experiencing an oversold bounce. This video will show upside targets and show what it takes to go from a bear market bounce to a bullish breadth thrust. Attention then turns to nine equity ETFs that are holding up the best, including two tech-related ETFs. In the alternative asset group, Bitcoin broke out and the DB Agriculture ETF is making a move. Gold is going parabolic and getting dangerous.
Short-term breadth became oversold on April 4th and stocks surged on April 9th with SPY gaining 10%. SPY then fell 6.5% into Monday and became short-term oversold again. Stock rebounded on Tuesday with SPY gaining 2.6%. Trading is very choppy, but SPY is currently experiencing an oversold bounce. This is still considered a bear market bounce because the market regime indicators are net bearish and we have yet to see a bullish breadth thrust.
Stocks Surge, but Was it Enough for a Breadth Thrust? Read More »
The long-term trends and breadth charts have been net bearish since mid March. SPY, QQQ and the S&P 500 EW ETF (RSP) are in long-term downtrend since early-mid March. Six of the nine breadth indicators were bearish as of mid March. The bond market and Fed policy are the wild cards.
Market Regime – Weighing the Evidence using Trends, Breadth and Yield Spreads Read More »
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Manipulation and Volatility – Downtrend and Bear Market – Volume Spikes – Bitcoin Read More »
Trading is all about the odds. Trade when the odds are in your favor. Exercise patience and stand aside when the odds are NOT in your favor. Stocks are in a bear market and the vast majority of names are trading below their 200-day SMAs. Clearly, the odds are NOT in our favor for equities and equity ETFs. Traders need to look elsewhere. Today’s report will highlight some non-equity leaders and analyze Bitcoin as it sets up.
Equities? Fuhgeddaboudit! Alternative Assets are Leading Read More »
Today’s report will focus on some commodity-related ETFs for two reasons. First, we are in a bear market for stocks. Second, these ETFs are in uptrends. Despite these uptrends, volatility is increasing in this group as well. There is no escaping volatility these days. We will also cover Bitcoin because it is an alternative asset that is setting up.
The weight of the evidence remains bearish. Stocks are in the midst of an oversold bounce, but we have yet to see follow through strong enough to trigger a bullish breadth thrust. SPY and QQQ are in long-term downtrends and near short-term resistance levels after their oversold bounces, which creates a precarious situation. In fact, several ETFs are hitting resistance levels after oversold bounces. Some ETFs are even showing relative strength, but this really means “less weakness”. Gold remains the ultimate safe-haven and Bitcoin has a bullish failure swing working.
Even with the big rebound last week, the vast majority of stocks are below their 200 and 150 day SMAs. Only 23% of S&P 1500 stocks are above their 200-day SMAs (77% below), and only 20% are above their 150-day SMAs (80% below). New lows expanded last week with over 30% of S&P 1500 stocks hitting 52-week lows.
Market Regime – Weighing the Evidence using Trends, Breadth and Yield Spreads Read More »
The weight of the evidence remains bearish for stocks and the bounce over the last four days is considered an oversold bounce. Our short-term breadth thrust indicators have yet to trigger. Until these indicators trigger, I will consider this a bear market bounce. This means negative outcomes are still more likely than positive outcomes. Resistance zones are more likely to hold and support levels are more likely to be broken. In short, risk in stocks remains above average. See this report for an update on the thrust indicators..
Panic selling and oversold extremes gave way to a rip higher last week. Stocks are poised to open strong on Monday as the market reacts positively to tariff news. Last week’s bounce is considered an oversold bounce within a bear market. Thrust signals are setting up, but strong follow through is needed to trigger actual signals. This report will first review the panic indicators and the short-term oversold condition, and then show what it would take to move from a bear market bounce to a bullish breadth thrust.
An Oversold Bounce is One Thing – A Bullish Breadth Thrust is Another Read More »
With fast-moving markets, this report is vulnerable to self-destruction within 5 days. The bond vigilantes sent a message as long-term yields surged and bonds plunged. Unless reversed, these developments are negative for stocks, especially rate sensitive stocks.
This Report Might Self Destruct in 5 Days – TLT Plunges as Yields Surge Read More »
The analysis mode remains macro because the weight of the evidence is still bearish for stocks. Moreover, the markets are unhinged with stocks, commodities, currencies and Treasury bonds fluctuating wildly. Chaos makes chart analysis exceptionally difficult. Perhaps there is opportunity in the chaos, but the current market environment is for nimble traders with quick trigger fingers.
Market Report – Down/Up – Evidence Unchanged – No Thrust, but Watching – SPY – QQQ Read More »
This market regime report weighs the evidence to determine the state of the stock market. Are we in a bull market or bear market? We start with the long-term trends for three major index ETFs (SPY,QQQ,RSP). Attention then turns to breadth indicators to measure the percentage of stocks in uptrends/downtrends and the percentage hitting
Market Regime – Weighing the Evidence using Trends, Breadth and Yield Spreads Read More »
Everything, well, almost everything, fell the last four trading days. This includes the gold and US Treasury Bonds. The Dollar was hit hard, which means other currencies gained. Stocks, industrial metals, oil, crypto and foreign stocks were all down the last four days. Within the US stock market, all sector ETFs and all but two
ETF Report – Forget Support in Downtrends – 2008 Comparison – Bonds, Gold & Yen Read More »
Before looking at the current extremes, keep in mind that the weight of the evidence on the Market Regime page is bearish. We are in a bear market, and bear market rules apply. Support levels are less likely to hold and Bullish Setups are less likely to work. Stocks are extremely oversold right now: long-term and short-term. These oversold conditions could lead to a bounce, but this will be considered a bear market bounce as long as the evidence remains bearish. With volatility higher in bear markets, we can expect some sharp counter-trend bounces and erratic price action.
Long & Short Term Oversold Extremes – Bear Market Rules Apply – Zweig Indicator Sets Up Read More »
Price and breadth indicators are hitting panic levels as investors indiscriminately dump stocks. Several key indicators already reached extremes that could foreshadow a bounce. However, these extremes result from strong selling pressure and increasing downside momentum, which is bearish. The vast majority of stocks moved into long-term downtrends and new lows surging. Such serious technical damage is unlikely to be reversed with the first bounce.
