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=========SIGNALS, NOT INDICATIVE OF POSITIONS=========
My Best Signal:
BULLISH since 1/5/2017 @ SPX 2743.15
Signal Based on Technicals Model:
BULLISH since 1/4/2017 @ SPX 2723.99
This chart represents BUY and SELL signals using my favorite signal since late 2016. I will attempt to add tests to filter out a few flip-flops such as early in 2017, and the early exit call in October.
The Modeling Feature is down as my data source pulled the plug. I found a work around but will need to find the time to do the coding.
Click the ‘Trader Platform’ Menu link for access to the Real-Time Technicals Model!
The new Technicals model (much more sophisticated than the original Daily version) is available in real-time for all subscribers to test it out. Green means bullish and Red is bearish. This is for the SPX at the 5-min, 10-min, 15-min, 30-min, 1hr, 2hr, 4hr time frames depending on your personal trading strategy. New models will be released in the future, working up to a composite model which would encompass several modeling techniques all in 1 chart (which should prove more profitable than using just a signal modeling technique)!!
As always, the Monthly, Weekly, Daily, Hourly and so on SPX charts I show are from all hours of the day, and therefore the prices and indicators will vary from charts which only show action during regular trading hours. I believe this method is more robust and encapsulates global sentiment, better capturing trends.
I mark negative divergences in red, and positive divergences in green. Please note that some indicators such as -DI are inverse, so a positive divergence is bearish and a negative divergence is bullish!
Are we about to stall out?
S&P500 Volatility (proprietary)
I developed the S&P500 Volatility Index to help characterize the volatility of the S&P500 market. It has nothing to do with $VIX (which shows the market’s expectation of 30-day volatility, constructed using the implied volatilities of a wide range of S&P 500 index options). This indicator serves to rank the volatility of the current market period using market data from 1990 to 8/9/2016.
Why does this matter? In coming up with BUY and SELL signals in any system, you need to know when to flip quickly, vs. times you can wait and see if your signal is a fluke or not. This is a way to limit position flip-flopping.
Recent trading has been more volatile than 35.5% of all trading periods since 1990.
Technicals Model (proprietary)
The first chart below is the cumulative Technicals Model dating back to 2006. The Model was higher today for the 48th day in a row, a record since at least 2006! Here you can see the model performance (in blue vs. SPX in black) all the way back to 2006. I added the purple 200 day moving average to help discriminate between bull markets vs. bear markets (although fake-outs do occur such as 2011, and either 2015 or earlier in 2016). The cumulative Technicals Model made a new All Time High on 1/24/2018! The model is well above its 200 dma that it lost briefly October 2016.
I have noted that the model did not confirm the last high for the SPX in 2007 (as denoted by red down arrows on the model, vs. SPX green up arrows).
Below the Model and SPX chart on figure 1, I have the performance of the ratio of the two. I have noted extreme readings (green) as potential bargain buy (such as Brexit which was the last extreme reading in green), and extreme Red readings being bearish for the market. The ratio has been positive for the 16th day in a row.
This next chart shows the daily readings, not in cumulative mode as above. Here you can see which particular trading days are the strongest/weakest technically with the markets as portrayed by the model. Divergences also show up near market Tops/Bottoms.
There is negative divergence in the Model vs. SPX between late April and mid October 2017, as well 1 in September and 3 since October. Almost a Technicals Thrust on 11/30 but it took more than 5 days to achieve so not quite fitting the definition. A strong negative divergence of the model from SPX is occurring in December and January 2018.
I have added a 5 day EMA to the Model (pink), and a new indicator called a Technicals Thrust. Similar to the Zweig Breadth Thrust, it looks for hard reversals. I have preliminary called a 0.50 gain within 5 days (with a peak above 0.35) a Technicals Thrust. 5 have taken place during the past year (noted with orange circles at the top of the chart), all had gains, while 3 of them had a prolonged bullish run.
What is this model? It’s a comprehensive assessment of a good number of technical indicators on each S&P500 stock. This model does 2 things well. First, it shows divergences from SPX price. Most valuable of all, my model has a lot less volatility than SPX price but does a great job of capturing SPX trend, which should do well with forecasting SPX price movements in the future.
HYG:IEF ratio is a way of looking at Greed vs. Fear in the more sophisticated bond market. Finally this ratio has eclipsed its previous major high on March 1st, 2017. But in doing so significant negative divergences have formed.
SPX Monthly from December 29th, 2017
On the monthly scale, the market has been expanding since a 2015-2016 consolidation period. Its easy to see with negative divergences from the end of 2013 and 2014 on ADX DI, RSI, MACD and MACD histogram. December 2017 made a new All Time High.
ADX: Bullish, trending
Volume: At the declining 20 period moving average.
Moving Averages: Close>12>36>72>120 period moving averages
% Bollinger Band: Top of Bollinger Band
Bollinger Band Width: Steady
MACD: Bullish at a positive value, histogram ticked higher for the 3rd month in a row.
