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Posts: 4,424
Reply with quote  #1 
2015-12-17 16:00:01 fib1618: good day
2015-12-17 16:00:03 fib1618: how is everyone?
2015-12-17 16:00:15 rite01: good
2015-12-17 16:02:09 fib1618: thanks again for the scripts
2015-12-17 16:02:48 rite01: no problem
2015-12-17 16:04:43 fib1618: OK...any questions or comments before we get started??
2015-12-17 16:05:15 rite01: Noticed the components when they touch buy or sell obligatory signals  works best you take the MCSUM direction into account?
2015-12-17 16:05:22 fib1618: ouch...just saw what happened today
2015-12-17 16:05:39 rite01: I know what was that?
2015-12-17 16:05:56 fib1618: it's called moving lower after snapping back to the MCO zero line
2015-12-17 16:06:16 rite01: OK then
2015-12-17 16:06:18 fib1618: yes...the MCSUM is your intermediate term trend oscillator
2015-12-17 16:06:27 fib1618: so it takes the greater weight
2015-12-17 16:06:38 fib1618: for example
2015-12-17 16:06:46 fib1618: if money is moving in
2015-12-17 16:06:53 fib1618: and the RSI is "oversold"
2015-12-17 16:07:03 fib1618: this is your buy point
2015-12-17 16:07:14 fib1618: so if the MCSUM is below the zero line
2015-12-17 16:07:25 fib1618: and the MCO, or its components, are above their zero line
2015-12-17 16:07:31 fib1618: the only thing prices can do is...
2015-12-17 16:07:34 fib1618: chop
2015-12-17 16:07:39 fib1618: no trend
2015-12-17 16:07:44 rite01: does being lower (MCSUM) or higher have bearing on the components obligatory bounce?
2015-12-17 16:07:58 fib1618: technically, no
2015-12-17 16:08:22 fib1618: which then provides greater insight when they don't do what they're supposed to
2015-12-17 16:08:35 fib1618: all of this is rhythm
2015-12-17 16:09:08 fib1618: we're measuring the "brea(d)th" and "heart beat" of the market
2015-12-17 16:09:14 fib1618: you're Dr. Mike
2015-12-17 16:09:26 fib1618: and you're looking at the market's EKG
2015-12-17 16:09:49 fib1618: sometimes there are palpitations
2015-12-17 16:10:16 fib1618: that's something that can be looked at as being part of the usual wear and tear
2015-12-17 16:10:24 fib1618: but too much out of sync, and you have problems
2015-12-17 16:10:31 rite01: but when the MCSUM is below zero and moving up .. should mean components heading up as well although zig zaging
2015-12-17 16:10:59 fib1618: try it this way
2015-12-17 16:11:12 fib1618: the 10% component is the 19 day EMA
2015-12-17 16:11:21 fib1618: the 5% component is the 39 day EMA
2015-12-17 16:11:37 fib1618: both of the cumulative A/D or U/D line being measured
2015-12-17 16:11:50 fib1618: if one or the other component is above the zero line
2015-12-17 16:11:57 fib1618: it tells you that specific EMA is moving higher
2015-12-17 16:12:03 fib1618: if they are below their zero line
2015-12-17 16:12:08 fib1618: the EMA is moving lower
2015-12-17 16:12:24 fib1618: the MCSUM tells you the distance BETWEEN these two EMA's
2015-12-17 16:12:30 fib1618: so...
2015-12-17 16:12:37 fib1618: if the 10% is above its zero line
2015-12-17 16:12:49 fib1618: showing that it's rising
2015-12-17 16:12:57 fib1618: but the 5% is below its zero line
2015-12-17 16:13:04 fib1618: showing that it's declining
2015-12-17 16:13:31 fib1618: you then use the MCSUM to measure the distance between the two EMA's before they cross
2015-12-17 16:13:41 fib1618: they "cross" at the MCSUM zero line
2015-12-17 16:13:58 fib1618: this is why the zero line is so important
2015-12-17 16:14:12 fib1618: for it tells us which direction money is flowing
2015-12-17 16:14:19 fib1618: both in direction and on a trending basis
2015-12-17 16:14:38 fib1618: so until all shows us on one side of the zero line at the same time
2015-12-17 16:14:45 fib1618: prices can NOT trend
2015-12-17 16:14:48 fib1618: they will only chop
2015-12-17 16:15:04 fib1618: sort of like having one of your spark plugs our of sync
2015-12-17 16:15:20 fib1618: you may move forward...but not without a lot of effort and lurching
2015-12-17 16:15:39 rite01: thanks for the reminders... I'm just trying to
2015-12-17 16:16:01 rite01: use this for a one day trade..
