SP500 Outlook

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progster
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SP500 Outlook

Postby progster » Mon Apr 20, 2009 1:20 pm

Here's the SPX since November:

SPX_20090420.png
SPX as of 20090420, last bottom marked

Below are some charts that I think are insightful regarding our current situation.
We have an extended up streak facing-off against post-option-expiration blues and significantly high relative sentiment.

SPX_ReturnsAfter6WeekGainsSince1972.png

SPX_WeeklyReturnsSince2000.png

SPX_BullsBears_01.png

SPX_ReturnsBy_IIP_Pctl_01.png

For a good discussion of this info in detail, I recommend going to schaeffersresearch.com and reading Todd Salamone's full article Bulls Face a Hurdle in Post-Expiration Week Blues .

The bottom line, IMO, is that the rally is vulnerable, possibly right now, possibly a bit later. That's my own interpretation, based partially on the above, and partially on other info.

If you did a good job getting long somewhere near the last bottom, and you haven't already taken your profits, you may wish to solidify your plans (if you haven't already) for what market conditions would cause you to go flat (or reverse).

If you are thinking of getting long now, you are LATE TO THE PARTY, and will likely be playing for the last leg up only (if indeed there is one).

Doesn't it feel now like all the down action is over, like a serious recovery is happening, like there will only be (perhaps) some nice dips to buy (and no more ferocious down legs)?

This is just the opposite of the end of February when it felt like the market was falling into the abyss, the declines would never end, and holding anything long for even a moment longer would be financial suicide.

Those who "puked it up" just then made a huge mistake, and those who are "loading up" just now are probably making just the opposite mistake. Beware!

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Re: SP500 Outlook

Postby progster » Mon May 18, 2009 1:41 pm

The strength and consistency of the rally since March 6 has really been quite stunning. Now, finally, we are seeing a multi-day pullback of note. How should we characterize it? Below is one quantitative way to look at it.

Last Wednesday, 5/13/2009, the SP-500 put in a 5 period Percent New Low of the sort that is relatively rarely seen. Here is a detail view from Progster’s HighLow Percentages Dynamic for StockFinder :

SP-500_5p_PctNL_20090513.png
Low value, SP500, 5 day %NL

Past performance of this situation as a buy signal on SP-500 stocks is more than interesting (IMO) :

SP-500_5p_PctNL_PastPerf_01.png
Backtested Performance, Long only, Simple Ruleset 01

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progster
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Re: SP500 Outlook

Postby progster » Fri Jul 17, 2009 1:12 pm

Here's the current situation wrt. percent of the SP500 at new N-day highs/new lows:

#P_NewHLPcts_03a.SP500_20090717.png
High percentage of New 5-day Highs - 20090715

Note the high value of the yellow line in the %NH pane (yellow line is % of list at 5-day highs).

IOW, a "measured" overbought status.

We are in the earnings announcement phase now ...

#P_NewHLPcts_03a.SP500_20090717_b.png
Detail View

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progster
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Re: SP500 Outlook

Postby progster » Thu Nov 19, 2009 1:36 pm

Reflation continues, uptrends remain intact.

Since March 2009, spike in new lows have generally been very tradable to the long side. Spikes in new highs were generally traps, as price just kept going up.

Some may call this market irrational. To crib from an old saying - here's hoping you are still solvent!

SP500_20091118.png
SP500 March 2009 thru Mid-Nov 2009


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