:: actio-et-reactio ::
amg's market charts and blather
Not a single red candle on the DJ30 60m chart. Absolutely remarkable jam job for the end of the month!
The most recent news from ECRI, and what some say really sparked the reversal today, is that the economy is on the mend. But the guys famous for their two hands will equivocate, stating that
"the 0.2 percent rise in fourth-quarter GDP, following a 1.3 percent third quarter contraction, is so close to zero that the odds are nearly 50 percent that when it is revised, the final number could turn out to be negative."The double-dip recession suggested by Byron Wein and Steven Roach of MSDW, among others, may end up being, errr, a technical revision to the one we just exited, so they say with their other hand waving.
What I find interesting at the end of today are the three narrow doji-like candles formed on the SPX and COMPQ, while the DJIA has had wider range days with a modestly rising trend. A move to the ridiculously named "defensive blue chips"? Perhaps. But a look at the declining volume on the DJIA makes me lean a bit more towards a sell off building towards the much anticipated Greenspan/FOMC announcement on Wednesday. While players are by now nearly uniformly sure that "no change" will be announced, how the market will react, short term and longer term, is not so sure.I speak specifically about the Nasdaq narrow range on the Nasblog, where I also expand a bit on the larger trend.
In gaging the health of the market, not only since 911 but since the first deflation of the technology bubble, a closer look at volume shows some interesting trends.
Since Jan 1999 (as far back as the Nasdaq site monthly aggregate data goes), total Share Volume has nearly doubled while in the same period, total Dollar Volume has decreased slightly. The average share price has corresponding been cut in half.
A simple minded conclusion is that fresh money is not going into the Nasdaq, despite the lower prices. From a dollar point of view, there are actually fewer dollars being traded today than Jan 1999. Note in particular the difference in the "sharpness" of the 911 bounce.
My life the past few days has been much like the market: in a narrow range.
In my case, it's been immersion in java/css code, learning it that is, and ummm, practicing it repeatedly on these pages. Of the few things in life that are deterministic, and coding is one of them. It will indeed do what you tell it, not what you want it to do! But fixing it is much a game of matching tags with endtags, easy peasy if a bit tedious. I don't wonder that those prone to obsessive/compulsive tendencies are drawn to it (hee hee, speaking in generalities of course).
As to the narrow range of the market. Yes, it is that. The very short term bottom on the 23rd is fueling hopes of "the bottom". I am reminded of a similar period during the April rally, when "double bottoms" were being sited quite often. Take care, y'all. And I'll be back to regular routine soon as I fix a curious bug in the archive page text.
Art Cashin, on being asked what kind of tree he would be: "Definitely deciduous."
As I could well be, tracking down the oscillating chart bug (IE5 specific so far) and marshalling my trading plan for what I see as an impending change in trend. Pull up a weekly chart with 13w Bollinger Bands-- they're narrowing; also note that the longer MAs are flattening and "clumping".
Readers know I am biased towards a correction, primarily influenced by at best tepid economic indications and a richly valued market with weak earnings outlook. I scrub the charts looking for Bully, but keep finding bear fur. It is in times like this that "discretionary" trading must be squashed and your plan worked with discipline.
If you don't have a plan, consider putting one together. That blank sheet of paper staring at you will be intimidating, but it is in the process of planning that the big value lies. A plan provides a focal point, a sounding board. And it is always there to be tweaked and modified along with conditions. What worked during the bull may not at all work in a conjested side-winding market.
Motivated by a question from a reader, I've been doing volume studies and being the weekend, got sidetracked and meandered back in time to the early 90s. I noticed a rather abrupt step up in OBV on the COMPX in Oct 92 and wondered if there was an "event" that pushed players into tech.
While I haven't quite found "an answer"-- lol, like there is simple one answer-- I did revisit Dow Jones' Historical Time Line and thought readers of this blog might enjoy the perspective.
Won't make you money tomorrow, but it's like the zest of a lemon, adds a pleasant touch to the business we are in.
