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

May 31, 2008

5-30-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 7:34 am
Subscriber email sent 5-31-08:

Market Breadth: In our “three steps forward, two steps back” tug of war between the bulls and bears, we are back in bull market territory. Our Bull/Bear Point and Figure ratio at 1.09 is up from last week’s 0.92, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market with the scales gradually tipping in favor of the bulls. The total count of securities in Bullish or Bearish patterns decreased by 2% and is now just over 1400. Bearish patterns decreased by 10%, while Bullish patterns increased by 7%. 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 ten weeks. At -188, it continues above all low points for the last few years and is approaching positive territory.
The Nasdaq Composite Index has a count of five (5) accumulation days and two (2) distribution days in the last two weeks and is currently in accumulation mode. Last week it ended 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.) Of the other indexes, all are currently in neither accumulation nor distribution mode.
Momentum: Although this week we did have three consecutive days with the CCI(20) below zero, the Daly CCI(20) continues in an uptrend by Woodie’s definition. On Tuesday 5/27 we had a ZLR (Zero Line Reject) Long entry signal for entry at Wednesday 5/28 open. We plan to exit the trade when the CCI(20) drops below 100. We will update 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. By this definition, the weekly CCI(20) of the Nasdaq Composite Index has just now begun an uptrend joining the Daily CCI(20) which has now been in an uptrend for ten weeks.
The Nasdaq Composite CCI(20) Weekly pattern now has six weeks above zero and is therefore in an uptrend by Woodie’s definition. We are now waiting for the CCI(20) to drop into the +50 to -50 range with a valid entry Zero Line Reject (ZLR) entry signal.
Industry Rotation the last two weeks: Most two week industry rotation signs are now bullish with Gold & Silver (XAU) moving from the top to the bottom five, and Oil (XOI), and Oil Services (OSX) leaving the top five. Computer Hardware (HWI) now leads the top five. Our bell-weather group, Biotech (BTK) is now also in the top five along with the Networkers (NWX) technology industry. Banks (BKX) remain in the bottom five. However, S&P Retail (RLX), and REITs (DJR) are no longer grouped with the industry laggards.
PnF 2% 3 box reversal chart of Banking Index (BKX)
Focus This Week: One important reason this recovery remains fragile is the inability of the Banking Index (BKX) to sustain an uptrend. Looking at a 2% 3 box reversal Point & Figure chart, we see that the BKX is currently in a negative P&F pattern, and the index is back its low in January (between the markers 1 to 2 in the ’08 area on the chart above) before the current recovery began. If the index falls below 74.14, just over 2% below its current level, bears are likely to regain control. To monitor this yourself, click the chart above in the days and weeks to come.

–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 ]

May 24, 2008

5-23-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 8:27 am
Subscriber email sent 5-24-08:

Market Breadth: As convincing as last week was, this week all but undid that confidence. In a tug of war between the bulls and bears, we are now back in bear market territory. Our Bull/Bear Point and Figure ratio at 0.92 is down from last week’s 1.34, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market is turning the corner into bullish territory. The total count of securities in Bullish or Bearish patterns, decreased by nearly 8% and is now back under 1450. Bearish patterns increased by 12%, while Bullish patterns decreased by 23%. 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 first time in nine weeks. At -217, it continues above all low points for the last few years and is remains close to positive territory.
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 neither accumulation nor distribution mode. Last week it 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, all are currently in neither accumulation nor distribution mode.
Momentum: This week on Tuesday 5/20, we got the exit signal for the ZLR trade we entered at Tuesday 5/13 open. Exiting at Wednesday 5/21 open gave us a profit of 6.37 points on the Nasdaq Composite (not directly tradable) or $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. By this definition, the weekly CCI(20) of the Nasdaq Composite Index continues in a downtrend while the daily CCI(20) is now in an uptrend. A longer term uptrend beginning next week now appears very likely.
The Nasdaq Composite CCI(20) Weekly pattern now has five weeks above zero. It appears likely that it will remain above zero next week, and at that point, the weekly pattern will be in an uptrend by Woodie’s definition. Remember, we require that the zero line reject (ZLR) pivot occur with the CCI(20) in the +50 to -50 range.
Industry Rotation the last two weeks: All two week industry rotation signs are bearish with Gold & Silver (XAU), Oil (XOI), and Oil Services (OSX) all in the top five and Brokers (XBD), Banks (BKX), S&P Retail (RLX), and REITs (DJR) in the bottom five. However, all technology industries remain out of the bottom five lending hope for the bulls to regain lost ground.
PnF 5% 3 box reversal chart of Volatility Index (VIX)
Focus This Week: Market volatility is on the rise, but lets put it in perspective this week by looking at a 5 percent 3 box reversal point and figure (P&F) chart of the Volatility Index (VIX). Remembering that months are indicated by index numbers except that October, November, and December are A, B, C, respectively, we see that volatility has risen above the lowest values at the end of last year, but is not yet approaching those highs usually associated with fear and rapid market declines.

