Trading Notes: Calendar Week Of September 28Th

Friday, Oct 2nd

*  I’ll locomote presenting at two trading conferences inward October; both receive got unusually potent programs together with are worth taking a human face at.  

*  The weak payrolls expose has led to a premarket selloff later nosotros dipped together with bounced dorsum yesterday.  As noted yesterday, all of this is consistent amongst a marketplace position that is inward a bottoming process.  My intermediate-term measures are significantly oversold; my models are neutral.  I am watching carefully to run into if nosotros tin hand the sack remain inward a higher house yesterday’s lows.  If so, nosotros could run into an first-class intermediate-term buying chance follow from that.

Thursday, Oct 1st

How nosotros educate ourselves through adversity; produce losses defeat us, or assistance us grow?  Very of import topic.

*  Yesterday’s entry mentioned skillful odds for a bounce together with nosotros sustained early on forcefulness into the twenty-four hours session together with thence overnight.  Two perspectives make me every bit of import here:  1) During the corrections of 2010 together with 2011–ones that were non outright extended deport markets–bottoming took house over multiple months.  Further tests of the downside are non out of the question; 2) The intermediate-term oversold measures referenced yesterday are nowhere nigh beingness worked off.  I human face those to locomote worked off inward fourth dimension together with price, amongst express upside if nosotros are indeed to run into to a greater extent than bottoming together with to a greater extent than upside momentum if we’ve really completed a examination of August lows.

Wednesday, September 30th

*  Overnight activity inward the stock index futures has given us the bounce referenced inward yesterday’s post service later a twenty-four hours of i time again testing lows together with asset inward the 1860 area.  We proceed to locomote short-term oversold together with my swing models are moderately bullish.  

*  We proceed at oversold levels on an intermediate term Earth that receive got led to positive swing returns, every bit the nautical chart below indicates.  This mensurate takes the expose of SPX stocks registering fresh 5, 20, together with 100-day highs minus lows together with calculates a five-day moving average.  (Raw information from Index Indicators).  When this forcefulness mensurate has been inward its bottom quartile (lows outnumbering highs), the side yesteryear side 3 days inward SPX receive got averaged a gain of +.57% going dorsum to 2010.  All other occasions since 2010 receive got averaged a loss of -.02%.

Tuesday, September 29th

*  Yesterday’s marketplace position was a textbook tendency twenty-four hours to the downside.  It’s rattling worthwhile studying the characteristics of tendency days, thence that they tin hand the sack locomote identified every bit early on inward the session every bit possible.  I discovery the distribution of NYSE TICK readings to locomote peculiarly helpful inward that regard.  

*  I had mentioned concluding calendar week that my intermediate-term indicators were relatively overbought.  With yesterday’s wide decline, nosotros discovery ourselves at much to a greater extent than oversold levels, nearing the August lows.  Interestingly, nosotros had 1212 stocks across all exchanges brand fresh three-month lows yesterday.  On August 24th, that expose was 2906.  Per before marketplace position notes, I am opened upward to the sentiment that nosotros are testing those August lows together with that nosotros volition ultimately succeed inward that test. Note, however, than yesteryear higher volatility corrections inward May, 2010 together with August, 2011 took multiple months to discovery an ultimate bottom.

*  We’re seeing elevated index together with private stock put/call ratios, also supporting the sentiment of a bounce here.  Fewer than 10% of SPX stocks are trading inward a higher house their 3 together with ten-day moving averages, a grade that inward the yesteryear has tended to yield bounces over a side yesteryear side five-day basis.  My models are moderately bullish over the side yesteryear side 3 to v twenty-four hours horizon.

*  Thanks to readers for the many positive comments well-nigh the recent trading conference together with the lessons learned.

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