2015-12-17 16:16:08 fib1618: hard to do
2015-12-17 16:16:10 fib1618: because
2015-12-17 16:16:17 fib1618: all of this data is on a daily basis
2015-12-17 16:16:30 fib1618: so in order to take full advantage of it for one day
2015-12-17 16:16:38 fib1618: you have to have everything moving in one direction
2015-12-17 16:16:45 rite01: right, I see that
2015-12-17 16:16:50 fib1618: get yesterday and today
2015-12-17 16:16:59 fib1618: Tuesday was a reflex
2015-12-17 16:17:10 fib1618: Wednesday was relief
2015-12-17 16:17:17 fib1618: Thursday was realization
2015-12-17 16:17:29 fib1618: we're still not out of the hole here
2015-12-17 16:17:36 fib1618: no buy signal has been given on a daily basis
2015-12-17 16:17:42 fib1618: intraday...OK
2015-12-17 16:17:57 fib1618: but even that was to be short lived as most bear market rallies are
2015-12-17 16:18:09 fib1618: context is everything
2015-12-17 16:18:29 fib1618: here's what I have found over the years
2015-12-17 16:18:56 fib1618: there is NOTHING out there that supersedes the directional flow of breadth
2015-12-17 16:19:16 fib1618: for money must move in advance of the eventual direction of prices
2015-12-17 16:19:22 fib1618: breadth (money) leads (the direction of) price
2015-12-17 16:19:55 fib1618: so when we get signals and hammer sticks like we did on Tuesday off of deeply non divergent levels
2015-12-17 16:20:07 fib1618: these are typical movements in bear markets
2015-12-17 16:20:36 fib1618: and eventually we take out these same low points
2015-12-17 16:20:48 fib1618: this is why MCO texture is important
2015-12-17 16:21:06 fib1618: sort of like building a multi story building
2015-12-17 16:21:12 fib1618: you must have a solid foundation
2015-12-17 16:21:21 fib1618: and then as you begin to build on that foundation
2015-12-17 16:21:47 fib1618: you go one story...look around to make sure that it's stable...and then you move on to the next story
2015-12-17 16:21:59 fib1618: all the while making sure that you have UNDERLYING SUPPORT
2015-12-17 16:22:03 rite01: when you say non divergent you mean in the price and MCO right
2015-12-17 16:22:10 fib1618: always
2015-12-17 16:22:30 fib1618: as the MCO is a momentum tool that measures the short term TREND of money flow
2015-12-17 16:22:40 fib1618: so...if prices move to a lower low
2015-12-17 16:22:51 fib1618: without increased selling to get you there
2015-12-17 16:22:58 fib1618: you create divergence
2015-12-17 16:23:09 fib1618: money leads the direction of price
2015-12-17 16:23:11 fib1618: period
2015-12-17 16:23:15 fib1618: case closed
2015-12-17 16:23:20 rite01: Thanks great information...
2015-12-17 16:23:36 fib1618: there will be, at times, anomalies to this concept in market dynamics
2015-12-17 16:23:51 fib1618: but they are almost always corrected...
2015-12-17 16:23:55 fib1618: we "reset"
2015-12-17 16:24:09 fib1618: for without the fuel needed to meet a goal
2015-12-17 16:24:15 fib1618: you're just not going to get there
2015-12-17 16:24:17 fib1618: this is why
2015-12-17 16:24:32 fib1618: when we hear anyone that the market is going to Dow 10,000
2015-12-17 16:24:40 fib1618: unless we have money flow leading the way
2015-12-17 16:24:49 fib1618: that analyst is going to be dead wrong
2015-12-17 16:25:05 fib1618: the market doesn't move based on voodoo or bias
2015-12-17 16:25:11 fib1618: it moves on the directional flow of money
2015-12-17 16:25:21 fib1618: simple, simple, simple
2015-12-17 16:25:36 fib1618: supply and demand
2015-12-17 16:25:49 fib1618: right now
2015-12-17 16:26:01 fib1618: we have money sloshing around indecisively
2015-12-17 16:26:16 fib1618: my best example here
2015-12-17 16:26:19 fib1618: as a kid
2015-12-17 16:26:36 fib1618: and you would take your forearm and moving the water back and forth in a full bathtub
2015-12-17 16:26:48 fib1618: and the more arm energy you put behind it
2015-12-17 16:26:58 fib1618: the higher up against the wall it would go
2015-12-17 16:27:03 fib1618: take away your arm
2015-12-17 16:27:08 fib1618: and the water doesn't just stop
2015-12-17 16:27:28 fib1618: it moves back and forth until the momentum that was introduced by your arm motion has subsided
2015-12-17 16:27:40 fib1618: same thing here with the market
2015-12-17 16:27:52 fib1618: also keep in mind
2015-12-17 16:28:00 fib1618: that the higher prices go
2015-12-17 16:28:11 fib1618: the bigger the typical 1% move
2015-12-17 16:28:23 fib1618: so it looks and feels different
2015-12-17 16:28:32 fib1618: but percentage wise..there is order
2015-12-17 16:28:57 fib1618: that's why institutions love playing high cost stocks
2015-12-17 16:29:14 fib1618: if you get a 1% move in a $10 stock...that's only .10
2015-12-17 16:29:47 fib1618: $100 stock...$1
2015-12-17 16:30:09 fib1618: $500 stock...a $5 move
2015-12-17 16:30:19 fib1618: it's all relative
2015-12-17 16:30:31 fib1618: as not to bore you to sleep
2015-12-17 16:30:38 fib1618: let's move on to today's data
2015-12-17 16:30:45 rite01: not bored at all
2015-12-17 16:30:52 rite01: thanks again
2015-12-17 16:31:22 fib1618: after snapping toward the zero line with a -3 reading on Wednesday
2015-12-17 16:31:37 fib1618: the NYSE CO breadth MCO moved sharply lower today
2015-12-17 16:31:54 fib1618: coming in with a -32 reading
2015-12-17 16:32:38 fib1618: this negative action has now generated a continuation to the downside in the trend of the NYSE CO breadth MCSUM
2015-12-17 16:32:59 fib1618: which moved down and through the -300 level
2015-12-17 16:33:01 fib1618: because of this
2015-12-17 16:33:13 fib1618: the next area of potential support will come in at the -500 level
2015-12-17 16:33:31 fib1618: so now that the market has accomplished making all of the near term puts worthless
2015-12-17 16:33:49 fib1618: we can now resume the negative trend prior to this week's "oversold" bounce