–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 ]

May 17, 2008

5-16-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 6:54 am
Subscriber email sent 5-17-08:

Market Breadth: We have now moved convincingly back into bull market territory. Our Bull/Bear Point and Figure ratio at 1.34 is up from last week’s 0.98, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market is turning the corner into bullish territory. The total count of securities in Bullish or Bearish patterns, increased by nearly 8% and is now over 1550. Bearish patterns decreased by 9%, while Bullish patterns increased by 25%. 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 sixteenth time in twenty-four weeks, and eight weeks in a row. At -184, it continues to rise and remains above all low points for the last few years and is now close to positive territory.
The Nasdaq Composite Index has a count of five (5) accumulation days and two (2) distribution days in the last two weeks and is currently in distribution mode. The prior five weeks it ended neither in 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.) Of the other indexes, the Dow (DIA) is in distribution mode while the S&P (SPY) is in accumulation mode.
Momentum: Last week we mentioned that with the CCI(20) just above 50, we were awaiting a Long entry signal. At close on Monday 5-12 we got a ZLR (Zero Line Reject ) entry. We will hold the position until the CCI(20) drops below 100.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. By this definition, the weekly CCI(20) of the Nasdaq Composite Index continues in a downtrend while the daily CCI(20) is now in an uptrend. We continue to watch as a longer term uptrend develops.
The Nasdaq Composite CCI(20) Weekly pattern now has four weeks above zero, and the CCI(20) continues to move upward without generating an entry signal. Although we are still in a Short trend by Woodie’s definition, with the CCI(20) now over 100, we will not accept a short entry signal even if it moves sharply downwards. We await a Long entry signal following a trend change in two weeks.
Industry Rotation the last two weeks: Although Oil Services (OSX) still leads the advancing industries, Disk Drives remains in second place which we take as a bullish sign of resiliency Gold & Silver (XAU) also remains in the top five while Banks (BKX) lead lagging industries with Brokers (XBD) also in the bottom five. However, REITs (DJR), have left the bottom five which is bullish.
PnF 2% 3 box reversal chart of Banking Index (BKX)
Focus This Week: With the focus on ever new record highs for oil, something important that is helping drive the market higher regardless is getting overlooked. This week we show a 90 day performance chart of Oil (OIX) and Semis (SOX) normalized against Gold and Silver (XAU). Note that Semis are actually slightly outperforming Oil. We believe this trend is significant and worth watching in the coming weeks. To monitor this trend yourself, click the chart above in the weeks to come, adjusting the look-back period to various lengths.

–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 ]

May 10, 2008

5-9-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 4:02 am
Subscriber email sent 5-10-08:

