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TW Patron++
Posts: 1,054
Reply with quote  #1 
With OPEX on the docket for the coming week, anything can happen, but there are some flags in the air a short term correction is in the cards to keep the bulls honest.

Although the MCO congestions we are currently seeing in most indices could continue, but such patterns typically resolve in the MCO heading south.  This chart is the AD MCO for the Russell 4000, which are the 4000 highest cap US common stocks.  I like this group since it is one of the "purer" measures of what the US operating companies' internals are up to. The current congested MCO pattern is not excessively large, but bears watching.

The NDX climax indicator (CLX) MCO has achieved levels which are usually initiation thrusts, but in the very short term, are often followed by consolidation or moderate weakness.

The Standard Deviation (SD) of the daily NYSE SDOT short sale volume as a percentage of sell volume is currently over 0.75 SDs below its 50 day mean, which often results in a sell off of some degree.  Once again, this indicator can go much lower, but is waving its warning flag.

The OEX options trading is usually dominated by the market makers, but over the past week or so, the retail customers' activity has increased (relative to the market makers) which is often a precursor to a short term change in direction for prices.

The indicator in the next chart is the difference between the market makers' put-call (PC) ratio and the retail/firm PC ratio.  This indicator is rapidly approaching levels typically associated with short term (or longer term) price weakness.

The daily equity options composite retail-brokerage firm PC ratio is not yet to the intermediate term (IT) danger zone, but has been dropping at a steep slope, which may need some braking applied, which price weakness could influence.  There is still plenty of room for this indicator to fall before IT warning flags are raised, but some short term doubt instilled into the bulls would go a long way in extending the longevity of price appreciation.

The smallest equity options trader (1 to 10 contracts per transaction) Buy-To-Open (BTO) volume PC ratio remains at levels not typically associated with important price highs. The most recent price lows did not drive this group's BTO PC ratio up to extreme levels, but the small traders haven't yet jumped on the bull bandwagon in large numbers.

The total retail (all transaction sizes) equity BTO premium PC ratio has not backed off much since the recent price lows, a good sign for the IT.

This next indicator is the OCC weekly equity call-put ratio for BTO closing positions of the market makers.  Unfortunately, the OCC does not publish the BTO transactions of the market makers, but I have found the market makers closing position volume ratios are pretty fair tool for determining what this most savvy group is up to.  This indicator had a very large upward spike last week, which is likely a short term warning flag, but for the IT, this tool is not yet in the danger zone.

Finally, courtesy of McClellan Financial Publications, is a chart posted in the latest twice monthly McClellan Market Report (MMR). If you are not a subscriber to either the twice monthly or the daily MMR, you should be.  For less than $200 per year, the twice monthly MMR is one of the more interesting and educational publications out there.

Anyway, this is a long term look at the University of Michigan Consumer Sentiment Survey versus the DJIA since the early 1950s. What this chart shows, is regardless if "the" price bottom is in, or within a few percentage points of being made, we are likely in an attractive accumulation zone for the long term.  Of course, consumer pessimism could get much worse, particularly with the prospect of a shift to socialism in the US after the elections, but based upon the past 50+ years, the current level of this survey is similar to that in 1975 and 1980.

As suggest earlier, OPEX is a wild card for next week, but short term warnings are surfacing.  However, the IT looks like it has more room for upside appreciation.



TW Member
Posts: 293
Reply with quote  #2 
Very nice work.
I think we retest 1265/1270 some time over next week or two.
Several indicators are suggesting strength but at a slowing rate.
Thanks for the work you share with us.


TW Patron++
Posts: 497
Reply with quote  #3 

Thanks again for sharing your data--data which you don't see elsewhere on the net. In keeping with your caution for the very short term, the Bond CEF as depicted in Fib's charts still looks weak. So do these smattering of high yield bonds funds:

Markets generally do well when liquidity is high enough to drive these up. I would not be surprised to see another quick shakeout, but jeez, we've had 7 200+ point moves in the DOW in the last 10 trading days, 4 up and 3 down.

The market always seems to want to shake off as many as possible...



TW Patron
Posts: 38
Reply with quote  #4 

Great charts!

What do you guys think about namo and nahl breaking out yesterday?

still not really confirmed by nymo and nyhl, and with nasi and nysi making new lows, it puts a big question mark on the break out

Nonetheless it seems good for the IT as mortiz points out

by the way the thrust in namo reminds me of the start of september before the 5 week bottom

however back in september nymo confirmed, so i'd like nymo to confirm

by the way guys how do you interprete new highs in nymo/namo - when would you consider it a fair assumption that it indicated new price highs ahead - would you add on other conditions, such as nasi/nysi being above zero

Short term i think this chart is interesting

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