SPX Weekly from January 26th, 2018
There are negative divergences back to 2013 on the ADX +DI, and MACD histogram in 2016.
ADX: Bullish, trending
Candle: Very Bullish
Volume: Above the steady 20 period moving average.
Moving Averages: Close>20>50>100>200 period moving averages
% Bollinger Band: Above the Upper Band
Bollinger Band Width: Increasing from near historically low levels from summer 2017
MACD: Bullish at a positive value, histogram higher for the 4th week in a row
With 1/26’s All Time High, negative divergences have formed on ADX +DI and MACD histogram, but broken on ADX -DI. HO’s mean Hindenburg Omens. Orange ones mean that the McClellan was positive (likely just a strong rotation), Red is the real deal, the McClellan was negative (Likely pre-drop selling).
ADX: Bullish, trending
Candle: Very Bullish
Volume: Well Below the slowly increasing 20 period moving average.
Moving Averages: Close>20>50>100>200 period moving averages
% Bollinger Band: Near the upper band
Bollinger Band Width: Steady
MACD: Bullish at a positive value, histogram higher for the 1st day in a row
At today’s All Time Highs, negative divergences strengthened, some as far back as early December or late November, so be on guard for a change in trend lower.
VIX was lower today with hourly MACD on a SELL signal. No negative divergences at recent highs, so after this retrace is complete VIX should continue to rise.
VIX 15-min Intraday
15-min VIX chart shows only 1 negative divergence at recent highs, not a sign that VIX will significantly retrace lower. No divergences within the past several days.
VIX 442-hr Which Side of Trade? From 1/26/2018
Traders who prefer to trade one side, should be trading with the BULLS.
This chart attempts to use a long term average for VIX to identify Bull markets. I use a 442 hour EMA of VIX as that is approximately how many trading hours there are in a quarter of a year. When this value is below 17.5, those who like to trade one side at a time should make sure to be trading the long side. This chart makes no comment about the other times, meaning the inverse is not necessarily true.
High-Low was +123 today. The SPX McClellan Oscillator was positive for the 18th day in a row The SPX A-D line is above its rising 20 EMA, with its ATH made on 1/26/2018. The summation index is in positive range, but topped in July 2016, with a negative divergence are shown going back to 2016. The negative divergence for New Highs was broken on 1/12/18.
More SPX Breadth
More breadth indicators, note the negative divergences since early 2016 on many of these. 5 of 5 of these signals are BULLISH.
Intermediate-Term Breadth Momentum Indicator: A BUY signal was given on 1/5/2018.
Swenlin Trading Oscillator: A BUY signal was triggered 1/3/2018.
Bullish Percent Indicator: A BUY signal was triggered 11/13/2017.
Percent with PMO above Zero: A BUY signal was given on 11/28/17.
Percent with PMO giving BUY signal: A BUY signal was given on 1/8/18, topping?
SPX %above MA
The stochastic indicators have signaled a BUY for 3 of the 5 indicators.
Participation was mixed today.
This should peak when SPX is high and VIX is low. 1/5/18 was a new high for the ratio, which only strengthened negative divergence across the board since September and October. You can see the huge divergence between SPX and this ratio, noting some fear in the market.
A chart that study’s the stocks in the SPX as if they all had equal weighting. Negative divergences are in place for MACD histogram since early December and RSI and ADX +DI more recently, showing momentum is waning for the bulk of individual stock members of the SPX. No significant difference in slope between SPXEW and SPX so nothing earth shattering here.
UST10Y-2Y from January 26th, 2017
Each week I will take a look at the UST10Y-UST2Y, though it will be the daily chart. This chart symbolizes whether the yield curve is supporting economic expansion (by increasing the spread), or providing additional head winds (decreasing). Despite long and strong positive divergences since last summer, this measure of the yield curve is well below the level of the Trump election. In fact, I had to go back to October of 2007 to match levels that are this low!
What’s interesting here, the spread is at 0.55, while recessions since the 1970’s started when the spread was near zero or negative (shown below). If that trend is right, we are a while away from that taking place. You can see the trend is lower over the past several years, but we are currently at a top or consolidating. The bull leg started before the election, as the tide was turning positive for Trump support. Looking at the short term, there has not been a new high or low put in recently, so no divergences to compare to make a prediction.
BUT WAIT…THERE’S MORE ON THE YIELD CURVE
I downloaded US Treasury data (all maturity periods) for every day since 1990. Then I preformed a linear regression on the yields for every maturity period each day and calculated the slope of the linear regression line. This is more robust than merely just subtracting 10Y-2Y as many (including me) do. The resulting graph shows the periods slope were negative in light red. See how nicely they line up with the SPX top in 2000 and just before the 2007 top? Now look from 2009 to present day. The yield slope is quite stable and actually rising! Remember, there are lies, damn lies, and statistics!!
