|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
|
Today's Need-To-Know * After a
pessimistic extreme on Monday, the Equity Put/Call Ratio swung near the
opposite extreme on Tuesday. * The
consistent uptrend on Tuesday pushed the ultra short-term Price
Oscillator for the Nasdaq 100 to a multi-month extreme, which usually
leads to choppy trading at best. * Public
Opinion on the Yen has soared to close to a 15-year high.
Short-term
Outlook:
Neutral since Oct 5th (1029
SPX)
Short-term Strategy
What: We will go 25% Bearish if
the S&P 500 e-mini futures trade at 1102 (just below
Tuesday's low). If triggered, then we will go back to
Neutral if they subsequently trade at 1111.
Why: If attempting to sell
short, the highest reward / risk scenarios involve shorting
as an index bumps up against resistance. Less
desirable is selling into weakness, especially in a strong
tape, since by definition part of the selling pressure has
already been exhausted. So just shorting at 1110ish
and seeing what happens could be viable, but also extremely
short-term if we happen to break out. Because we really
don't trust the short side much right now, we'll go
the less desirable route and wait for some downside
confirmation, moving to a minor bearish
position if we take out yesterday's low. Why keep
focusing on the downside? Same reasons as the past few
days -
troubling
net
short positions from "smart money" traders in the NDX,
a surge in
speculative options activity, a
jump in call buying on the
ISE exchange and the
8th-lowest percentage of bears in the I.I. survey in 20 years.
Sentiment:
Trend:
Several of our shortest-term guides are in "red line"
territory which typically leads to a breather over the coming day(s). Still stuck in a range between 1085 and 1110. Support/Resistance:
Other Tendencies:
Support at
1085, resistance nearby at 1110. Nothing
notable. A minor negative bias after a gap like Tuesday, but
counter to that there is some positive seasonality ahead.
Intermediate-term Outlook: Neutral
since Apr 9th (843 SPX)
Intermediate-term Strategy
What: We will remain neutral for now.
Why:
In March,
we discussed a large number of reasons to expect an imminent rally
of one to three months' duration, or perhaps even more.
We've had ample opportunity to discuss the historic
momentum since that low, and have seen little reason
since to expect anything other than short-term
corrections. In
late October, we looked at
some "toppy" kinds of studies, and after those warning signs the S&P broke
its uptrend line from March.
However, during that late-October correction, traders quickly
became bearish and the market convincingly bounced
back - that's healthy behavior. The recent
failure to hold the 1100 breakout area is something to
watch carefully given the "topping" warning signs and a
surge in
speculative activity, especially as we look to challenge
that 1110 area yet again. After Tuesday's session, we
are right there and it will resolve one way or the other
this week.
Sentiment:
Trend:
Smart/Dumb Confidence Spread is neutral.
The S&P has a rising 200-day average and a series of
higher highs/higher lows. Support/Resistance:
Other Tendencies:
Resistance is nearby at 1100. Pullbacks after highs
have been positive, but we've seen some "toppy"
kind of behavior.
Equity Indicators - Updates and Extremes
This indicator looks at where the Nasdaq 100 closes each half-hourly bar
in relation to its open and close. When there is a clear trend, it
pushes the Oscillator to an extreme. That can be a good sign
longer-term, but in the short-term it often signals a temporary
exhaustion, and further pushes in that direction most often get pulled
back. On Tuesday the Oscillator hit a crazy kind of extreme, and
suggests that further upside attempts in the very short-term won't hold.
You can see an intraday version that is updated every 30 minutes on the
Intraday Snapshot.
|
|||||||||||||||||||||||||||
|
Equity Market Indicators
Notes: Corporate insiders and the various sentiment surveys continue to be the more worrisome indicators among the broad groups that we follow. Most of the others are either neutral or slightly bearish (for the market). Among individual indicators, we continue to watch most closely for scenarios where 0% are bullish and 30% or more are bearish, which has been a very consistent predictor of short-term weakness ahead since March.
More history:
* New extreme
|
|||||||||||||||||||||||||||
|
Bonds, Commodities and Currencies - Updates and Extremes
Sentiment surveys for the Japanese Yen have seen a rapid increase in bullishness, pushing our Public Opinion over 77% bulls. The indicator has reached this extreme five other times - March 1995, October 1998, January 2004, November 2004 and December 2008. Over the next six months, the Yen was lower every time, by an average of -6.3%, though not without some last-ditch blow-off moves first (e.g. 1995 and 2008).
Forwarding or other distribution of this email is prohibited without the express permission of Sundial Capital Research, Inc. If you do not possess a firm-wide license, then forwarding this message will violate your subscription agreement.
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
For December
2, 2009
to
