Sand 2 Pirls Market Commentary a weekly technical stock market overview featuring our custom Bull/Bear P&F ratio

January 26, 2008

1-25-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 8:42 pm

Subscriber email sent 1-26-08:

Although at 0.24, the Bull/Bear Point and Figure ratio is within the range of recent values, a quick look at the Sand 2 Pirls P&F Market Breadth Summary Chart reveals that a dramatic shift occurred last week. The change in the total count of securities in Bullish or Bearish patterns, a 36% decrease to under 1350, is the largest since March 2007. Bearish patterns decreased by 43%, and Bullish patterns increased by 15%. Paid subscribers have access to the Excel data from which the image to the left is built.

The well known market breadth indicator, the Nasdaq McClellan Summation Index (NASI) decreased for the twelfth time in fifteen weeks. At -1091, it it has now fallen below its November 2007 low of -882 and its April low of -941, as well as the April 2005 low of -964.
The Nasdaq Composite Index has a count of one (1) accumulation days and four (4) distribution days in the last two weeks and is currently in neither accumulation nor distribution mode. A week ago it was in distribution mode. (Accumulation days are counted when the index closes up on higher volume than the prior day while distribution days occur when the index closes down on volume higher than the prior market day.) We also note among other indexes only the S&P is in distribution mode. The other are in neither accumulation nor in distribution mode.
On Tuesday 1/8 Woodie’s CCI(20) had six days below zero, and we are therefore awaiting a Short entry signal. However, since high downward momentum is unlikely to continue, we require that the CCI(20) be above minus 100, preferably above minus 50, before we accept a Zero Line Reject (ZLR) entry signal. Therefore we continue to wait for a daily signal entry pattern to form.
The Nasdaq Composite CCI(20) Weekly pattern is now on its fourth week below zero. In Woodie’s CCI trading system, six weeks above or below zero are required to establish a change of trend. To accept a Zero Line Reject (ZLR) short entry signal, we require that the CCI(20) be above minus 100 and preferably above minus 50. Therefore we continue to wait for a weekly signal entry pattern.
Concerning industry index performance over the last two weeks, we see S&P Retail (RLX), REITs (DJR), and most importantly Banks (BKX) have joined Airlines (XAL) in the top five. Oil (XOI) and Oil Services (OSX) industries have continued their decline and are now in the bottom five. As we mentioned last week, it does appear that the beginnings of a market leadership shift may have begun as assets are rebalanced in the midst of the current bearish environment. And now with Banks and REITs recovering, it will be possible for new leadership to begin to emerge.
Putting last week’s Banking Index upswing in perspective by the use of a 30 day performance chart of the S&P and Philadelphia banking indexes, we see that although both the S&P and Philadelphia Banking Index are up about 10% from last week’s lows, they have not yet risen above December’s values. Remember from last week’s P&F chart of the S&P Banking Index that the current decline began in October 2007.We will continue to monitor the banking indexes by various methods in future commentaries.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged. © 2004 Sand2Pirls, Inc. All rights reserved. [ Terms and Conditions/Disclaimer ]

January 19, 2008

1-18-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 9:38 am

Subscriber email sent 1-19-08:

A very strong bear market got even stronger this week. At 0.12, the Bullish/Bearish Point & Figure ratio is down from 0.20 recorded the previous week and for the second week in a row, is the lowest value since we began tracking it in March 2007. The total count of securities in either bullish or bearish patterns is over 2100, the highest for the second consecutive week since March 2007, and almost 14% higher than last week’s total count. Bullish patterns decreased by 28% while Bearish patterns increased by 22%. Paid subscribers have access to the Excel data from which the image to the left is built.