TLT:TIP Daily from January 26th, 2017
Deflation risk which steadily climbed in spring 2017, jumped in early summer 2017 before going sideways.
The bond market Deflation vs. Inflation metric (iShares Barclays 20+ Year Treasury Bond Fund vs. iShares Barclays TIPS Bond Fund). Values early in 2015 and pretty much all of 2016 are showing higher Deflation fears than even 2008-2009.
From this chart you can clearly see when the FED stepped in (when this ratio was nearing 1, except things got out of control at the peak of the 2008 downturn until the FED figured some things out). Clearly things changed since late 2014 and the FED has stepped aside leading to the Deflation fears building beyond the 2008 crisis.
Summary: Bulls vs. Bears
My proprietary Technicals Model has been up for the 48th day in a row, the longest streak since I started calculations in 2006. Major market momentum at play here!
As of Friday Jan 5th both of my swing trade signals are BULLISH, yes much much too late this time.
HYG:IEF has broken last major peak, on March 1st 2017. But it doing so has made significant negative divergences. If it can gain momentum, then it can break these divergences, but its a red flag as of right now. This is a very significant chart to follow!
SPX daily hit All Time Highs today. Negative divergences are in place for 2 of 5 indicators since the middle of the month, with 2 others breaking recently. Countless Hindenburg Omens have occurred since this past summer. Still feel its likely that the next top will be a SIGNIFICANT TOP. At the All Time Highs, SPX Hourly shows negative divergences back to late November for many indicators, therefore I am expecting SPX to turn lower soon.
My proprietary Technicals Model was higher for the 48th day in a row, with a positive divergence at 9/1’s peak vs. SPX, foretelling of this bullish run. On 11/30 it fell just short of making a Technicals Thrust. The Cumulative version of the Technicals Model made a new All Time High 1/24. My statistically driven Volatility Model is steady to lower.
VIX finished lower, on a hourly MACD SELL signal. but there were no negative divergences at this time-frame to give indication that the reversal lower will last long. Zooming in to the 15-min chart, there was only 1 negative divergence, so its more likely than not that VIX will find a footing and venture higher in due time.
Market Internals, participation and breadth indicators, were mixed today. Many of these are in positive territory, yet are well off peaks from last year. SPX A-D line made a new All Time High on 1/24, obviously above its 20 dma which is rising. SPX McClellan has been positive for the 16th day in a row.
Economically, while most talking heads are yammering about the downward trend in 10Y-2Y (The Yield Curve is flattening to 2007 levels), my work dating back to 1990 using the slope of linear regression at all maturity levels shows since 2010 the yield curve has been rising (Bullish Economy) and is well off the levels that foretold a recession in 2000 and 2007. In fact, rising to these levels, matches up well with 2005, 1997 and 1995. Not bad years for stocks, eh?
- The SPX A-D line made an All Time High on 1/26/2018
- The SPX A-D line is above its rising 20 EMA
- SPX Daily above its 20, 50, 100 and 200 dma
- Cumulative Technicals Model made a new All Time High on 1/26/2018
- Technical Model (cumulative) is above its 200 dma
- SPX 20 dma above the 50 dma for the 91st day
- SPX 20 dma above the 100 dma for the 299th day
- SPX 50 dma above the 100 dma for 46th day
- SPX Monthly continue in a upward run
- Strong run in SPX Weekly
- Technicals Model is positive for the 48th day in a row, a record since at least 2006
- BUY signals on 5 of 5 of other Breadth indicators
- BUY signals on 3 of 5 of Number of stocks above their 20/50 dma
- Slope of full yield curve is stable and rising since 2009
- SPX McClellan Oscillator was positive for the 18th in a row
- HYG:IEF eclipsed March 1st, 2017 high, but is now negatively diverging significantly
- UST10Y-2Y at levels not seen since October 2007, major yield curve flattening
- There is negative divergence in the Model vs. SPX between late April and mid September, as well as 4 since October
- Summation Index has been negatively diverging since summer 2017
- SPX weekly has been negatively diverging for years, but some of these divergences have since broken
- SPX:VIX negatively diverging
- SPXEW negative diverging
Levels to watch…
- 2594 pivot
- 2575 pivot
- 2525 pivot
- 2479 pivot
- 2456 pivot
- 2444 pivot
- 2428 pivot
- 2411 pivot
- 2385 pivot
- 2336 pivot
- 2321 pivot
- 2286 pivot
- 2270 pivot
- 2212 pivot
- 2177 pivot
- 2131 pivot
- 2116 pivot
- 2085 pivot
- 2070 pivot
Feb-March 2016 Posts: https://stormchaser80.wordpress.com/
Note: I want you to know that although I have taken the steps to start the subscription business, I will continue to offer the free service through May 2016. I want there to be a good record of (hopefully) accomplishment. Plus I don’t want to spring anything on anyone unfairly. I thought 3 months was enough lead time. I also want to present something nice, and well worth your visit (and subscription).
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