2015-12-17 16:34:17 fib1618: note also that the CO 10% components found snapback resistance with the 5% component today
2015-12-17 16:34:30 fib1618: so a reversal in this short term trend was to be expected
2015-12-17 16:35:05 fib1618: and I'm getting that "low down" feeling again looking at the NYA price chart
2015-12-17 16:35:40 rite01: and the MCSUM below zero and heading down at the snapback
2015-12-17 16:35:40 fib1618: notice that we weren't able to move back above the reversal price bar of last Wednesday
2015-12-17 16:35:57 fib1618: yes was just a hesitation point
2015-12-17 16:36:25 fib1618: remember that since the MCSUM measures the distance between the 19 and 39 day EMA's of the cumulative line
2015-12-17 16:36:51 fib1618: that the further the distance between the individual postings also tells us how fast or slow money is moving
2015-12-17 16:37:03 fib1618: the wider the spacing...the larger the sums of money moving in or out
2015-12-17 16:37:16 fib1618: the narrower the spacing...the smaller the sums of money
2015-12-17 16:37:30 rite01: thanks for reminders
2015-12-17 16:38:31 fib1618: the beauty of the McClellan's is that they give us so much information at a single glance
2015-12-17 16:38:41 fib1618: more than 99% of traders out there don't see it
2015-12-17 16:38:57 fib1618: especially with the significant inclusion of the components as we do in here
2015-12-17 16:39:10 fib1618: so much so
2015-12-17 16:39:42 fib1618: that you can trend trade the market with very little effort because you know what the general market conditions are
2015-12-17 16:40:15 fib1618: this is why the BETS works as well as it does
2015-12-17 16:40:48 fib1618: where many continued to look for higher stock prices into the 4th quarter
2015-12-17 16:40:57 fib1618: the BETS remained solidly negative
2015-12-17 16:41:14 fib1618: so the most that could happen was a challenge of the highs
2015-12-17 16:41:28 fib1618: but nothing that would mimic a trend
2015-12-17 16:41:37 fib1618: OK..back to the data
2015-12-17 16:41:55 fib1618: moving to the NYSE Composite breadth MCO
2015-12-17 16:42:13 fib1618: and we also saw it continue to snapback to or toward the zero line on Wednesday
2015-12-17 16:42:28 fib1618: but only to pull back slightly today
2015-12-17 16:42:52 fib1618: this would indicate that the interest rate sensitive issues were finding general support on this technical pullback
2015-12-17 16:43:13 fib1618: which would mean that the weight of this same pullback came with the common stock issues
2015-12-17 16:43:30 fib1618: small "whispers" like this are important
2015-12-17 16:44:01 fib1618: because interest rate sensitive issues tell us how liquidity is doing at any given time
2015-12-17 16:44:39 fib1618: liquidity (in this case) is the amount of money that is available for investment
2015-12-17 16:46:02 fib1618: looking at the components
2015-12-17 16:46:24 fib1618: and we see that the 10% Trend found resistance at the 5% Trend on Wednesday
2015-12-17 16:47:11 fib1618: so some sort of pullback was to be expected today
2015-12-17 16:47:40 fib1618: notice now how the NYSE Composite breadth MCSUM continues to decline in spite of Tuesday and Wednesday's reflex rally
2015-12-17 16:48:01 fib1618: which again tells us that those advances are that of the bear market type...against the flow of a declining trend in money flow
2015-12-17 16:48:17 fib1618: and the vacuum when created is usually filled very quickly
2015-12-17 16:48:30 fib1618: in fact
2015-12-17 16:48:37 fib1618: Wednesday rally never happened
2015-12-17 16:48:46 fib1618: as we're back to where we were on Tuesday
2015-12-17 16:48:58 fib1618: that's the vacuum being filled
2015-12-17 16:49:19 fib1618: moving to the NASDAQ breadth MCO
2015-12-17 16:49:22 rite01: I see that
2015-12-17 16:49:33 fib1618: and here we also saw a nice snapback toward the zero line here as well
2015-12-17 16:49:38 fib1618: which reminds me
2015-12-17 16:49:47 fib1618: when ever we look for technical snapbacks
2015-12-17 16:50:12 fib1618: the term in which I use is that its a process of "to or towards"
2015-12-17 16:50:33 fib1618: many other analysts use, and trade off of, the word "to"
2015-12-17 16:50:53 fib1618: which can be problematic if you're only moving "toward" something
2015-12-17 16:50:58 fib1618: take the MCO's today
2015-12-17 16:51:13 fib1618: the NYSE CO....we'll call its progress "to" the zero line
2015-12-17 16:51:23 fib1618: but the NYSE Composite..was "toward"
2015-12-17 16:51:31 fib1618: nothing is exact in this business
2015-12-17 16:51:53 fib1618: so, as technicians, we look for the reasonable expectation instead of perfection
2015-12-17 16:52:06 fib1618: and lock and load based on that
2015-12-17 16:52:10 fib1618: take Tuesday
2015-12-17 16:52:22 fib1618: we had several MCO's above their blip resistance points
2015-12-17 16:52:26 fib1618: but other were not (like the NYSE Composite)
2015-12-17 16:52:34 fib1618: strictly speaking
2015-12-17 16:52:46 fib1618: until you get uniformed confirmation
2015-12-17 16:53:23 fib1618: it's dangerous to trade on the expectation that all will move above thier blip resistance point
2015-12-17 16:53:30 fib1618: but once they did (intraday)
2015-12-17 16:53:48 fib1618: and held steady (remember the market was choppy sideways into the FED announcement)
2015-12-17 16:53:59 fib1618: it was at that time where one side took control
2015-12-17 16:54:29 fib1618: and we fulfilled the technical expectation of a snapback to or towards the zero line (neutral) after being deeply "oversold"
2015-12-17 16:54:35 fib1618: once that's out of the way
2015-12-17 16:54:41 fib1618: one side can then take control again
2015-12-17 16:54:50 fib1618: and as mentioned on Tuesday
2015-12-17 16:54:58 fib1618: the odds are with the sellers
2015-12-17 16:55:00 fib1618: because..
