Friday, August 30, 2013

Guesstimates on August 30, 2013



September S&P E-mini Futures: Today’s range estimate is 1632-44.  The ES is headed back to its June 24 low as 1553.
QQQ:  If the market starts accepting prices below 75 it is headed back down to 69 or lower.
TNX (ten year note yield): The upside yield target for the 10 year is 2.85 % has been reached but I think the market will move past this level to 3.50% over the next few months.
Euro-US Dollar: It looks like a move up to 1.400 is underway. Support is at 1.3200 and any significant break below that level would be bearish.
Dollar-Yen: The dollar-yen is headed for 107.00.
October Crude:  Crude has broken decisively above 108 resistance. Next upside target is 123.   
December Gold:  Resistance stands in the 1425-50 zone. So far the market has stopped at 1434. Weakness below 1380 would mean that a move down to 1200 or below is underway.  
December Silver: The market has reached resistance near 24.00 and will probably stall here before the bear market resumes.  
Google: Support is at 800 and I think the next step up will carry GOOG to 975.
Apple:  The 460 level is now support and as long as it holds I think AAPL will continue its rally to 560 or so.

Thursday, August 29, 2013

bear market ?

As you know I have been expecting a bull market top this fall or early in 2014. The timing of this top is suggested by Lindsay's 15 year period from bear market lows to bull market highs. There was a bear market low in August and October of 1998 in the Dow and S&P respectively. On many occasions Lindsay insisted that the Dow was more suitable for applying his methods than the more broadly based averages. So the top on August 2 in the S&P certainly meets the 15 year criterion (purists might observe that it is about 4 weeks shy of exactly 15 years from the August 1998 low in the Dow).

I have been counting one of Lindsays basic advances from the October 4, 2011 low. Such advances average about 2 years in length but there is a lot of variation around that mean - most basic advances last between 21 and 27 months. An August 2 top would make this basic advance last 22 months.

So in my judgement Lindsay's longer time periods are highlighting the possibility that August 2 was a bull market top. Experience shows that bull market tops are generally associated with visible bearish divergences longer term technical indicators and I have posted the charts of a few such indicators above.

The top three charts show three measures of the market's trend: the Dow, the S&P 500 and the New York Stock Exchange advance-decline line. Note that the S&P is the strongest of these three indicators right now. It is trading around its 50 day moving average and is only about halfway back to its June 2013 low. The Dow has been the weakest of the price averages since the August 2 top. Note that it is trading well below its 50 day moving average which itself has rolled over and has started to drop. The chart of the advance-decline line show a tiny bearish divergence at the August 2 top where it failed to move above its May 22 top even as the price averages moved above their May 22 tops. Since then the advance decline line has been about as weak as the Dow.

I'd say that these three indicators are now headed down to their respective 200 day moving averages (wavy red line on each chart). I don't see enough bearishness in the put/call ratio (bottom chart) to prevent a further substantial drop from current levels. Right now this long term moving average is in each case near the June 2013 low. If these three indicators all start trading below their 200 day moving averages I think it would be highly likely that a bear market has begun.

In addition to the advance-decline line divergence at the August top there were two other significant long term divergences visible at that time. The fourth chart from the top shows a 20 day moving average of the daily count of the number of S&P 500 issues trading above their 50 day moving averages. Note the three consecutive lower tops in 2013 which were associated with three consecutive higher tops in the market averages. This is a very obvious bearish divergence. The fifth chart from the top shows the 20 day moving average of the daily count of 12 month new highs on the NYSE. Note how the number at the August top was substantially lower than at the February and May tops.

All in all this looks like a pretty bearish picture to me. One should remember that not every bearish picture like this one gives rise to a bear market. But the current bull market has lasted 53 months, far longer than average, and by standard valuation measures the US stock market is substantially overvalued. So I think these warning signs should be taken seriously, especially when and if the averages start trading below their 200 day moving averages.

Guesstimates on August 29, 2013



September S&P E-mini Futures: Today’s range estimate is 1629-43.  The ES is headed back to its June 24 low as 1553.
QQQ:  If the market starts accepting prices below 75 it is headed back down to 69 or lower.
TNX (ten year note yield): The upside yield target for the 10 year is 2.85 % has been reached but I think the market will move past this level to 3.50% over the next few months.
Euro-US Dollar: It looks like a move up to 1.400 is underway. Support is at 1.3200 and any significant break below that level would be bearish.
Dollar-Yen: The dollar-yen is headed for 107.00.
October Crude:  Crude has broken decisively above 108 resistance. Next upside target is 123.   
December Gold:  Resistance stands in the 1425-50 zone. I don’t think the bear market in gold is over.
December Silver: The market has reached resistance near 24.00 and will probably stall here before the bear market resumes.  
Google: Support is at 800 and I think the next step up will carry GOOG to 975.
Apple:  The 460 level is now support and as long as it holds I think AAPL will continue its rally to 560 or so.

Wednesday, August 28, 2013

Guesstimates on August 28, 2013



September S&P E-mini Futures: Today’s range estimate is 1615-33.  The ES is headed back to its June 24 low as 1553.
QQQ:  If the market starts accepting prices below 75 it is headed back down to 69 or lower.
TNX (ten year note yield): The upside yield target for the 10 year is 2.85 % has been reached but I think the market will move past this level to 3.50% over the next few months.
Euro-US Dollar: It looks like a move up to 1.400 is underway.
Dollar-Yen: The dollar-yen is headed for 107.00.
October Crude:  Crude has broken decisively above 108 resistance. Next upside target is 123.   
December Gold:  Resistance stands in the 1425-50 zone. I don’t think the bear market in gold is over.    
December Silver: The market has reached resistance near 24.00 and will probably stall here before the bear market resumes.  
Google: Support is at 800 and I think the next step up will carry GOOG to 975.
Apple:  The 460 level is now support and as long as it holds I think AAPL will continue its rally to 560 or so.