360° Coverage : Heavy Selling Shifts Sentiment

10 Updates

Heavy Selling Shifts Sentiment

Jan 27 2014, 11:14am CST | by

The close last Friday could not come soon enough for most investors while traders bailed after the New York close, knocking the futures five points lower on the heaviest volume of the day. The...

Filed under: news

 
 
 

26 weeks ago

Heavy Selling Shifts Sentiment

Jan 27 2014, 11:14am CST | by

The close last Friday could not come soon enough for most investors while traders bailed after the New York close, knocking the futures five points lower on the heaviest volume of the day.

The technical and sentiment readings have been in the moderately high-risk zone since before Christmas. Some of the bulls became disillusioned in early 2014 as the market moved sideways (Souring Sentiment Will Help Stocks), which made the market even more vulnerable.

The sentiment has shifted since last week as the selling was the heaviest in some time, with the declining stocks leading the advancing issues Friday by a 6.4 to 1 margin. The ARMs Index or TRIN, a measure of overbought/oversold market condition closed at 1.75 on Friday with its 10-day MA at the highest level since the late February 2013 lows.

On a short-term basis, this favors a decent rebound this week that could last a couple of days as many did not succumb to the panic selling in reaction to China’s manufacturing data. As discussed in Friday’s Weak Ahead column, I reviewed some of the past China-inspired market declines that eventually set up good buying opportunities. The overseas markets were lower early Monday but the futures are higher.

This market correction should not only eventually provide a buying opportunity in the US markets but also overseas some potential buy zones are evident on the weekly charts.


Click to Enlarge/>

Chart Analysis: The % of S&P 500 stocks above their 50-day MAs was just over 79% at the end of 2013.

  • As I have noted over the past few months, it has formed lower highs since May, line 1.
  • The % dropped sharply from just over 70% last Wednesday to 36.6% on Friday.
  • At the June 2012 lows, the % dropped to well under 15%, point a.
  • At the November 2012 lows (point d), the % dropped below 25%, which was more than 2 SD (standard deviations) below the mean of 64.59%.
  • At the June 2013 lows, the % was also below 29%, point c.
  • The five-day WMA more clearly identifies the turns as it did last June.
  • It dropped to around 35% twice in 2013 and is still relatively high at 57.4%.


Click to Enlarge/>

The chart of the German Dax (also from IndexIndicators) shows the five-day MA over the past two years.

  • The MA dropped to an extreme in June and July of 2012, line d.
  • It rose for the next three months to over 90%.
  • A strong surge into overbought territory like this is a sign of strength as the DAX rose from under 6000 to over 9750.
  • Since that low, drops in the five-day MA to the 40% area have often marked short-term lows.
  • Last summer, the MA dropped to 15% (point e), which was more than 2 SD below the mean.
  • The MA shows a pattern of higher lows, line f, with support in the 64 area.
  • The five-day MA is currently at 84.67% as the % dropped to 60% on Friday.
  • On a one-day basis, the % dropped to below 10% last summer.


Click to Enlarge/>

The Spyder Trust (SPY) shows the weekly LCD sell signal last week with the 20-week EMA at $177.56, which is just below the quarterly pivot at $177.84.

  • The weekly starc - band is at $175.52 with the September high, line a, at $173.60.
  • The weekly uptrend, line a, is just slightly lower.
  • The weekly on-balance volume (OBV) did make a slightly new high two weeks ago and is not testing its rising WMA.
  • The longer-term OBV support is much lower at line c.
  • Aspray’s OBV Trigger (AOT) peaked in November and has been forming lower highs, line d.
  • The fact that the OBV did confirm the highs makes the current OBV decline look like a buying opportunity and the AOT could give a bullish trigger in the next few weeks.
  • There is resistance now at $180.50-$181.32 and stronger at $182.76.

The SPDR Euro STOXX 50 (FEZ) is made up of the largest Eurozone companies. It has 38% in the top ten holdings with a yield of 2.75% and an expense ratio of 0.29%.

  • FEZ is currently 5% below the highs at $42.43 as it closed last week below the quarterly pivot at $40.99.
  • The 20-day EMA is at $39.96 with the quarterly projected pivot support at $39.54.
  • The weekly starc- band is at $38.73 with more important weekly chart support at $36.90, line e.
  • From the June 2012 lows, the FEZ was much stronger than the S&P 500.
  • That was also the case from June 2013 through November.
  • Recently it has kept pace with the S&P 500 (see circle).
  • The weekly OBV peaked in October and has since formed lower highs, line h.
  • The OBV dropped below its WMA, which has started to flatten out.
  • The OBV shows a long-term bullish pattern.
  • There is strong resistance and a gap in the $41.16 to $42.00

What It Means: The strength or weakness of a rally this week may help us determine how long the market decline or correction may last. I would recommend you keep an eye on the quarterly pivot levels for the key ETFs (see table) as those that hold these pivots on a weekly closing level may be the new leaders.

