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

March 29, 2008

3-28-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 9:48 am
Subscriber email sent 3-29-08:

Market Breadth: Our Bull/Bear Point and Figure ratio at 0.49 is up from last week’s 0.28, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that is less bearish than the last few weeks, but still bearish none-the-less. The total count of securities in Bullish or Bearish patterns, decreased by 19% and is now less than 1300. Bearish patterns decreased by 31%, and Bullish 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) increased for the ninth time in seventeen weeks. At -852, it remains above the January 2008 low, and is now back above the November 2007 low when the market began its rebound attempt at that time. It has also just risen above the August 2007 and April 2005 lows, but not yet the July 2006 low.
The Nasdaq Composite Index has a count of three (3) accumulation days and two (2) distribution days in the last two weeks and is currently in neither accumulation nor distribution mode. Last week it ended in accumulation 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.) Of the other indexes, both the Dow and the S&P are neither in accumulation nor distribution mode.
Momentum: Checking the Daily CCI(20) of the Nasdaq Composite Index, we now have five days with the CCI(20) above zero. we do not accept the ZLR (Zero Line Reject) pattern formed at Wednesday 3/26 close because at the point where the down arrow is shown on the chart, the CCI(20) had risen above 100.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. Both daily and weekly CCI(20) of the Nasdaq Composite Index continue in a downtrend by this definition.
The Nasdaq Composite CCI(20) Weekly pattern now has thirteen weeks below zero. When the CCI(20) dropped below -200 a Vegas Trade Long and ZLR Short both became possibilities, and we have been watching for either signal entry pattern to develop. The CCI(20) now has two bars above -100 and may be in the process of rounding to form a Vegas Trade (VT) trigger for a counter-trend Long trade or may form a ZLR Short signal if the CCI(20) rises to above -50 then drops by 20 points.
Industry Rotation the last two weeks: Some of the bullish signs we noted last week remain, but there are also bearish indications to be noted this week. Biotech leading the top five lends suspicion that recent gains may to a large extent be speculation driven. However, REITs continuing in the top five is bullish as is Gold & Silver (XAU) continuing to lead the bottom five. Back on the bearish side, Banks (BKX) have dropped out of the top five, and Disk Drives (DDX) and Computer Hardware (HWI) are in the bottom five industry groups.
Banking Index (BKX) P&F 2% 3box rev.
Focus This Week: Again taking a long term look at support and resistance on the Nasdaq Composite Index, this week using a 2% box 3 box reversal Point and Figure Chart, we see what a critical juncture the market is at now. If the index breaks below 2191.3, the long term P&F support line begun in 2002 is broken. However, should the bulls regain control, a rise above 2419.4 would give a bullish breakout signal. These continue to be a very interesting days for market observers and participants alike!

–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 ]

March 22, 2008

3-21-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 7:56 am
Subscriber email sent 3-22-08:

Market Breadth: Our Bull/Bear Point and Figure ratio at 0.28 is unchanged from last week, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that continues bearish since the bearish spike and apparent short term bottom of January 18. The total count of securities in Bullish or Bearish patterns, increased by 7% and is approaching 1600. Bearish patterns increased by 8%, and Bullish patterns increased by 6%. 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 eighth time in sixteen weeks. At -999, it remains above the January 2008 low. However, it has dropped below the November 2007 low when the market began its rebound attempt at that time, and we are now below the August 2007, July 2006, and April 2005 lows.
The Nasdaq Composite Index has a count of four (4) accumulation days and two (2) distribution days in the last two weeks and is currently in accumulation mode. The prior two weeks ended 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.) Of the other indexes, both the Dow and the S&P are neither in accumulation nor distribution mode.
Momentum: Checking the Daily CCI(20) of the Nasdaq Composite Index, we have an exit at Wednesday 3/19 open for our Woodie’s Short ZLR (zero line reject) entry at Friday 3/14 open for a change of +0.91 (0.04%) points on the Nasdaq and a loss of 0.18 per share of QQQQ.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. Both daily and weekly CCI(20) of the Nasdaq Composite Index continue in a downtrend by this definition.
The Nasdaq Composite CCI(20) Weekly pattern now has twelve weeks below zero. When the CCI(20) dropped below -200 a Vegas Trade Long and ZLR Short both became possibilities, and we have been watching for either signal entry pattern to develop. The CCI(20) has just risen above -100 and now qualifies for either a Vegas Trade long or a ZLR short signal if the CCI(20) moves sharply either up or down.
Industry Rotation the last two weeks: For the last three weeks, bearish Gold & Silver (XAU) has led the top five. This week, having the largest percentage decline of any industry group in two weeks, it leads the bottom five. Banks (BKX), REITs (DJR), S&P Retal (RLX), Internets (DOT), and Biotech (BTK) all in the top five and Oil (XOI) in the bottom five with Gold & Silver (XAU) is bullish and a definite shift for last week’s bearish pattern.
Banking Index (BKX) P&F 2% 3box rev.
Focus This Week: With the Philadelphia Banking Index (BKX) on the rise again, we revisit its 2%, 3 box reversal Point & Figure chart and find that we now have a bullish double top breakout pattern. The BKX will likely fluctuate somewhat in the weeks to come, but as long as the bottom of 74.14 remains intact, the bulls will gain strength.

