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mortiz

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Reply with quote  #1 
As if the bulls needed any more discouraging news, the climax indicator (CLX) offsets are not in positions usually supportive of price bottoms.  CLX offsets are the CLX values from 10 days ago or 30 days ago, with the theory being when high positive values "fall off" the 10 day and 30 day moving averages, those same moving averages will decline... unless of course the current "replacement" value is higher than the offset value. 

So the term "favorable" offsets means the CLX values from 10 or 30 days ago are negative and is typically favorable for the bullish case.  "Unfavorable" CLX offsets are positive CLX values from 10 or 30 days ago, particularly high positive values.

The following two charts illustrate the sums of the 10 day and 30 day CLX offset due to disappear over the next five trading days.  High blue curve levels are not typically conducive to further strength in prices, although early in an upmove, they do tend to serve as initiation thrust indicators.

What is not typically bullish is when the CLX offset sums are at elevated levels when prices are declining... first the Dow CLX offset sum indicator.



The NDX CLX summed offset indicator.



Including today (Thursday, July 26th), there are six consecutive days of unfavorable offsets remaining for the Dow and five consecutive days of unfavorable CLX offset for the NDX.  The unfavorable offsets are present for both the 10 and 30 day CLX numbers.

By late next week, there will be a juicy string of favorable CLX offsets for both the 10 and 30 day numbers, which would be supportive of a price strength, at least from this indicator.

We'll see what unfolds over the coming week.

FWIW

Randy
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Reply with quote  #2 

randy, thnx for the info (as usual). i was wondering what the climax numbers were showing as the markets are declining into my expected 4.5 yr nest of cycle lows.

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Whipsaw101

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Reply with quote  #3 
Randy, excellent work as always!  Be interesting to see how CLX Offsets shape up in a weeks time. 
Also, your post on Options pointed to future weakeness, it was just a question of time.

Thanks for reply on MCO Clusters too.

CW
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da_cheif

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Reply with quote  #4 

good job on da clx....todays 28 is a rare event and climactic......the 87 october numbers into the low were -27 -29 -30....ur rite about the offsets.....

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mortiz

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Reply with quote  #5 
A follow-up to cheif's comments on the 1987 extreme Dow CLX numbers going into the crash lows.  My CLX number for Friday July 27th is -25, which gives us two consecutive days of CLX numbers less than or equal to -25. My data shows not a single Dow component's CLX value was positive Thursday or Friday meaning:

- Thursday there were zero component CLX advances, 28 component CLX declines, and two unchanged

- Friday there were zero component CLX advances, 25 component CLX declines, and five unchanged

My Dow CLX data only goes back to early 1997, but in the 10+ years of the data I have, the past two days are the first instance where the Dow components had zero positive CLX values and 25 or more negative CLX values for two or more consecutive days.  cheif has given an example of when the phenomena may have occurred before (October 1987), but this is indeed a rare event whose consequences are "TBD"... but I think we can deduce it is bullish at least over the next few weeks at a minimum.

To determine the behavior of prices going forward when there were consecutive days of zero Dow components with positive CLX values, I lowered the bar for the number of Dow components with negative CLX values to twenty or more components over the past ten years:

Events with Zero CLX Advances, -20 or More CLX Declines (2 or More Days)

1) 9-21-2001

2) 7-22-2002 (many current parallels to July 2002)

3) 1-22-2003

4) 7-27-2007

All of the prior cases were during the 2000-2003 bear market. Explosive rallies soon followed the 2001 and 2002 events.

The January 2003 event is perhaps one whose characteristics over the ensuing few days following the initial two consecutive days of zero positive CLX values and 20 or more negative CLX values, should be looked at more closely for clues we should look for in the coming week.

The Dow CLX "Advances and Declines" over the following few days in January 2003:

Date              CLX Adv              CLX Dec
1-23-03           1                       8
1-24-03           0                       19
1-25-03           0                       25

After the initial event, the Dow CLX exhibited continuing weakness with two additional days of zero CLX advances, but only one of those two days had more than 20 components with negative CLX values. Following the January 2003 event, the Dow relentlessly drifted lower until the final price bottom in March 2003.

The January 2003 CLX event may be a model to keep in mind over the next several trading days... if price doesn't begin recovering in the next few days with continued CLX weakness, it may be a warning the bears will be remaining in control for a few more weeks.

FWIW

Randy
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Spock

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Reply with quote  #6 

Randy,

Thanks for sharing your unique and valuable analysis.  I am a long time lurker both here and at TT.

I thought I would list the position of the $nysi and $nymo for the dates you provided.

09-21-01    $nymo  -120        $nysi -464   
01-22-03    $nymo  -44.36     $nysi  +281.82
07-22-02    $nymo  -80         $nysi  -775
07-27-07    $nymo  -103.13   $nysi  -215.64

The 01-22-03 event was different in a few ways.  We did not have negative divergence on the $nysi with the index itself, we were not as washed out on the $nymo, and the $nysi itself was still in positive territory.  I am not exactly sure what relevance this may have but I thought I would share it anyway. 

My thought is that we are more likely to see the outcome from the other dates listed.  I will still be keeping a close eye on a possible analogus path to the 2003 event.

