Warning signsFor the first time since October 2018, there are hints of trouble brewing beneath the market. While major indexes have been at or near all-time highs, under the surface there are more and more stocks losing momentum, and there has been a split with many securities at 52-week highs AND lows.That has triggered the much-derided Hindenburg Omen, at least using the criteria we've always used (others might use slightly different criteria or data sources). According to our Backtest ...Read more...
I won't be publishing a Daily Report this afternoon, so this post is being sent as a Bulletin to all users. This is similar to what is included in the premium notes published most days.Bully BullyEven after a choppy week, the smallest of options traders have sustained their belief in a continued rally in stocks. So have others, enough to push the Options Speculation Index above 1.30. This means there was 30% more volume in bullish options strategies than bearish strategies last week.After ...
The Hindenburg Omen, a warning of a split market, triggered on both the NYSE and Nasdaq; Gold hit an overbought reading 30 days ago but has tacked on another 8% since then; Hedgers are still buying cotton while selling corn
A warning for stocks last fall was triggered by several conditions, primarily that major indexes were still in uptrends, but fewer and fewer stocks were driving them higher (the McClellan Oscillator moved below zero) and the market was split with a large number of securities hitting 52-week highs and a large number at 52-week lows at the same time.For the first time since October 2018, those same conditions exist now, triggering a Hindenburg Omen on both the NYSE and Nasdaq. See the July 19, ...
Here's what's piquing my interest on this summer Friday that's having some issues trying to hold any buying interest.UnstoppableGold reacted very well to the newly renewed projections of a larger rate cut at the next Fed meeting, breaking out again to another new high. So far, it has managed to shrug off the kinds of conditions that stopped other rallies in the past 7 years in their tracks. When we see behavior like this, very often it means something fundamental in the market has ...
Six months of momentumThe McClellan Summation Index has now gone 6 months in positive territory.That’s a long streak compared to others since 1962. Momentum is very difficult to time, almost by definition, but by the time this measure of breadth momentum went this long above zero, forward returns for stocks were poor over the next 1-2 months, but good longer-term. Seasonality may play a part in much of that weakness – when the streak hit this length anytime from May through August, returns ...
The NYSE McClellan Summation Index has been above zero for 6 months now; The Nasdaq Composite just hit a new high, but already there are more stocks at 52-week lows than 52-week highs on that exchange; The Dow Industrial's Summation Index is rolling over from a very high level; A Hindenburg Omen triggered on both the NYSE and Nasdaq
Here's what's piquing my interest on what's starting out to be a minor hangover from yesterday's pressure.Breadth ReviewAcross sectors and indexes, breadth underlying the recent rally has been ebbing, and most of the McClellan Oscillators we track are now below zero.This means that the longer-term Summation Index should start to roll over, which they have. For the Dow Industrials, the index has dropped below 1525. Per the Backtest Engine, this loss of momentum has preceded some shorter-term ...
Confidence nears upper boundOver the last couple of days, Dumb Money Confidence has poked above 80%. While it has gone higher over the past 20 years, this is in the top 2.3% of all readings.'It’s high enough that it has preceded weak returns, especially in recent years, and those times when stocks aren’t coming out of a major decline.Barometer is bustingA fundamental indicator created by Yardeni Research, the Boom-Bust Barometer, has been “busting” even while stocks reach new highs. The ...
Dumb Money Confidence has exceeded 80% for the first time in more than a month; The Boom-Bust Barometer from Yardeni Research hit a 52-week low even as stocks were hitting 52-week highs; Newsletter writer sentiment is in the top 5% of readings since 1987; Oil & gas stocks have trailed oil by more than 8% over the past 6 months