Just frisked the SPX, DJ , & COMPQ daily charts across all MAs (8, 13, 26, 34, 50, 150, 200) Everyone of them cleanly underwater. The last miracle is a deadcat bounce off support provided by the Dec lows. Not feeling particularly heroic.
Using the COMPQ as an example, how will post-OE shape UP? If last month is any indication (and it has the similarity of having a short week after it), the 60m chart I've been watching is indicating at least a rebound. 
Andrews/Median-lines on the SPX and COMPQ show a slight positive bias. This supports my view we get just a bit more up tomorrow, despite some after hours selloff. Click the Public Chart list link to the right to see the latest.
Hey, I oughta run out and catch a matinee more often! The inside day shaped up to be outright positive. Looking for continuation tomorrow, perhaps to the mid-band of the 13d on the COMPX and 20d on the SPX as rough targets.
Market closed on Monday -- Martin Luther King Day observed.. Nasdaq Trading Schedule
Looks to be making an Inside Day across the market indices
Got the gap up. Now what? Rally into Friday, mash around a bit Monday. Tuesday is where the pedal hits the metal.
Wollie Don says to understand price action during Options Expiration "week", you have to think like a kriminal. And the trez nasty close underscores that completely. The DJ swooned to the point of curbs and the Nasdaq woke out of a 3-hour midday narcoleptic nap to stumble off the couch. The thumbscrews come off tomorrow-- maybe.
Unfortunately, the COMPQ closed at 1944, just under the 50d MA at 1951. Overshoot? The last overshoot was of the 34d MA 12/14, when the triangle did not break. Think like a kriminal!! Gap UP in the morning... or at worst, a flat open-trend up day. The two gap downs on this chart are troublesome... but euphoria usually brings in mo-mo and Bob's your uncle, away we go.
[ removed the chart -- it may be wrecking havoc for some viewers ]
A friend asked me for my thoughts regarding a "V" shaped recovery, etc. Here is my reply.
I just can't get excited about the shape of "this" recovery. The idea of a second recessionary wave appeals, if only because it allows a double wave of sell-off/recovery. We can still say we've had a recovery, let another debacle creep in and get sick all over again. Sort of like going back to work too early, before the cold had completely run its course.
Hussman has it right when he writes:
Investors are currently tangled in pretzel logic (gg-- so was dubya!). Every hope that the economy is about to recover results in stock buying, and the stock buying is then taken as evidence that the economy is about to recover.
I do like this cartoon!
The manic nature of day trading ill suits me as does long term buy and hope. These rabbit slippers will be great during what promises to be a range-bound market in the coming months.
The January Effect has a catch!! The Ominous December low, which trumps the January effect!
Sheesh, it's always something!
(which is why trading these seasonal white sales is for the ... pros)
Stockcharts.com Chart Watchers Weekly - 12 January 2002, authored by SCC Prez Chip Anderson, is always a great read.
Sure gaps fill, but unless it is a "common" gap (ie, not a more significant exhaustion or continuation gap), it often doesn't fill the on the first pass.
Gaps aren't only about "filling", they also reflect important support and resistance price ledges that can be exploited by traders.
Here is the April gap study, which includes the recent rally gaps. The gap echo boundaries can be exploited, particularly for shorter term trading, as support/resistance points.
Overhauled my public charts quite a bit today. amg's Market Studies & Commentary. Added NDX gap chart and revamped the COMPX/SPX Andrews charts for shorter term views.
This article, titled Andersen's Future at Stake After Enron goes in the bin labeled if you can't trust your accountant, who can you trust.
Here is an Investor Intelligence Market Sentiment chart, courtesy of Martin Capital. "Investors Intelligence" is a contrarian tool, as you see Bullish sentiment peaks at highs and Bearish at lows. An odd comment on intelligence.
In thinking back to past New Years, 2002 stands out more as a struggle with completion and resolution of events of the past year than as a beginning of fresh starts. It is little wonder as 2001, the first "real" year of the millenium, was not only ushered in with a thudding denial of promises made on future prospects during the heady giddy build-up to that brave new year 2000, but ended with a terrorizing event that shattered our concept of safety. Despite the determined market gains (and unprecedented fed liquidity injections) after 9/21, by the dawning of 2002, even the most optimistic of bulls acknowledged and knew the market, in particular the Nasdaq, had experienced a bubble and that even if "the lows" are not to be visited, neither will prior highs be visited anytime soon.