The well known market breadth indicator, the Nasdaq McClellan Summation Index (NASI) decreased for the third time in thee weeks. At -1000, it it has now fallen below its November 2007 low of -882 and its April low of -941, as well as the April 2005 low of -964.
The Nasdaq Composite Index has a count of one (1) accumulation days and six (6) distribution days in the last two weeks and is currently in distribution mode. A week ago it was in neither accumulation nor distribution mode. (Accumulation days are counted when the index closes up on higher volume than the prior day while distribution days occur when the index closes down on volume higher than the prior market day.) We also note that all the other indexes are currently in distribution mode.
On Tuesday 1/8 Woodie’s CCI(20) had six days below zero, and we are therefore awaiting a Short entry signal. However, since high downward momentum is unlikely to continue, we require that the CCI(20) be above minus 100, preferably above minus 50, before we accept a Zero Line Reject (ZLR) entry signal. Therefore we continue to wait for a daily signal entry pattern to form.
The Nasdaq Composite CCI(20) Weekly pattern is now on its third week below zero. In Woodie’s CCI trading system, six weeks above or below zero are required to establish a change of trend. To accept a Zero Line Reject (ZLR) short entry signal, we require that the CCI(20) be above minus 100 and preferably above minus 50. Therefore we continue to wait for a weekly signal entry pattern.
Concerning industry index performance over the last two weeks, we notice that surprisingly, Airlines (XAL) may have begun to recover from its long term downtrend. It is the only industry to have gained ground in the last two weeks. Yes, Gold & Silver (XAU) is down more in the last two weeks than S&P Retail (RLX) and Pharmaceuticals (DRG). This is at least in part due to the fact that the Oil (XOI) and Oil Services (OSX) industries have recently declined. Also noting that Computer Hardware (HWI), Semiconductors (SOX), and Disk Drives (DDX) are no longer in the most negative group. The beginnings of a market leadership shift may have begun as assets are rebalanced in the midst of the current bearish environment. Yet, new leadership is unlikely to emerge without the funding that Financials, especially the banking industry, provides. Although not currently in the bottom five, Banks (BKX) are down over 7% in the last two weeks.
Taking a long term view of the support and resistance of the S&P Banking Index (BIX) by using a 2% 3 box reversal Point & Figure chart, we notice that since October 2007 (see the ‘A’ label), it has broken though several levels of support, and has recently broken through the lowest levels in recent years, those of 2002. Clearly, as we continue to emphasize, Financials must recover before bulls can regain market control. We will continue to monitor the S&P Banking Index by various methods in future commentaries.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged. © 2004 Sand2Pirls, Inc. All rights reserved. [ Terms and Conditions/Disclaimer ]

January 12, 2008

1-11-08 Commentary

Filed under: Market Commentary — dlpirl @ 10:12 am
Subscriber email sent 1-12-08:

This remains a very strong bear market. At 0.20, the Bullish/Bearish Point & Figure ratio is down from 0.23 recorded the previous week and is now the lowest value since we began tracking it in March 2007. The total count of securities in either bullish or bearish patterns is over 1850, the highest since March 2007, and almost 10% higher than last week’s total count. Bullish patterns decreased by 2% while Bearish patterns increased by 13%. Paid subscribers have access to the Excel data from which the image to the left is built.

The well known market breadth indicator, the Nasdaq McClellan Summation Index (NASI) decreased for the third time in six weeks. At -849, it remains above its November 2007 low of -882 and its April low of -941, but if bearish strength continues, it will likely penetrate these and test the April 2005 low of -964.
The Nasdaq Composite Index has a count of one (1) accumulation day and six (6) distribution days in the last two weeks and is currently in neither accumulation nor distribution mode. A week ago it was in distribution mode. (Accumulation days are counted when the index closes up on higher volume than the prior day while distribution days occur when the index closes down on volume higher than the prior market day.) We also note that all the other indexes are currently in neither accumulation nor distribution mode.
On Tuesday 1/8 Woodie’s CCI(20) had six days below zero, and we are therefore awaiting a Short entry signal. However, the zero line reject (ZLR) formed on Friday 1/11 had the ZLR pivot below minus 100, and we require that it be above minus 100, preferably above minus 50. Therefore we continue to wait.
Following the Nasdaq Composite CCI(20) Weekly pattern shown here, we took the CCI(20) ZLR (Zero Line Reject) Long entry signal to enter at Monday 12/3 open. We stayed in the trade until the CCI(20) dropped below the ZLR point on Friday 1/4 and exited at the Monday 1/8 open for a loss of 140.76 points on the Nasdaq Composite (not directly tradeable) and 2.74 per share on QQQQ. The CCI(20) weekly continues to drop and once we have 6 weeks below zero, we will look for a short entry signal.
Concerning industry index performance over the last two weeks, we see that Gold & Silver (XAU) continues its bearish lead. Continuing the bearish picture, Computer Hardware (HWI) is the most bearish industry followed by Semiconductors (SOX) and Disk Drives (DDX) along with S&P Retail (RLX). New leadership is unlikely to emerge without the funding that Financials, especially the banking industry provides. Although not in the bottom five, Banks (BKX) are down over 5% in the last two weeks.
Taking a long term view of the momentum of the S&P Banking Index (BIX) by using the weekly CCI(20) as our momentum indicator, we see that in February 2007, it broke through support and has been in a downward trend since that time. (The positive momentum seen in March 2007 was not sustained for more than 6 consecutive weeks.) Clearly, as we continue to emphasize, Financials must recover before bulls can regain control. We will continue to monitor the S&P Banking Index in future commentaries.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged.
 © 2004 Sand2Pirls, Inc. All rights reserved. [ Terms and Conditions/Disclaimer ]