Thanks again,

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Eminimee

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Reply with quote  #7 
namo and nymo smoothed with a 34ema

Click Here to see Full Sized Image


Click Here to see Full Sized Image
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da_cheif

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Reply with quote  #8 

u must remember that all giant advances are preceded by ugly declines...the uglier the decline and the heavier the volume the larger advance to come.....all sharp declines are conducted for purposes of exchange insider accumulations and or short covering.....wave 2 corrections are invariably ugly enuf to get most convinced that the bull market is over......one of the finest sentiment tools for important bottoms is how many of timer digest top ten timers turn bearish........9 or 10 is rare and allways has occurred at important bottoms as of saturdays report only 4 are bearish....another week of this may see this number expand......which would coincide with the offsets.....1438 in the sept sp is important support.....if the dow opens down on monday it appears there will be a lot of buyers but me thinks they will be disappointed....sharp declines or just failing rallies goes along way in improving sentiment....i had indicated many months ago that the epicenter of primary wave 3 up would follow a wave 2 pullback after 5 waves up.....and was sure that the advance was the first wave up of that larger move and that after 5 waves up the susequent pullpack would bring on the end of the world EW contingent declaring an end to the bull market.......i would think that august 26 ...(bradley day) may be the focal point for this wave 2 correction.....thus the current correction may take on a an ABC form into august 26 or as in 1987 a 4/5 subdivision will occur......my guess is a 4.5 subdivision which if it unfolds that way will keep the ewavers bearish on the first 1.2 up as they will count it as a contertrend advance......just as it happen on the ensuing advance out the dec 1987 5th wave bottom......the advance out the 87 low was sloppy and kept the bears bearish then in 1990 when the 2nd wave down occured....(the bears saw 5waves down into the oct 90 low and declared that the end of the world was upon us) the rest was history.....1.2 buckly my choo.......SJNORJHT

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doc

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Reply with quote  #9 
cheif, what do you see as the max risk on spx cash by August 26?
Doc
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da_cheif

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Reply with quote  #10 

this C wave or ABC decline could end anywhere......looking at sentiment and clx  more than price...max seems to be 1360 give ur take...realisticly the 200 da line near 1450.....or 1438 the fib support in the sep contract

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doc

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Reply with quote  #11 

thanks D

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Eminimee

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Reply with quote  #12 

I believe OEX is the key index if looking for a bottom of C....I have a ton of fib relationships at 671/72 fwiw...and then I think we head for 747 ...and maybe quite quickly. fwiw

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mortiz

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Reply with quote  #13 
Thanks to all for the great info, particularly cheif who took the time to weigh in despite convalescing from some medical procedures (and Spock who saved me some time by pointing out the breadth status at past CLX negative extremes).

I have been ridiculed in the past for applying the McClellan Oscillator (MCO) and Summation Index (McSum) recipes to the CLX data, but I feel those tools do a good job of graphically illustrating the momentum of CLX, so here goes.

The Dow CLX MCO reached its negative extreme range Friday by touching -39, matched only once in the past 10+ years on January 27, 2003... the time frame discussed earlier in this thread where the ultimate Dow price bottom of the move completed a few weeks afterward.

The below chart is messy due to the time frame I am trying to cover, but it includes all of the events discussed earlier where the Dow CLX had two consecutive days of zero component CLX advances and over 20 component CLX declines.  In addition to those events, I have circled other Dow CLX MCO negative extremes, with black circles designating the price low coinciding with the CLX MCO low, and red circles designating CLX lows where prices continued lower.

The Dow only went nominally lower following the March 2004 CLX MCO negative extreme, but as we all know, the market to several months of backing a filling before a sustained rally got started. Since the bull market began in 2003, Friday's CLX MCO extreme was only the third event, with one (March 2004) leading to further price deterioration over the following months and the other (early March 2007) resulting in a robust rally.



The CLXp MCO is carving out a potential positive divergence with price, but will need to recover quickly to confirm the possible divergence.  Note how the CLXp MCO could barely move its head above the zero line during the Dow's price breakout earlier this month.



The Dow AYDIS (CLX minus CLXp) MCO is also forming a potential divergence with price, as is the Dow AYDIS MACD indicator (not shown).



The Dow CLX 10+ year McSum indicator reached a 10+ year high in May 2007 by breaching the initiation thrust zone of +500.  Reaching these McSum heights can result in a few months of consolidation or correction, but over the past ten years at least, always led to higher price highs in the Dow.

Note the Dow CLX McSum never got close to the +500 level during its topping process in the 2000-01 time frame, so it highly unlikely the Dow's recent high is the end of this bull run.



IMHO, there are still some glaring flies in the ointment (options sentiment) voting against the price bottom being in, but the positive momentum of CLX over the past few months is saying this upside run ain't over yet.

FWIW

Randy

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da_cheif

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Reply with quote  #14 

the aug 26 bradley date mite be a focal pt for the current correction

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da_cheif

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Reply with quote  #15 
after five waves up the dingbats coming out of the woodwork declaring a supercycle top in place.........in may i thot thats what would happen from somewhere up there......



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36.   May 9, 2007 10:10 AM

ยป Kirk Lindstrom - DOW Targets: epicenter of primary wave 3

Looks like he's saying DOW 13,000 to 18,000 or 20,000 with a 10 to 20% correction then an even bigger move to come. Agree? happy
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From: da_cheif (don wolanchuk)
May 09, 2007 at 13:00:19
Subject: epicenter of primary wave 3...........

.
Here is what i think will happen.....the dow will get up to the 18 to 20 k area......and complete 5 waves up. (1 of 3).....the bears....most notably prechter.....will declare the 5 of 5 of 5 is done...its all over.....he will get plenty of cnbc air time. along with many many ol guru perma bears....especially during the ensuing 2nd wave pullback of a a few thousand pts.....then will come the mother of all melt ups.........mark this down........

Suite101
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