2015-12-17 16:55:21 fib1618: the directional flow of money, on an intermediate term trending basis, is to the downside as measured by the MCSUM
2015-12-17 16:55:48 fib1618: so these kind of zero line snapbacks are position trades
2015-12-17 16:55:59 fib1618: where your risk is rather minimal
2015-12-17 16:56:09 fib1618: but you reward is quite substantial
2015-12-17 16:56:36 fib1618: and can be measured by how far away from neutral (the zero line) you are when using the MCO and MCSUM
2015-12-17 16:56:51 fib1618: you then...
2015-12-17 16:56:52 fib1618: in a way
2015-12-17 16:56:57 fib1618: become the "house"
2015-12-17 16:57:04 fib1618: and not the "chump"
2015-12-17 16:57:31 fib1618: probability and outcome...that's all we do (and measure) as traders
2015-12-17 16:58:08 fib1618: note that the NASDAQ breadth MCSUM broke away to the downside today from the -250 level
2015-12-17 16:58:31 fib1618: so our expectation into next week is for continued weakness as we move toward the -500 level
2015-12-17 16:58:40 fib1618: and the deeper we go in the MCSUM
2015-12-17 16:58:48 fib1618: the more downside pressure that's applied to prices
2015-12-17 16:59:01 fib1618: equal and opposite on the north side of zero
2015-12-17 16:59:30 fib1618: the NDX breadth MCO actually moved above the zero line on Wednesday
2015-12-17 16:59:40 fib1618: but was not able to take out the previous highs seen on the chart
2015-12-17 17:00:00 fib1618: so unless the buyers came in to further support the pattern
2015-12-17 17:00:21 fib1618: a snapback back down to or toward the zero line would be expected
2015-12-17 17:00:28 fib1618: and viola...that's what we got today
2015-12-17 17:00:38 fib1618: not only that
2015-12-17 17:00:54 fib1618: but the zero line was broken as we finished with a -22
2015-12-17 17:01:10 fib1618: so since we're close to natural support at -25
2015-12-17 17:01:25 fib1618: the odds here suggest a snapback back up to the zero line near term
2015-12-17 17:01:31 fib1618: and if that doesn't happen
2015-12-17 17:01:51 fib1618: then we know that the selling pressure is heavier than what's being indicated
2015-12-17 17:02:06 fib1618: and because of our current position to the Monday price lows
2015-12-17 17:02:40 fib1618: a challenge of these lows would become probable on any break below -25
2015-12-17 17:02:58 fib1618: things must work together
2015-12-17 17:03:10 fib1618: would also provide a lower low in the NDX breadth MCSUM
2015-12-17 17:03:39 fib1618: instructing us of a continuation of money moving out of this basket of issues
2015-12-17 17:03:49 fib1618: and if money is moving out
2015-12-17 17:04:07 fib1618: the odds of prices moving higher become less and less probable
2015-12-17 17:04:20 fib1618: and you position your trade accordingly
2015-12-17 17:04:26 fib1618: regardless of hammers
2015-12-17 17:04:45 fib1618: regardless of previous "oversold" patterns
2015-12-17 17:05:14 fib1618: as they only mean something IF money begins to lead prices out of these same potential turning points
2015-12-17 17:05:33 fib1618: what we occasionally refer to as the "character" of a move
2015-12-17 17:05:54 fib1618: the best thing about all this is
2015-12-17 17:06:24 fib1618: if the MCO and the Components are in disagreement as to their positions with respect to their zero lines
2015-12-17 17:06:36 fib1618: we KNOW that we have time to be patient
2015-12-17 17:06:43 fib1618: that's on a short term basis (that of 4-6 weeks)
2015-12-17 17:06:53 fib1618: and if the MCO and MCSUM are in disagreement
2015-12-17 17:07:28 fib1618: we then know that we won't see trending price moves either on an intermediate term basis (that of 6-12 weeks)
2015-12-17 17:07:47 fib1618: and knowing all this
2015-12-17 17:07:59 fib1618: allows you to trade both as a scalper and day trader as well
2015-12-17 17:08:18 fib1618: for if everything is in agreement
2015-12-17 17:08:52 fib1618: the path of least resistance, and therefore the easier profitable trade, is going along this same path
2015-12-17 17:09:02 fib1618: but if there's any disagreement
2015-12-17 17:09:07 fib1618: you "hit and run"
2015-12-17 17:09:30 fib1618: as the market will be choppy, if not volatile, until the engine is "tuned"
2015-12-17 17:11:45 fib1618: moving on
2015-12-17 17:12:06 fib1618: hard reversal bar to the downside on the SPX today
2015-12-17 17:12:15 fib1618: and right at the zero line of the SPX breadth MCO
2015-12-17 17:12:41 fib1618: this then suggests that all of the willing and unwilling buyers/covered shorts were spent
2015-12-17 17:12:54 fib1618: and that the sellers have taken back control of the action
2015-12-17 17:13:41 fib1618: we also see that the SPX components also couldn't find any follow through positive money flow today
2015-12-17 17:13:56 fib1618: while the SPX breadth MCSUM failed to even snapback up to its zero line
2015-12-17 17:14:22 fib1618: suggesting that the sellers are now taking an upper hand for the intermediate term
2015-12-17 17:14:52 fib1618: looks like a test of 2020 is the near term objective here
2015-12-17 17:15:33 fib1618: with any close below 2010 likely to push prices below the November lows in a decisive way
2015-12-17 17:16:43 fib1618: doing a little math sec
2015-12-17 17:17:55 fib1618: looks like we peaked out at just above a .618 retracement level of the December decline yesterday
2015-12-17 17:17:59 fib1618: could be corrective
2015-12-17 17:18:10 fib1618: but if it's not...shrug
2015-12-17 17:18:39 fib1618: now the OEX breadth MCO had a better go of it on Wednesday
2015-12-17 17:18:56 fib1618: as it closed above both its zero line and its horizontal resistance point
2015-12-17 17:19:04 fib1618: problem is...
2015-12-17 17:19:12 fib1618: we didn't get follow through on this today
2015-12-17 17:19:27 fib1618: so a reset was the result
2015-12-17 17:19:40 fib1618: now that December futures have expired
2015-12-17 17:19:56 fib1618: it will be important that the buyers show some support into tomorrow's close
2015-12-17 17:20:14 fib1618: or next week has the potential of being very weak
2015-12-17 17:20:17 fib1618: speaking of which
2015-12-17 17:20:38 fib1618: remember that our chats next week with be on Monday and Tuesday because of the holiday on Friday
2015-12-17 17:21:18 fib1618: I would expect Wednesday to be the last "full day" before shut down as traders begin to take off
2015-12-17 17:21:23 fib1618: and as we know
2015-12-17 17:21:39 fib1618: thinly traded days do have a tendency to see large moves
2015-12-17 17:21:50 fib1618: we'll see how things look on Monday
2015-12-17 17:21:52 fib1618: anyway
2015-12-17 17:21:56 fib1618: back to the charts at hand
2015-12-17 17:22:19 fib1618: notice that the OEX breadth MCSUM is far weaker than the SPX breadth MCSUM
2015-12-17 17:22:41 fib1618: and since something like 80% of the weighting in the SPX is with the top 100 stocks
2015-12-17 17:23:02 fib1618: it would be reasonable to expect that the SPX is going have a tough time finding near term support
2015-12-17 17:23:28 fib1618: notice also how the OEX 10% and 5% Trend found resistance right at their zero lines
2015-12-17 17:23:55 fib1618: still fascinates me when things like that happen as regularly as they do
2015-12-17 17:24:01 fib1618: "how does the market know?"
