pay attention or pay the offer

The simple 30 minute chart has produced some good signals over the past few months.  Just two indicators are used, cycle-trap and RSI divergence, with one of each type signal occuring within four bars to produce a signal. Here’s the latest look at that chart.

I have to believe we’re close to if not at a low now, but I really want to see a healthy final hour before strengthening my opinion.

click chart to enlarge

At this time there seems no point in trotting out the usual indicators as all that matters is sellers are lined up to sell and their numbers significantly outnumber buyers. Once again my short-term volume oscillator accelerated do the downside in the last hour of trading.  As stated before, my interpretation is that it’s so important for these people to sell today, because they know they have still more in the pipeline to sell tomorrow.

The CBOE put/call numbers took a jump, and wouldn’t you know, but their website changed how they display the data and my Excel macros have to be rewritten to import the numbers into my spreadsheet. Oh well, it beats those years when I collected the data via phone from the CBOE typing in each 30 minute entry.  Ah, to be young again!

Gold registered a bearish range-bar reversal on the daily chart. Gold’s going to be a buy at some point, and it’s not a bad idea for long-term holders to be accumulating now. But from a trading standpoint, it looks lower over the near-term.

click chart to enlarge

click chart to enlarge

A reader emails to note that yesterday was a rebalancing for the S&P 500 as index funds that received cash in the Anheueser buyout needed to put that money back into the S&P. That rebalancing may have been behind all of the late rally yesterday - and considering the quick return to ugliness today, that line of reasoning makes sense.

Readers - please feel free to use the ‘comments’ feature of this blog to share this type of information. There are many readers of this blog with so much useful information that we can all benefit from.

The theme here at “pay attention or pay the offer” the last few days is that we needed to see advancing volume behave better versus declining volume late in the day before we could turn positive on short-term stock direction. I’ve been publishing an intra-day 5-minute chart of my volume oscillator to see if it could lift itself off the mat late in the trading day. Today it finally accomplished that feat, as the low in the oscillator today came in just after 3 PM ET.  The rebound wasn’t impressive, but the fact remains that the sellers who had been overwhelming the market closes recently were not around today.  It appears safe to get bullish.

The 60 and 135 minute eMini charts support that outlook, with a nice modified DMX divergence in the 60 minute chart and raw RSI and tick divergences combining with trend changes to paint the second to last 135 minute bar of the day green as well. The 60 minute chart registered a net-line buy on todays close too. I’m showing the 5-day advancing volume chart too as well, as it adds additional weight to the bull case.

Targets? The tops of the channels are as follows; 60 minute at 918, 135 minute at 948 and daily at 1046.  The solunar model wind is at the markets back as well.  I think we see the 948 number at a minimum.

click chart to enlarge

click chart to enlarge

click chart to enlarge

click chart to enlarge

The U.S. stock market is in a funk. By all indications there are still serious sellers working to unload large positions. The first chart this evening, showing one day’s eMini prices and my volume oscillator has the same sharp acceleration in down volume late in the day that we saw on Friday. I interpret these sellers as working large orders all day long and then not having sold enough of their quota are forced to more aggresively hit bids in the final half hour of trading. Stocks cannot rally under these conditions.

The second chart shows the solunar model, which is now about to head higher. It’s goint to take more than a favorable seasonal picture to get stocks up, but once these lingering sellers are satisfied, anything will be possible.

The standard 60 minute and 135 minute charts are here as well.  There are both positive and negative aspects to each chart, but right now for me, the key is watching the advancing and declining volume late in the day for signs that the relentless supply of stock for sale is waning.  Watch this space for developments!

click chart to enlarge

click chart to enlarge

click chart to enlarge

click chart to enlarge

Here’s a 5 minute chart of the volume oscillator along with the eMini mentioned in the earlier post today.  The level of the 2pm low is noted with a horizontal line.  Notice how the oscillator has reversed lower AND is at new lows for the day.  That is not what bulls want to see.

click chart to enlarge

There’s nothing wrong with both eMini charts below. Stocks seemingly have no technical reason to go lower now, at least based on those indicators. And yet, we have times like this morning when relentless selling dominates.  I watch some intra-day oscillators built on advancing and declining volume and no matter how good the rest of the universe of indicators looks, the market can’t go higher without advancing volume having the upper hand over declining volume.  Which makes today interesting, because it’s important that it not have a typical down day where my oscillators close on their lows of the day.  And so, it was heartening to see these oscillators turn around and head higher today around 2 PM  EST.   It’s not that these volume oscillators can’t still close on their lows of the day, but the edge today is now on the bull’s side.

click chart to enlarge

click chart to enlarge

Stocks are attempting to make a low here. The eMini took out the October lows and has now rallied over 40 handles from that low. The Tick Cycle-Trap on the 60 minute chart makes the bullish case. I think we’re at a low risk/high reward spot for traders to enter the market on the long side here.

click chart to enlarge

I have a limited number of new Spiral Calendar books available.  The cost is $49 - plus $8 shipping and handling in the U.S.  or plus $20. shipping and handling outside of the U.S.

The ingredients for a U.S. stock market low are forming, but it’s not yet clear that the low is nearby. Selling has been intense and consistent, two features that will need to disappear before prices can reverse.  And yet, the charts show the modified DMX poised to form a bullish divergence (if prices turn up.)  We’ve also arrived at that November Spiral Calendar turn date mentioned in previous reports.  Clearly selling intensity and emotion have picked up. Today’s ISEE call/put reading was lower than any since September.

The sum of the parts is that I can see how we are close to a low, but there’s no sense in ‘calling’ for a low, or taking any foolishly heroic stand in the face of such relentless selling.   It’s just a time to watch and wait.

click chart to enlarge

click chart to enlarge

Are the clouds parting allowing stocks to rally now?  The 60 minute chart has a nice Tick Cycle-Trap divergence in place. An hourly close above 906 will provide a net-line buy as well.  The eMini is in the vicinity of the 135 minute lower channel (now 902). A move above 910 will bring in buyers if it happens today.

click chart to enlarge

The DJ-AIG commodity index and the daily gold chart both made bearish range-bust reversal bars yesterday. Gold is following through with a minus 18 dollar day today. The gold chart below shows a bear flag formation which projectst o $550 per oz!  I’m not sure it can go that low. But $650. is definitely doable. Oil is under $59 today as well.  The deflationary liquidation of assets continues. Long-term gold is a buy, but we’re not there yet. The leveraged longs must be forced out before a bottom can be put in.

click chart to enlarge