Some of the country ETFs that are looking the best are the iShares MSCI Austria (EWO), iShares MSCI Spain (EWP) and iShares MSCI Italy (EWI). I think the SPDR Euro STOXX 50 (FEZ) could drop down to the $38.50-$37.00 area.

How to Profit: No new recommendation for now but watch my Twitter feed for intra-day market updates.

Editor’s Note: If you’d like to learn more about technical analysis, attend Tom Aspray’s workshop at The Trader’s Expo New York, February 17-19, 2014. You can sign up here, it’s free.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat wa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rak ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minis ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states l ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensation ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry M ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 million. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramada ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Methane created mysterious Siberian crater: Study
London, Aug 1 (IANS) The mysterious crater spotted in the frozen Yamal peninsula in Siberia earlier this month was probably caused by methane released as permafrost thawed, Russian researchers say.
 
 
Why some people can cope with short sleep
New York, Aug 1 (IANS) Most people require seven to nine hours of sleep to have proper daytime functioning, but some people can function normally on less than six hours of sleep per night owing to a gene mutation, says a study.
 
 
Way to restore body's insulin producing ability
New York, Aug 1 (IANS) There is good news for patients suffering from type-one diabetes as they may soon be able to do away with their daily insulin dose to manage their blood-sugar levels.
 
 
How flu virus infects host cells
New York, Aug 1 (IANS) A new computer simulation shows how the flu virus attacks and infects host cells which may lead to new strategies to stop influenza and even Ebola, perhaps even a one-size-fits-all vaccine.
 
 
 

Latest from the Network

Venezuela to shelter wounded Palestinian children, orphans
Caracas, Aug 1 (IANS/EFE) Venezuelan President Nicolas Maduro has announced plans to set up a shelter for Palestinian children wounded and orphaned in the Israeli offensive on Gaza, and has raised the possibility of...
Read more on Politics Balla
 
Will Gaza truce lead to Hamas-Israel-US meet in Cairo? (Comment: Special to IANS)
Does the 72-hour ceasefire in the three week long conflict in Gaza brokered by the UN and US advance peace? Just as I write this comes news that the Palestinians have captured an Israeli soldier. Has the ceasefire...
Read more on Politics Balla
 
Indian women's hockey team finish 5th in CWG
Glasgow, Aug 1 (IANS) The Indian women's hockey team defeated hosts Scotland 2-1 in the 5-6 position classification match to end fifth at the Commonwealth Games here Friday. While the first half was a showcase of...
Read more on Sport Balla
 
Somali lawmaker gunned down
Mogadishu, Aug 1 (IANS) Suspected Islamist gunmen Friday shot dead a Somali member of parliament, Aden Mohamed Madeer, in a drive-by shooting in the capital Mogadishu, police and witnesses said. Gunmen in a vehicle...
Read more on Politics Balla
 
Paddlers Sharath Kamal-Ghosh to vie for men's doubles gold
Glasgow, Aug 1 (IANS) Indian paddlers Sharath Kamal and Anthony Amalraj reached the final of the men's doubles event at the 2014 Commonwealth Games, securing a minimum silver medal here Friday. It was a facile win for...
Read more on Sport Balla
 
Myanmar ethnic leaders speed up work on ceasefire pact
Yangon, Aug 1 (IANS) A third summit of Myanmar's ethnic armed groups, held in two phases over the past six days in Laiza in northernmost Kachin state, has decided to speed up coordination with the government to...
Read more on Politics Balla
 
Pinki brings India's first boxing medal
Glasgow, Aug 1 (IANS) Pinki Jangra brought home India's first boxing medal from the 2014 Commonwealth Games though she lost her women's 48-51 kg semi-final bout and had to settle for the bronze at the SECC Hall here...
Read more on Sport Balla
 
Pakistan deploys army for Islamabad's security
Islamabad, Aug 1 (IANS) Pakistan has started deployment of army troops for the security of Islamabad over concerns that the Taliban militants could carry out attacks in reaction to the ongoing major operation against...
Read more on Politics Balla
 
Over 1,700 killed in Iraq violence in July: UN
Baghdad, Aug 1 (IANS) At least 1,737 Iraqis were killed, and 1,978 others injured in terrorist attacks and violence in July, according to a statement issued Friday by the UN Assistance Mission for Iraq (UNAMI). The...
Read more on Politics Balla