January 5, 2008

1-4-08 Commentary

Filed under: Market Commentary — dlpirl @ 9:46 am

Subscriber email sent 1-4-08:

Our current Bull/Bear P&F Ratio (0.23) is the second lowest value since March 2007, indicating that this very clearly remains bear market. The total count of securities in either bullish or bearish patterns is now nearly 1700, over 14% higher than last week’s total count and the highest total count since May 2007. Bullish patterns decreased by 40% while Bearish patterns increased by 36%. At 0.23, the Bullish/Bearish Point & Figure ratio is down from 0.50 recorded the previous week. Paid subscribers have access to the Excel data from which the image to the left is built.

The well known market breadth indicator, the Nasdaq McClellan Summation Index (NASI) decreased for the second time in five weeks. At -679, it is now above its recent low of -882 and may be forming a “double bottom” pattern similar to that of July 2006 before the market began its four month rise at that time.
The Nasdaq Composite Index has a count of three (3) accumulation days and four (4) distribution days in the last two weeks and is currently in distribution mode. A week ago it was neither accumulation nor in distribution mode. (Accumulation days are counted when the index closes up on higher volume than the prior day while distribution days occur when the index closes down on volume higher than the prior market day.) We also note that all the other indexes are currently in distribution mode.
A week ago we took profits from our recent Woodie’s CCI(20) Long signal, and are currently awaiting the next CCI(20) daily entry point. Monday 12/31/07 was the first day of CCI(20) below zero. A count of six days is required for a trend change by Woodie’s definition, so a Short ZLR signal is a likely possibility in the days ahead.
Following the Nasdaq Composite CCI(20) Weekly pattern shown here, we took the CCI(20) ZLR (Zero Line Reject) Long entry signal to enter at Monday 12/3 open with the Nasdaq Composite at 2,654.91 and QQQQ at 51.14 per share. We stayed in the trade until the CCI(20) dropped below the ZLR point on Friday 1/4. Note how responsive the weekly CCI(20) was to this week’s plunge. Our exit will be at Monday 1/7/08 open, almost certainly a loss which will be reported in next week’s commentary.
Concerning industry index performance over the last two weeks, we see that Gold & Silver (XAU) continues its bearish lead, and is in fact the only positive industry with even Oil Services (XOI) down slightly although remaining in the top five. Continuing the bearish picture, Technology industries Disk Drives (DDX), Computer Hardware (HWI), and Semis (SOX) are in the bottom five industries along with Airlines (XAL), and REITs (DJR). Our position remains that technology industries are unlikely to gain bullish strength until Financials recover sufficiently. And with the bearish hedge of Gold & Silver (XAU) continuing to lead, bears remain in control.
In reviewing the Bullish Percent (BP) Equity Indexes over the last two weeks, we see that only Energy and TSE (Toronto Stock Exchange) are positive, and that Financials (BPFINA) remain in the bearish industries along with Consumer Discretionary (BPDISC). Although Technology (BPINFO) remains out of the bottom five laggard industries, clearly, as we continue to emphasize, Financials must recover before bulls can regain control.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged. © 2004 Sand2Pirls, Inc. All rights reserved. [ Terms and Conditions/Disclaimer ]

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