Market Breadth: We have slipped ever so slightly back into bear market territory. Our Bull/Bear Point and Figure ratio at 0.98 is down from last week’s 1.15 , and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market in the process of turning the corner into bullish territory. The total count of securities in Bullish or Bearish patterns, decreased by almost 3% and is now about 1450. Bearish patterns increased by almost 6%, while Bullish patterns decreased by 10%. 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 fifteenth time in twenty-three weeks, and seven weeks in a row. At -310, it continues to rise and remains above all low points for the last few years and is nearing positive territory.
The Nasdaq Composite Index has a count of four (4) accumulation days and two (2) distribution day in the last two weeks and is currently in neither accumulation nor distribution mode. The last five weeks it also ended neither in 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.) Of the other indexes, all continue in neither accumulation nor distribution mode.
Momentum: The Daily CCI(20) of the Nasdaq Composite Index remains in a Long trend by Woodie’s definition. With the CCI(20) now back down to just over 50, we await a new ZLR (Zero Line Reject) entry signal.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. By this definition, the weekly CCI(20) of the Nasdaq Composite Index continues in a downtrend while the daily CCI(20) is now in an uptrend. We continue to watch as a longer term uptrend develops.
The Nasdaq Composite CCI(20) Weekly pattern now has three weeks above zero, and the CCI(20) continues to move upward without generating an entry signal. Remember the weekly chart is still in a down-trend and if the CCI(20) moves sharply downwards, a Short entry signal could be generated even though the CCI(20) is now above zero.
Industry Rotation the last two weeks: This week we note some significant bearish industry rotation signs. Gold & Silver (XAU) and Oil Services (OSX) are back in the top five while REITs (DJR), Banks (BKX), and Brokers (XBD) have dropped to the bottom five. However, with Disk Drives (DDX) in the number two bullish slot, two week industry rotation signs are not completely bearish.
PnF 2% 3 box reversal chart of Banking Index (BKX)
Focus This Week: Last week we mentioned that the Banking Index (BKX) had broken out of its current range into a bullish pattern. This week, it reversed, and although the Point & Figure trend is still Long at this point, the banking index is now just above an important support level. The recovery remains fragile, and if the BKX drops below 80.26, bears could regain control of the market.

–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 ]

May 3, 2008

5-2-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 2:08 pm
Subscriber email sent 5-3-08:

Market Breadth: Its official… We are now in a Bull market. Our Bull/Bear Point and Figure ratio at 1.15 is is up significantly from last week’s 0.83, and the Sand 2 Pirls P&F Market Breadth Summary Chart shows us a market that has turned the corner from bearish to bullish. The total count of securities in Bullish or Bearish patterns, increased by over 6% and is now just below above 1500. Bearish patterns decreased by almost 10%, while Bullish patterns increased by more than 25%. While the Bull/Bear ratio needs to rise to close to 2.0 for us to consider the Bull market “healthy”, we have turned an important corner. 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 fourteenth time in twenty-two weeks, and six of the last six weeks. At -364, it continues to rise and remains above all low points for the last few years and is nearing positive territory.
The Nasdaq Composite Index has a count of four (4) accumulation days and two (2) distribution day in the last two weeks and is currently in neither accumulation nor distribution mode. The last four weeks it also ended neither in 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.) Of the other indexes, all are neither in accumulation nor distribution mode.
Momentum: Checking the Daily CCI(20) of the Nasdaq Composite Index, in a Long trend by Woodie’s definition, last week an exit signal was given at Tuesday 4/22 close when the CCI(20) dropped sharply moving below 100. It is now back above 100, but without dropping to near 50 where a ZLR (Zero Line Reject) entry signal is valid. This is when knowing Woodie’s CCI patterns keeps us from entering when the risk of a momentum drop is high. We continue to wait preserving our profits from the last trade.
In Woodie’s CCI trading system, six consecutive bars above or below zero are required for a change of trend. By this definition, the weekly CCI(20) of the Nasdaq Composite Index continues in a downtrend while the daily CCI(20) is now in an uptrend. We will watch to see if a longer term uptrend develops.
The Nasdaq Composite CCI(20) Weekly pattern now has two weeks above zero, and the CCI(20) continues to move upward without generating an entry signal. Remember the weekly chart is still in a down-trend and if the CCI(20) moves sharply downwards, a Short entry signal could be generated even though the CCI(20) is now above zero.
Industry Rotation the last two weeks: Bullish industry roation signs continue this week. Although Semis (SOX) have dropped out of the top five, Banks (BKX), and Brokers (XBD) lead, and Networkers (NWX)remain. Meanwhile while Gold & Silver (XAU) is the most negative of the bottom five which also includes Oil Service (OSX).
PnF 2% 3 box reversal chart of Banking Index (BKX)
Focus This Week: Last week we mentioned to watch the Banking Index (BKX) as it was on the verge of breaking out of its current range into a bullish pattern. This happened on Thursday May 1, and the strong bullish move we mentioned was possible appears to have begun.

–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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