ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Friday, March 12, 2010

 

intermediate-term downturn/consolidation prospects




i won't attempt to defend this. it is a weekly closing price screen of the nasdaq 100 components showing the percentage of issues trading either above (demand, green), below (supply, red) or net of (demand-supply, yellow) their volatility envelopes. i've highlighted with green lines positive divergences which indicate institutional accumulation/waning downside momentum; vice versa with red lines. circles indicate points following such divergences where the spread between the demand-supply line and its moving average starts shifting down meaningfully.

the last upturn circle in the series registered in the last week of march 2009. the most recent downturn circle PROVISIONALLY registered in the second week of february 2010. its possible demand moving higher here plays out as it did in 4q2007 with a final bump up in price before weakness materializes. i am definitely drawing that final circle with a measure of anticipation, which could easily be reversed.

but i also do so thinking the probability is good that one will have an opportunity to buy the market at lower prices at some point in the intermediate-term future.

this is not foolproof. it doesn't mean there's a crash coming. even if the signal plays out it might mean a noisy multimonth consolidation of some kind, a la 1q2004-2q2005. but that's what i think i see.

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