–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 ]

March 15, 2008

3-14-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 11:21 am
Subscriber email sent 3-15-08:

Market Breadth: Our Bull/Bear Point and Figure ratio rose very slightly this week, from 0.24 to 0.28, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that continues bearish since the bearish spike and apparent short term bottom of January 18. The total count of securities in Bullish or Bearish patterns, decreased by 2% and continues under 1500. Bearish patterns decreased by 5%, and Bullish patterns increased by 11%. 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 seventh time in fifteen weeks. At -934, it remains above the January 2008, August 2007, and April 2005 lows. However, it has dropped below the November 2007 low when the market began its rebound attempt at that time. It was not able to rise above -600 where declines began last December, and we are now below the July 2006 low of -839.
The Nasdaq Composite Index has a count of three (3) accumulation days and three (3) distribution days in the last two weeks and is currently in distribution mode. It ended he last two weeks 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.) Of the other indexes, both the Dow and the S&P are neither in accumulation nor distribution mode.
Momentum: Checking the Daily CCI(20) of the Nasdaq Composite Index, we a new Woodie’s Short ZLR (zero line reject) signal for short entry at Friday 3/14 open. Note that we didn’t take the ZLR entry signal last week as the CCI(20) was below -100. We will follow the results of this trade simulation in next week’s commentary.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. Both daily and weekly CCI(20) of the Nasdaq Composite Index continue in a downtrend by this definition.
The Nasdaq Composite CCI(20) Weekly pattern now has eleven weeks below zero. When the CCI(20) dropped below -200 a Vegas Trade Long and ZLR Short both became possibilities, and we have been watching for either signal entry pattern to develop. However, the CCI(20) remains below -100. To qualify for either a Vegas Trade long or a ZLR short signal, the CCI(20) must first rise above -100.
Industry Rotation the last two weeks: Again this week, in spite of rising oil prices, Oil Services (OSX) and Oil (XOI) continue out of the top five group, and Gold & Silver continues to lead which is bearish. Semis (SOX) has dropped out of the top five, but Disk Drives (DDX) has joined Computer Technology (XCI) there which has bullish potential. Banks (BKX) has risen out of the bottom five but Brokers (XBD) and S&P Retail (RLX) remain.
Volatility Index (VIX) P&F 2% 3box rev.
Focus This Week: The recent increase in volatility has been notable. Usually increased volatility is directly related to greater fear of loss which tends to drive the market more quickly downwards than greed drives it upwards. The Point and Figure chart above helps us put the volatility increase in perspective. (Note the small 1, 2, and 3 in with the Xs and Os to the right of of 08 on the bottom axis.) The spike earlier this year was on January 22, and was an intra day high. Six months of end of day VIX values are shown in the chart below.
6 mo EOD VIX chart

–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 ]

March 8, 2008

3-7-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 9:40 am
Subscriber email sent 3-8-08:

