• 4 days Squid Game Rampage Fails to Lift Netflix Stock After Stellar Earnings
  • 4 days Why Tesla, EV Stocks, Could Remain Highly Volatile For Years
  • 6 days Did Big Bank Earnings Just Signal ‘Real’ Economic Recovery?
  • 7 days The Cannabis Industry Is Looking To Fill The Employment Gap
  • 7 days Apple Capitalizes On Upward Momentum Ahead Of Earnings
  • 10 days Earnings Beat Isn’t Enough for S&P 500 Q3
  • 12 days The New World Tax Order
  • 13 days Is Crypto Finally Ready To Pay The Piper?
  • 14 days Is It Time To Buy The Global Gaming Market Dip?
  • 17 days Even The Mafia Has A Millennial Problem
  • 19 days Zuckerberg Loses Billions in Social Media Outage
  • 20 days ‘Pandora Papers’ Leak Reveals More Financial Crime
  • 21 days US Retail Has A Major Supply Chain Problem
  • 24 days China Has Set Out To Crush Crypto...Again
  • 25 days Top Performing Cannabis Stocks of the Year
  • 26 days Millennials Could Power A 20-Year Bull Stock Market
  • 31 days The Million-Dollar Question: Will China Bail Out Evergrande?
  • 33 days 3 Restaurant Stocks In Full Recovery Mode
  • 33 days Bitcoin Is Driven By Testosterone
  • 38 days Quantum Computing Is The Newest Megatrend In Silicon Valley
Stock Barometer

Stock Barometer

Stock Barometer

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend. Our goal is to…

Contact Author

  1. Home
  2. Markets
  3. Other

Top or Trend

11/18/2014 6:32:30 AM

Good morning Traders,

We've been here before. Prices hanging up near highs, approaching a key reversal date and expiration week is upon us. The barometer is reflecting the markets action:

Daily Stock Barometer

As I like to say, the market makes about 7 mid term moves a year. So the barometer is simply a guide to what's going on in the markets, regardless of the news (which creates a bias). So when the barometer turns lower, but prices remain high, that creates buy trend mode. The potential for the markets to trend is significant. That's when stock trading becomes key, as index trading should produce minimal gains in this mode, stocks become the focus of traders and move more significantly.

That being said, one of our new traders has put together an educational email series on trading price gaps. You can click the following link to check it out. Note the emails are handled by Aweber, so you'll have to find the confirmation email after you sign up to actually start getting the emails: http://forms.aweber.com/form/33/1216030333.htm

On the markets, one key indicator we've been watching:

Nas Cumulative Breadth

The trending lower is bearish and note that the next bearish thing that we'll watch for is a cross below the 34 day moving average. Sorry, I'm a Fibonacci guy...

Another basic indicator:

spy qqq up down

This is just a gage on the overall positioning of the market. It doesn't mean the market will top, it just means that the potential exists.

Another basic indicator that gives a key measure on the market's sell pressure:

Tick

If you remember that the market is traded mostly by computers and buying and selling is hard to hide, this indicator is key.

Trin

Trin is less significant as an indicator, because it's based on 4 measures and their interpretation can be skewed by light volume. That being said, it's important to know where this indicator sits as it's the original Trading Index...

And finally, the VIX Put Call Ratio. I remember when this first came out. The volume was so light. In it's first month, there was a day when there were only 3 vix put contracts traded! Now, when the market is getting real scary, you'll see 1.3M CALL contracts traded (bets or hedges that the volatility will go up!)

VIX Put/Call Ratio

My theory on the market is that what moves it is the underlying pressures created by the vehicles that are traded - not the news, though the news can be a catalyst for the timing of a position, it's the sum total aggregated or cumulative measure of actions taken that really drive the markets. The accumulation of all buying and selling of stocks, options, futures, on everything. So for example, if you look at the above and the amount that trading has grown on it since the 2/24/06 it started trading in the markets to where it is now - instant portfolio hedging protection.

So as I always say, when the crowd leans to the left, we need to lean to the right and that's where profitability exists... I feel like we're getting close to a catalyst that will move the markets. And also note the Wednesday before expiration can be a little crazy as that's when larger institutions will start rolling positions - so stay tuned...

Regards,

 

Back to homepage

Leave a comment

Leave a comment