Price is the true north star and her sisters are a few – one particular one is how many stocks in S&P 500 are above their 50 days SMA ($S5FI)
The first big red candle and a drop of 10 percentage points in the number of stocks above their 50 days SMA happened 12 days before the actual market crash!
Market lost its floor on October 10th and you see in the above chart that the big red candle appeared on 9/24.
Do you see the gradual descent in the above chart! It falls below all the Moving Averages (MA)..the green 10 Days Exponential MA and also the 22 days SMA and 55 days SMA.
It falls below 50 % on 10/04.
there are other signs that go along with this. More in the coming days posts.
now a drop of more than 10 points in $S5FI occurred in 4 days by 02/01/2018 and NASDAQ dropped to the low 765 points in the next 6 days!
Similarly $S5FI dropped more than 10 points on 02/27/2018 and NASDAQ dropped to the low of 246 point in the next 3 days.
similarly in 4 days by 03/15/2018 it dropped by more than 10 points and then in next 11 days the NASDAQ dropped by 676 points!
and it dropped by more than 10 points in 4 days by 6/19/2018 and in the next few days NASDAQ dropped 362 points
and it falls by more than 10 points on 9/24/2018 and NASDAQ drops 1000 points in the next 18 days!
I am staying in cash
FFTY is the index of leading stocks in the market. It is actually an ETF. the market’s leading growth stock. It is an excellent indicator of general health of the market, for the institutional buyers buy the best stocks in good times, and dump them to preserve their profits in bad times.
Since Aug 20th 2018, FFTY went up around 7%, NASDAQ up 4%. that is brilliant and beautiful.
they have been 4 high volume selling in the market last 30-40 trading days. a good count and not that bad. yesterday (i am here in Hyderabad India with my parents and it is wednesday here September 5th 2018 around 9:00 am) the volume came up above Friday. Now it is not bad because it is a labor day holiday weekend volume..
the Accumulation Distribution line for NYSE has reversed with 1810 stocks down on 2.01 Billion volume and 990 stocks top in 0.94 billion volume and the number of S&P stocks that have been trading above their 50 day SMA is fallen down since last August 29th till yesterday, Wednesday to Wednesday – which is just 4 trading days, from 73.75 to 66.48 7%. these 2 are red flags.
QLD volume is 768 K and it is a red H-A candle with red volume but not significant volume. QLD wonderfully above 9 EMA daily chart and a nice bounce yesterday.
Near term NQU18 near term resistance is 7650 and then 7693 and then 7697
decision : wait in NQ to enter stay in QLD long
Current market participation : unfortunately because of 12 hours time difference between bali (I am currently in Bali Indonesia ) and NY, I am currently not participating in the market. Timing is critical during breakouts and It is sleeping time here when market opens in NYC! If COMP moves up by 100 points than that is added to the risk if the breakout is missed.
This below info is for the readers.
Nasdaq hit all time high. March 12th week and April 2nd week crash stabilized the next 4 weeks. April 30th it retook the 9 week Moving average
From May 7th to yesterday the hole which was dug the market came out
Look at this chart below FFTY the top 50 growth stocks in the entire market
It just topping and topping
NYSE’s advance-decline line has now risen for five weeks in a row.
S&P 500 spent four solid weeks above its 50-day moving average. That’s the longest period of time since January. Technically speaking, that’s good. It means the rally is accelerating.
Accumulation/Distribution Rating the Nasdaq scored a B-, much improved from a D since May 10th uptrend start
And finally 65% of all stocks in S&P 500 are above their 50 day simple moving average
So Market hit a top. It is very likely to go up further
Happy trading !
5 days of stalling and no progress
2 days of high volume selling
100 points loss in 2 days in high volume
Top leaders down in high volume
( first photo source : trading view )
FFTY etf a proxy for top 50 beat stocks in the market down by 2%
Weekly chart on the right appears to be forming a top. but it is clearly in an uptrend
daily chart (on the left) – good chart damage a few days ago in higher volume
Major Indexes rose only 0.2 % – 0.3 %. Small caps ran up – Russel went up 0.2%
On NASDAQ – volume – a good indicator of institutional buying is roughly even compared to Monday.
The best Industry group today is automation industry – up 4.1% – supported by CGNX – up 11%
Consumer loan, oil field services, scientific and measuring gear, heavy construction and outsourcing companies also outperformed well and grew more than 2% today.
what’s more at the top? More of the top.
Last week all the indices hit all time high. How far is far enough?
when P/E is constant, then the risk premium is constant.
P/E has been hovering for S&P Index around 20.5 for the last and half year (DEC 2015 to June 2017) . earning increased from 100 dollars to 116 dollars around 16%
So mostly the gain in S&P came from the gain in real earnings of the companies!
So assuming just the earning to grow by 10% (very reasonable..just the growth %) and P/E = 20.5 as constant
then S&P would be (116+10% of 116) * 20.5= 2615 – a gain of 144 points from today.
the leading economic indicators – % change has been positive for the last 10 months!
around 65 % of stock market is about its 75 days moving average.
Now value of companies according to the theory is based on discounted value of the cash flow. because of low interest rates companies can borrow much with little interest paid. Hence expansion, hence earnings growth!
“The market can stay irrational longer than you can stay solvent.” – John Maynard Keynes