Market Breadth: Our Bull/Bear Point and Figure ratio dropped sharply this week, falling from 0.49 to 0.24, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that continues bearish since the bearish spike and apparent short term bottom of January 18. The total count of securities in Bullish or Bearish patterns, increased by 21% and is now just under 1500. Bearish patterns increased by 46%, and Bullish patterns decreased by 29%. 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 sixth time in fourteen weeks. At -796, it remains above the August 2007, July 2006, and April 2005 lows as well as the November 2007 low when the market began its rebound attempt at that time, yet it is still below -600 where declines began last December.
The Nasdaq Composite Index has a count of three (3) accumulation days and two (2) distribution days in the last two weeks and is currently in distribution mode. A week ago it was also 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.) Of the other indexes, both the Dow and the S&P are also in distribution mode.
Momentum: Checking the Daily CCI(20) of the Nasdaq Composite Index, we note that the Woodie’s Short ZLR (zero line reject) trade begun on Friday 2/29 at open gave an exit for Wednesday 3/5 open because the CCI(20) went flat at about -200 at Tuesday 3/4 close. This trade was profitable for 42.57 points on the Nasdaq Composite (not directly tradeable) and $0.66 per share of QQQQ. Note that the CCI(20) at Wednesday 3/5 close did not rise above -100, so we do not accept the ZLR short entry signal formed at Thursday 3/6 close.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. Both daily and weekly CCI(20) of the Nasdaq Composite Index continue in a downtrend by this definition.
The Nasdaq Composite CCI(20) Weekly pattern now has ten weeks below zero. With the CCI(20) having dropped below -200 a Vegas Trade Long and ZLR Short are both possibilities we will be watching for as we continue to wait for a weekly signal entry pattern. However, the CCI(20) is not yet above -100, and has just begun to hook downwards. To qualify for either a Vegas Trade long or a ZLR short signal, the CCI(20) must be rise above -100.
Industry Rotation: Over the last two weeks In spite of rising oil prices, Oil Services (OSX) and Oil (XOI) continue out of the top five group, yet Gold & Silver continues to lead and is the only industry showing gains which is bearish. Computer Hardware (HWI) has dropped out of the top five, but Computer Technology (XCI) has now joined Semis (SOX) there which has bullish potential. Rounding out the bearish picture, we note that Banks (BKX) remains in the bottom five accompanied by Brokers (XBD), Disk Drives (DDX), and S&P Retail (RLX).
Performance Chart of Banks and SemisFocus This Week: Market observers often note how over the last several years, the semiconductor industry has led the technology sector and the market in general. Examining the relative performance of these two industries over the last 90 days, we note that Bank declines have been leading Semis downwards. We note that the rise of Banking in mid January wasn’t followed by Semis, hinting perhaps that recent attempts to stabilize banking were unsuccessful in strengthening the broader economy, and to date, the banks themselves, since we see Banks have recently hit a lower low as their decline continues.

–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 ]

March 1, 2008

2-29-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 10:16 am
Subscriber email sent 3-1-08:

Market Breadth: Our Bull/Bear Point and Figure ratio remained virtually unchanged this week, rising from 0.48 to 0.49, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that remains reluctant to go bullish after the bearish spike and apparent short term bottom of January 18. The total count of securities in Bullish or Bearish patterns, increased by 2% and is still under 1250. Bearish patterns increased by 1%, and Bullish patterns increased by 5%. 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) increased for the eighth time in thirteen weeks. At -637, it continues to rise above the August 2007, July 2006, and April 2005 lows as well as the November 2007 low when the market began its rebound attempt at that time, yet it is not above -600 where declines began last December.
The Nasdaq Composite Index has a count of three (3) accumulation days and two (2) distribution days in the last two weeks and is currently in distribution mode. A week ago it was also in accumulation 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.) Of the other indexes, the Dow is also in distribution mode while the S&P is in either accumulation or distribution mode.
Momentum: Our Woodie’s Daily CCI(20) zero line reject (ZLR) Short entry at Thursday 2/14 open ended immediately after breaking through the CCI(20) support line with a counter-trend zero line reject giving us an exit signal for Tuesday 2/26 open. The profit was 61.80 on the Nasdaq Composite (not directly tradable) and $1.20 per share of QQQQ.
Still referring to the Daily CCI(20) of the Nasdaq Composite Index, on Thursday 2/28 at close we had another Short ZLR signal with entry for Friday 2/29 open. Note that the CCI(20) trend-line break was nearly horizontal at -100. We will continue to follow this trade simulation in next week’s commentary.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. Both daily and weekly CCI(20) of the Nasdaq Composite Index continue in a downtrend by this definition.
The Nasdaq Composite CCI(20) Weekly pattern now has nine weeks below zero. With the CCI(20) having dropped below -200 a Vegas Trade Long and ZLR Short are both possibilities we will be watching for as we continue to wait for a weekly signal entry pattern. However, the CCI(20) is not yet above -100, and to qualify for either a counter trend Vegas Trade or a ZLR short signal, we require that the CCI(20) be above -100.
Industry Rotation: Over the last two weeks Oil Services (OSX) and Oil (XOI) have dropped out of the top five group yet Gold & Silver remains and now leads which is bearish. However, Computer Hardware (HWI) also remains in the top five joined by Semis (SOX) which is bullish. Yet, Banks (BKX) are back in the bottom five, so although the picture is mixed, bears currently appear somewhat stronger.
Long term support of the Nasdaq Composite IndexFocus This Week: Looking at a chart of the Nasdaq Composite Index since its peak in March 2000, we see that we are now at a critical point. If we draw a support line from 9/23/04 through 7/3/06, we find that have just recently passed through it. If we draw the support line from 7/19/04 through 7/3/06, we are currently right at the support level.

Note: We use the Nasdaq Composite Index as our best indicator of the market as a whole, because of its breadth of over 4000 securities, and because it is capitalization weighted.

–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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