2015-12-17 17:24:34 fib1618: the Dow breadth MCO also failed to hold above its zero line
2015-12-17 17:24:54 fib1618: and now the Dow breadth MCSUM is up against zero line resistance
2015-12-17 17:25:05 fib1618: as opposed to it being holding zero line support
2015-12-17 17:25:33 fib1618: quite a difference in the potential outcome this conveys
2015-12-17 17:25:52 fib1618: bad day for the MID
2015-12-17 17:26:01 fib1618: as it not only reversed hard to the downside today
2015-12-17 17:26:14 fib1618: but it also took out Tuesday's reversal close in prices
2015-12-17 17:26:23 fib1618: this would then suggest that lower price lows are likely
2015-12-17 17:26:53 fib1618: and this will probably time well with the MID breadth MCSUM moving down and through its zero line
2015-12-17 17:27:12 fib1618: which, minimally, is two days away
2015-12-17 17:27:19 fib1618: unless we have a near term collapse tomorrow
2015-12-17 17:27:59 fib1618: with the SML breadth MCSUM at the zero line now with a -2
2015-12-17 17:28:15 fib1618: what happens here will be our near term proxy for the direction of the MID
2015-12-17 17:28:37 fib1618: the reason for this is that in order for prices to trend higher
2015-12-17 17:29:04 fib1618: you must have more than ample liquidity in order for money to seek out those issues that are looked upon as being "less deserving"
2015-12-17 17:29:23 fib1618: as they don't provide consistent earnings and/or dividends
2015-12-17 17:29:35 fib1618: so if the secondary market is leading lower
2015-12-17 17:29:54 fib1618: those issues that would be classified as "growth" products
2015-12-17 17:30:12 fib1618: they fully depend on the cost and availability of money for their existence
2015-12-17 17:30:22 fib1618: and if liquidity is contracting
2015-12-17 17:30:33 fib1618: so are the future prospects of anything that is called "growth"
2015-12-17 17:30:50 fib1618: only stocks that provide "value" are supported by what's left to use for investment
2015-12-17 17:30:56 fib1618: "total return"
2015-12-17 17:31:03 fib1618: after all
2015-12-17 17:31:10 fib1618: the objective here is capital appreciation
2015-12-17 17:31:22 fib1618: and if a company is not able to expand their earnings
2015-12-17 17:31:30 fib1618: or their R&D
2015-12-17 17:31:33 fib1618: or territories
2015-12-17 17:31:57 fib1618: then they are going to lose their intrinsic value
2015-12-17 17:32:02 fib1618: and down they go as money continues to dry up
2015-12-17 17:32:16 fib1618: and as more and more stocks get less and less capital
2015-12-17 17:32:20 fib1618: down they go
2015-12-17 17:32:29 fib1618: until you are left with the best of the best
2015-12-17 17:32:58 fib1618: and eventually they join the party as more and more opinion shifts to other asset classes that are deemed "undervalued"
2015-12-17 17:33:09 fib1618: that provide a better return
2015-12-17 17:33:12 fib1618: bonds
2015-12-17 17:33:20 fib1618: commodities
2015-12-17 17:33:26 fib1618: and the like
2015-12-17 17:33:40 fib1618: gold doesn't move until there are excesses in this same liquidity stream
2015-12-17 17:33:45 fib1618: so gold moves lower as well
2015-12-17 17:34:04 fib1618: this is why it had a reversal this morning...let me see how it did
2015-12-17 17:34:23 fib1618: down $21
2015-12-17 17:34:26 fib1618: and pattern new lows
2015-12-17 17:34:41 fib1618: the important thing about gold is
2015-12-17 17:34:44 tuna: what about gold in 1980?
2015-12-17 17:34:54 fib1618: it doesn't rise of because of inflation
2015-12-17 17:35:13 fib1618: it rises on inflationary expectations
2015-12-17 17:35:18 fib1618: 1980?
2015-12-17 17:35:21 fib1618: well..
