As I was doing my usual weekend reading, I was struck by the remarkable analysis and commentary available to 21st Century Alert subscribers. Indeed, by far the most valuable stuff I read all weekend was on our own site. I bring this up because I know some are just reading my humble little morning piece on a free trial, and are not fully aware of all the great analysis we've assembled for subscribers.
This morning I'm going to give a glimpse of what you may be missing, by citing highly pertinent excerpts from commentary posted on our site just since the close on Friday.
From Tom McClellan, of the McClellan Market Report Daily Edition :
"The stock market is finally beginning to respond to the overbought pressure that has been building up, and the correction we have been calling for took its first bold step.
The selloff on Friday accomplished a lot, technically speaking. All of the major averages' Price Oscillators turned down, and all of our A-D and Volume Oscillators are now below zero. The first chart shows the NYSE's McClellan A-D Oscillator, and there is an interesting pattern forming to which we want to call your attention. This Oscillator is coming off of a pair of big complex structures above the zero line. By complex, we mean that it has chopped up and down within the structures without crossing below the zero line. A complex structure implies strength for the side of zero on which it forms.
But that implication gets wiped out by a quick crossing down through zero, back above, and down through zero again.
Notice in the chart that a couple of previous structures had formed in a way that was similar to what we are seeing now. In each case, the Oscillator was making a complex structure above zero, then made a quick dip below zero (indicated by the stars), only to go back above zero for another complex structure and higher price highs. The circled areas show how the Oscillator whipped itself around the zero line, throwing off the implication of bullish strength given by the prior complex structure above zero. We suspect that just such a structure is what we will see this time, meaning that Monday could bring an up day in order to set up for more selling in the days that follow. "
From Tim Wood, of Cycle News & Views:
"The pattern that I discussed in the October issue of Cycles News & Views, known as "Three Peaks and a Domed House," is still unfolding. I have obtained original documentation by George Lindsay (the founder of this pattern) and I wanted to let you know that presently, this pattern is still very much in effect. This is a terminal pattern and if it does continue to materialize it will mark a major turning point for the stock market. I will provide you with more specific details in the November issue of Cycles News & Views. My job at this point is to monitor this formation as it continues to unfold and provide you with sell signals as they develop. In monitoring this formation I will also provide you with any information that comes to light which might negate this pattern as well.
...Given the evidence at hand today, I believe that we are now moving into the half trading cycle low. This low should ideally occur within approximately the next 5 to 8 trading days. Based on the historical norms for this pattern this half-trading cycle low should occur in close proximity to the September 30, 2003 low. From that low we should see the next half trading cycle rally begin.
This rally should fail to move above the recent highs seen on October 15, 2003 and this failed rally should set up the right shoulder. It is this right shoulder that will provide us with the second opportunity to establish short positions.
Selling the top of the formation of the right shoulder could prove to be a more conservative entry point. That is of course if the pattern continues to unfold in the normal and presently expected manner. Any rise above the October 15, 2003 high would mean that the head is still forming and would serve to stop out any positions established based on today's (Friday's) short-term sell signal. The risk with waiting on this second selling opportunity is that we could see a harder break than expected and the formation of the right shoulder could be abbreviated or could form at a much lower level."
From Jason Goepfert, of sentimenTrader :
"Small option traders continue to pile in. For the latest week, the smallest of options traders -- those trading 10 contracts or less -- bought to open 792,000 calls as opposed to 317,000 puts. Other than a reading seen a few weeks ago, this has pushed the ROBO put/call ratio to its lowest level in years, at 0.40. [Note: ROBO stands for "Retail Only, Buy to Open, and is Jason's own trade-marked sentiment measurement].
And, once again, they are paying handsomely for their upside exposure -- they paid 27% more for their calls on average than they did for their puts. This marks the 10th straight week that we have seen a "demand premium" for calls that is 10% or greater, which is the longest streak since the spring of 2000. For the second week in a row, call buying made up 35% of their volume allocation, and bullish strategies in general made up 53% of the total. This is the fifth week out of the past seven that bullish strategies have outweighed bearish ones, and it should be a surprise to nobody that this is the most concentrated amount since 2000. "
Sentiment Dashboard
by Adam Oliensis
SENTIMENT TANK: Filled 1.5 points to 1.5% full of negative sentiment.
SHORT-TERM: Hourly gauge is in neutral.
MID-TERM: Progressed 3 points to 94% on the advance side but with a very low confidence level of a bullish 1. It's a goofy picture. Confidence has remained low throughout this mid-term advance phase but the fact that the advance was able to sustain long enough to take this gauge up into the 90s is a bullish development. (Prior advances had stalled out by the time they reached 80% on the mid-term gauge.
LONG-TERM: Progressed 5 points for the week to 79% but with minimal Confidence, also at a bullish 1.
BOTTOM LINE: We are now entering the 4th week of October, which is the 2nd worst week of this the worst season of the year...and we're walking into this time frame with supreme and pervasive bullish complacency as measured by the Sentiment Tank (and numerous other sentiment barometers). The market can always defy expectations. But if ever there's a setup for one of those perplexing market dips ("Hey, why the heck is the market going down when the fundamentals are getting BETTER?") this is it.
Year-to-date the SPX is up 18% and the COMP is up 43%. Many institutions have fiscal years that close out at the end of the month. The interest in selling (to take profits, cut losses, and rebalance portfolios) may become the pervasive theme over the next week or week-and-a-half.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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