2001 also taught folks a new trick. Like the sluggish humans we are, just as the bear was nearing satiation, people learned to short, and continue to do so as a preference, creating a whole new breed of mo-mo winners and losers. One of its effects? A range-bound market as rallies are sold and dips are bought, not just by bulls by by bears! One of the prices paid for a range-bound market is polarization of views, a struggle between top and bottom pickers!
There has been a palpable change in chat sites these past months. Not only is volume of posting down, but participant's needs seem altered, a shift towards quick scalps and 5-minute chart focus being the biggest change. Everyone is a trader now. Investors and to some extent, even swing traders, seem to have gone underground. The ballast of the "buy and hold" crowd is now in the hands of conservative funds and institutions.
Another chat site change is the reappearance of aggression, ranging from classic bear-bull baiting to ridicule of peoples techniques and trading. This on public forums as well as a number of private and subscription groups I frequent. While these events were not unheard of, the shrinking of the communities has not always created a greater tolerance for those left standing. However the year is young and the heart ever hopeful. I remain at worst a cheerful curmudgeon!
A good summary of one of the January Effects: History Shows First 5 Days Can Put Bulls on Right Path Mind you, these sorts of adages bear further study. While they may "work", a sensible way to play it would be, like any trade, to use a stop loss. While the original observation by Yale Hirsch was for the Dow Jones Industrials, that these indices trade in tandem allows a liberal such as I to overlay it on the Nasdaq. Here is last year's chart, which also incorporates part two of the January effect, namely, "As goes January so goes the year".
Who says traders lack humor? I can't decide -- which one of these hotties is cuter?
Text of Greenspan Comments, 1/11/2002
Michelle Girard's treasury comments are always interesting and insightful Treasury Market Recap Jan 10, 2002. This week's FRB parade in anticipation of Greenspan's Friday appearance has been particulary hyped.
Yahoo - Andersen says staff disposed of Enron documents Ugly, ugly, ugly. Ugly internal company intrastructure, ugly impact to "investors", ugly political implications. As greed increases, the machinations engulf the willing and unwilling. Awareness and action are the only protection to those directly involved. I doubt Enron is an isolated case.
Hey, I can post links to my posts (good grief, I'm beginning to understand how this blogging mania works!) squawking about aroon and some other general comments.
There, now that we've popped the champagne, eaten everything in sight, and are wondering what's next, on to the commentary!
Gravity asserted itself dramatically yesterday, with a 3% intraday whoosh that put a fright into the bulls. Nevertheless, the brakes engaged and the daily chart action continues to form a complex side-trending consolidation. Ellioteers might throw ABCXABC soup at it; however, I am EW clueless, but it clearly looks conjested and building for something.
Greenspan speaks on the economy this Friday and the more dovish FRB members have been softening the pitch for what is likely a rah-rah-economy-is-sound-but-we-remain-cautious speil.
There are a number of January Effect studies on my Public List, which I will update through the end of this month.
Hello and Welcome to amg's Actio et Reactio web log, blog.
Blog?
Blogging is considered one of the most important manifestations of internet culture, one of the Seven Wonders of the Web. Often reflecting a surfiet of self-conscious narcissism, blogs have rapidly become a virtual lifestyle of the youthful and connected, often serving as a sort of word-cam of their angst-ridden attention-hungry inner world, a public and often uncensored and unsifted open diary. The shining light does get through, such as "news blogs", serving to bind members of diverse internet communities. I can't say that the odder form of blog exhibitionism is quite for me, and apart from chat sites, haven't found any pure market blogs. As a market diary, I think blogging will suit just fine!
There are countless blogs on virtually any topic. To set up your own blog or to read more about blogging, try blogger.com. And if you have a market blog, let me know!
Welcome to my teeter-totter actio et reactio world.
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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