2015-12-17 17:35:28 fib1618: we just came off the gold standard
2015-12-17 17:36:00 fib1618: and the dollar basically collapsed because it didn't have underlying support
2015-12-17 17:36:05 fib1618: you'll notice
2015-12-17 17:36:14 fib1618: that even with interest rates skyrocketing
2015-12-17 17:36:20 fib1618: it didn't keep gold from advancing
2015-12-17 17:36:39 fib1618: I would call it an adjustment period to the newly created Fiat Currency
2015-12-17 17:36:53 fib1618: and the market trying to put price valuations on products and commodities
2015-12-17 17:37:19 fib1618: remember WIN?
2015-12-17 17:37:27 fib1618: what else was there?
2015-12-17 17:37:32 tuna: makes sense then a 25 year bear market in gold
2015-12-17 17:37:38 fib1618: something else Nixon did
2015-12-17 17:37:42 fib1618: correct
2015-12-17 17:37:45 fib1618: because once you get to a certain point where the majority has no clue of value
2015-12-17 17:38:07 fib1618: everyone jumps on board
2015-12-17 17:38:16 fib1618: and you get your parabolic moves
2015-12-17 17:38:22 fib1618: that eventually collapse
2015-12-17 17:38:38 fib1618: and then you trend lower until you find "reset"
2015-12-17 17:38:46 fib1618: look at Bitcoin
2015-12-17 17:38:49 fib1618: same thing there
2015-12-17 17:38:57 fib1618: no one really knew what the value was/is
2015-12-17 17:39:07 fib1618: this is one of the reasons why
2015-12-17 17:39:13 fib1618: when a new issue comes to market
2015-12-17 17:39:19 fib1618: I stay away from it for the first year
2015-12-17 17:39:31 fib1618: got burned too many times
2015-12-17 17:39:47 fib1618: all that emotional excitement blinds you
2015-12-17 17:39:56 fib1618: we've all been there
2015-12-17 17:40:12 fib1618: and then we try it again because "this time will be different"
2015-12-17 17:40:20 fib1618: and wham,'re hit again
2015-12-17 17:40:43 fib1618: the biggest problem with trading is listening to everyone else's opinions
2015-12-17 17:40:56 fib1618: newsletter writers
2015-12-17 17:41:09 fib1618: people who are interviewed as "experts"
2015-12-17 17:41:11 fib1618: problem is
2015-12-17 17:41:25 fib1618: unless you find out when they turn tail and move on
2015-12-17 17:41:40 fib1618: you're usually stuck because he or she said that it was a "no brainer"
2015-12-17 17:41:43 fib1618: until it isn't
2015-12-17 17:42:03 fib1618: and your "no brainer" takes on a whole new definition [smile]
2015-12-17 17:42:26 fib1618: discipline and consistency
2015-12-17 17:42:29 fib1618: that's all that matters
2015-12-17 17:42:42 fib1618: and above all else
2015-12-17 17:42:48 fib1618: having something that works all the time
2015-12-17 17:42:53 fib1618: and not just some of the time
2015-12-17 17:43:08 fib1618: what I found out in my 30th year of trading (which was 15 years ago)
2015-12-17 17:43:27 fib1618: that money knows what money likes...and money like to make more money
2015-12-17 17:43:32 fib1618: so you just follow the money
2015-12-17 17:43:39 fib1618: and let the answers on why to come later on
2015-12-17 17:44:04 fib1618: all we should care about is where money is moving and at what rate of speed
2015-12-17 17:44:49 fib1618: finally, the TM breadth MCO also snapped back toward its zero line
2015-12-17 17:45:10 fib1618: but it didn't take out the highs seen at the beginning of the month
2015-12-17 17:45:14 fib1618: and that's a near term problem
2015-12-17 17:45:24 fib1618: of which the buyers will need to address by Monday
2015-12-17 17:45:36 fib1618: or the sellers will pretty much have control through the end of the year
2015-12-17 17:45:51 fib1618: which would then match our blueprint from earlier in the month
2015-12-17 17:45:53 fib1618: so...
2015-12-17 17:45:58 fib1618: reflex rally complete
2015-12-17 17:46:04 fib1618: zero line snapbacks complete
2015-12-17 17:46:17 fib1618: and now we're back to the sellers taking control
2015-12-17 17:46:27 fib1618: any downside follow through on Friday
2015-12-17 17:46:36 fib1618: would set up next week as being negative overall
2015-12-17 17:47:00 fib1618: though we would like to expect a firm day on Thursday before shutting down for the holiday weekend
2015-12-17 17:47:02 fib1618: we'll see how it goes
2015-12-17 17:47:13 fib1618: let me quickly go through the sectors
2015-12-17 17:47:47 fib1618: zero line snapback and failure in the XLY breadth MCO
2015-12-17 17:47:49 fib1618: ah oh
2015-12-17 17:47:57 fib1618: look at the new price highs in the XLP
2015-12-17 17:48:18 fib1618: which is not confirmed by the XLP breadth MCO and MCSUM
2015-12-17 17:48:34 fib1618: looks like Aunt Minnie and Uncle Charley bought the reflex
2015-12-17 17:48:50 fib1618: and the plug is about to be pulled
2015-12-17 17:48:56 fib1618: too bad
2015-12-17 17:49:24 fib1618: any downside follow through and strong bear divergence in place
2015-12-17 17:49:41 fib1618: breakdown again in the XLE
2015-12-17 17:49:59 fib1618: as the snapback toward zero was on the weak side
2015-12-17 17:50:30 fib1618: and today's reading in the XLE breadth MCO has pushed the XLE breadth MCSUM below the -1000 level
2015-12-17 17:50:48 fib1618: so a break of the $59 level is now probable
2015-12-17 17:51:09 fib1618: has to wonder if the economy is so good
2015-12-17 17:51:17 fib1618: why is the cost of energy so weak?
2015-12-17 17:51:27 fib1618: foolish economists
2015-12-17 17:51:40 fib1618: it's right there in front of them and still they're blind
2015-12-17 17:52:02 fib1618: and raise rates based on data that's in the rear view mirror
2015-12-17 17:52:30 tuna: do oil prices follow in lock step with XLE?
2015-12-17 17:52:36 fib1618: the XLF is also in danger of a breakdown here
2015-12-17 17:52:43 fib1618: no...XLE leads oil
2015-12-17 17:52:48 fib1618: as PM stocks lead gold
2015-12-17 17:53:14 fib1618: remember that equities discount future earnings
2015-12-17 17:53:27 tuna: man gonna look at oil futures seriously
2015-12-17 17:53:36 fib1618: this is why using divergence techniques between stocks their underlying commodity works so well
2015-12-17 17:53:51 fib1618: suggestion is a ETF
2015-12-17 17:54:08 fib1618: futures and options are have too much time risk with them
2015-12-17 17:54:29 tuna: day trading only
2015-12-17 17:54:47 fib1618: and be careful of the Direxion funds which can give you just as much punch
2015-12-17 17:55:00 fib1618: but you have to be careful there too as they are stop and start funds
2015-12-17 17:55:07 fib1618: understood
2015-12-17 17:55:11 tuna: yep
2015-12-17 17:55:16 fib1618: but you have immediate draw down with the futures
2015-12-17 17:55:23 fib1618: but not with the ETF's
2015-12-17 17:55:35 fib1618: either you're right or wrong less a commission
2015-12-17 17:55:53 fib1618: personal preference
2015-12-17 17:56:53 fib1618: take a look at ERY
2015-12-17 17:57:11 tuna: got it thanks
2015-12-17 17:57:21 fib1618: chart is in a bullish configuration
2015-12-17 17:57:44 fib1618: and the SAR stop is at closed today at 30.62
2015-12-17 17:58:16 fib1618: just remember that the ETF giveth and taketh away very quickly as everything is reset every day
2015-12-17 17:58:27 fib1618: so good for day traders
2015-12-17 17:58:33 fib1618: next...
2015-12-17 17:58:53 fib1618: the XLF breadth MCSUM is testing horizontal support now
2015-12-17 17:58:56 fib1618: a break of that
2015-12-17 17:59:11 fib1618: and $22.50 is doable
2015-12-17 17:59:30 fib1618: XLV remains on the bullish side
2015-12-17 17:59:42 fib1618: with the XLV breadth MCO finding zero line support today
2015-12-17 18:00:07 fib1618: while the XLB breadth MCSUM remains nicely above its zero line
2015-12-17 18:00:15 fib1618: so if we do have a downside resumption
2015-12-17 18:00:28 fib1618: this basket of stocks should have less price decay
2015-12-17 18:00:37 fib1618: and better performance on bounces
2015-12-17 18:00:41 fib1618: keep in mind though
2015-12-17 18:00:58 fib1618: we're still in the sign up period for ACA
2015-12-17 18:01:07 fib1618: so this strength might all blow away in January
2015-12-17 18:01:35 fib1618: the XLK is hanging in there
2015-12-17 18:01:51 fib1618: notice how XLK breadth MCSUM bounced right off the +250 level
2015-12-17 18:02:20 fib1618: but it will take the XLK breadth MCO to move to a higher high to break the downside chains
2015-12-17 18:02:37 fib1618: no...sorry
2015-12-17 18:02:43 fib1618: talking about the XLU on that one
2015-12-17 18:02:49 fib1618: scrolled too fast
2015-12-17 18:03:11 fib1618: back to the XLK breadth MCSUM
2015-12-17 18:03:19 fib1618: it's at the +250 level now
2015-12-17 18:03:41 fib1618: so any downside follow through by Monday there would start to weaken the price action
2015-12-17 18:03:44 fib1618: so....
2015-12-17 18:03:57 fib1618: there's a ray of hope for the buyers here
2015-12-17 18:04:20 fib1618: but the sellers took back control after relieving last week's "oversold" extremes
2015-12-17 18:04:52 fib1618: any follow through by either/or will still dictate what it likely to happen over the next two week
2015-12-17 18:05:12 fib1618: but the technical evidence strongly suggests continued weakness at this time
2015-12-17 18:05:17 fib1618: OBV's...
2015-12-17 18:05:50 fib1618: pretty much neutral right now
2015-12-17 18:05:56 fib1618: so one side is about to take control
2015-12-17 18:06:10 fib1618: with a BIG move coming with the NDX
2015-12-17 18:06:28 fib1618: wow
2015-12-17 18:06:33 fib1618: NYSE TRIN at 3.29!
2015-12-17 18:06:48 fib1618: Open 10 at .99
2015-12-17 18:07:27 fib1618: NASDAQ TRIN at 1.55
2015-12-17 18:07:30 fib1618: Open 10 at .89
2015-12-17 18:08:02 fib1618: TM TRIN at 2.03
2015-12-17 18:08:12 fib1618: Open 10 at .92
2015-12-17 18:08:41 fib1618: guess there was a huge amount of shorts on futures
2015-12-17 18:08:52 fib1618: we know there are with December options because of the FED action
2015-12-17 18:09:06 fib1618: could be once these are expired
2015-12-17 18:09:10 fib1618: that could lift prices as well
2015-12-17 18:09:13 fib1618: have to watch
2015-12-17 18:09:18 fib1618: let me check the BETS
2015-12-17 18:10:14 fib1618: -75
2015-12-17 18:10:18 fib1618: no change
2015-12-17 18:10:19 fib1618: but the NAUD is now a day away from being bearish
2015-12-17 18:10:56 fib1618: which would push it to -80 and the all time lows
2015-12-17 18:11:11 fib1618: a -85 or lower is needed for a "strong sell"
2015-12-17 18:11:25 fib1618: and considering that we never had that with the 2008/2009 decline
2015-12-17 18:11:39 fib1618: I wouldn't want to know what could happen if we have anything below -80 [frown]
2015-12-17 18:11:49 fib1618: anything else?
2015-12-17 18:12:10 fib1618: CRB index continues to make new lows
2015-12-17 18:12:22 fib1618: this is really getting deflationary now
2015-12-17 18:13:03 fib1618: which makes all the more important that we go for capital appreciation, no less, capital preservation
2015-12-17 18:13:27 fib1618: can't believe they tightened
2015-12-17 18:13:41 fib1618: did you notice how fast the banks moved their rates up?
2015-12-17 18:13:46 fib1618: Wells Fargo was first
2015-12-17 18:13:58 fib1618: prediction
2015-12-17 18:14:18 fib1618: we're going to see bankruptcies climb very fast in the 1st quarter
2015-12-17 18:14:35 fib1618: not much we can do, I guess
2015-12-17 18:14:39 fib1618: anyway
2015-12-17 18:14:45 fib1618: OK...if there's nothing else
2015-12-17 18:14:48 fib1618: I'm going to take off
2015-12-17 18:15:00 fib1618: this weekend's breadth charts might be a little late
2015-12-17 18:15:11 fib1618: but I will try to get them up Saturday night
2015-12-17 18:15:25 fib1618: otherwise...don't hate me if they're late on Sunday, OK?
2015-12-17 18:15:32 fib1618: have a great weekend everyone
2015-12-17 18:15:34 fib1618: good night

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