August « 2008 « Sand 2 Pirls Market Commentary

August 30, 2008

8-29-08 Commentary

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

Market Breadth: Bulls gained some ground week in their struggle to regain control as our Bull/Bear Point and Figure ratio rose from 0.55 to 0.64, still in bear territory. There are about 1.5 stocks in bearish P&F patterns for every one in a bullish pattern. The new format Sand 2 Pirls P&F Market Breadth Summary Chart continues to shows us market slowly making a bearish bottom, with bulls gradually gaining the strength needed to take control. Last week the total count of securities in Bullish or Bearish patterns increased by 2% to 1207. Bearish patterns decreased by 3%, while Bullish patterns increased by 12%. 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 fifteen weeks and six weeks in a row with a rise of only 28 points. At -232, it appears to have made an intermediate bottom six weeks ago, and is now above all low points for the past three years.

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 neither accumulation nor distribution mode. The last six weeks it also 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, this week both the DOW (DIA) and the S&P (SPI) ended the week in neither accumulation nor distribution mode.

Momentum: The CCI is not immune from whipsaws and we have two to report this week. The ZLR (Zero Line Reject) Long entry signal on Friday 8/22 close ended with the CCI(20) below the ZLR pivot at Monday 8/25 close for a loss of 35.42 points on the Nasdaq Composite or $0.64 per share of QQQQ. At Wednesday 8/27 close we got another ZLR Long entry signal, which ended at Friday 8/29 close when the CCI(20) again dropped below the ZLR pivot point. Tuesday’s (9/2) open price will determine the result of this second trade which we will report 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. The weekly CCI(20) of the Nasdaq Composite Index began a down trend four weeks ago, while the Daily CCI(20) began an uptrend four weeks ago. Caution is advised until the trends defined by two time frames are in agreement.

The ZLR Short entry signal from Friday 8/22 close continued this week with gains. As we pointed out last week, this trade hedged the losing Long entry signal from the Daily CCI(20) the same day. We will continue to follow the results of this trade simulation in next week’s commentary.

Industry Rotation the last two weeks: Bearish: Gold & Silver (XAU) continues to lead the top five. Oil (XOI) and Oil Services (OSX) remain in the top five. Semis (SOX) and Computer Tech (XCI) are in the bottom five. Bullish: Banks (BKX), Brokers (XBD), and REITs (DJR) have left the bottom five.

2% 3 box PnF chart of DOW Transport Index

Focus This Week: How is the Dow Transport index faring long term under the continued pressure of high oil prices? Will goods and services continue to move without requiring recessionary price increases? The 2% 3 box reversal Point & Figure Chart above shows that we are at a critical point since the economic upturn of 2003. With the recent bearish signal of August 20th we are now likely to drop through the long time, although somewhat arbitrary blue support line shown in the chart. However, if oil prices continue to fall without significant negative impact from hurricane Gustav, the Dow Transport Index could begin to rise again, relaxing the recessionary concerns of many.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged.

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August 23, 2008

8-22-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 9:11 am

Subscriber email sent 8-23-08:

Market Breadth: Bulls lost some ground this week in their struggle to regain control as our Bull/Bear Point and Figure ratio fell from 0.68 to 0.55, still in bear territory. There are about 1.8 stocks in bearish P&F patterns for every one in a bullish pattern. The new format Sand 2 Pirls P&F Market Breadth Summary Chart now shows us market that appears to be slowly making a bearish bottom, with bulls gradually gaining the strength needed to take control. Last week the total count of securities in Bullish or Bearish patterns decreased by 9% to 1180. Bearish patterns decreased by 1%, while Bullish patterns decreased by 20%. 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 fourteen weeks and six weeks in a row but with a rise of only 8 points. At -260, it appears to have made an intermediate bottom five weeks ago, and is now above all low points for the past three years.

The Nasdaq Composite Index has a count of two (2) accumulation days and one (1) distribution day in the last two weeks and is currently in neither accumulation nor distribution mode. The last five weeks it also 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, this week the DOW (DIA) ended the week in accumulation mode while the S&P (SPI) ended in neither accumulation nor distribution mode.

Momentum: Since Tuesday 7/29 the Daily CCI(20) has been in an uptrend by Woodie’s definition. Friday 8/22 close was the first ZLR entry signal since then where the CCI(20) was in the -50 to +50 range. We will follow the results of this Long 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 now has 6 weeks below zero beginning a down trend, while the Daily CCI(20) has began an uptrend three weeks ago.

The Nasdaq Composite CCI(20) Weekly began a down trend three weeks ago, but now has three weeks above zero. With the CCI(20) in the +50 to -50 range, at Friday 8/22 close, we got us a ZLR Short entry signal which interestingly hedges the Long entry signal from the Daily CCI(20) the same day. We will also follow the results of this trade simulation in next week’s commentary.

Industry Rotation the last two weeks: Bearish: Gold & Silver (XAU) leads the top five. Oil (XOI) and Oil Services (OSX) are in the top five. There are no technology indexes in the top five. Banks (BKX) remain in the bottom five joined by Brokers (XBD), Airlines (XAL), and REITs (DJR). Bullish: None.

Focus This Week: The Dollar is showing surprising strength since mid July, coming off a double bottom begun in May. The weekly chart above shows some of our favorite indicators, the CCI, Wilder’s DMI (ADX), and the 34 EMA all pointing to recent increased strength of the Dollar. Note particularly, the current 34 EMA upturn which has not occurred since April 2006.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged.

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August 16, 2008

8-15-08 Commentary

Filed under: Market Commentary — dlpirl @ 12:57 pm

Subscriber email sent 8-16-08:

Market Breadth: Bulls showed a bit more strength this week as our Bull/Bear Point and Figure ratio rose from 0.54 to 0.68, still in bear territory. There are about 1.5 stocks in bearish P&F patterns for every one in a bullish pattern. The new format Sand 2 Pirls P&F Market Breadth Summary Chart now shows us market that appears to be making a bearish bottom, with bulls beginning to show the strength needed to take control. Last week the total count of securities in Bullish or Bearish patterns increased by 4% to 1291. Bearish patterns decreased by 12%, while Bullish patterns increased by 12%. 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 seventh time in thirteen weeks and five weeks in a row with a rise of 247 points. At -268, it appears to have made an intermediate bottom four weeks ago, and is now above all low points for the past three years.

The Nasdaq Composite Index has a count of two (2) accumulation days and no (0) distribution days in the last two weeks and is currently in neither accumulation nor distribution mode. The last four weeks it also 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, this week the S&P (SPY) ended the week in accumulation mode while the DOW (DIA) ended in neither accumulation nor distribution mode.

Momentum: Since Tuesday 7/29 we have been in an uptrend by Woodie’s definition. At this point the ZLR (Zero Line Reject) signal at Tuesday 8/5 close we chose not take because the CCI(20) was outside the +50 to -50 range looks like a missed opportunity. However, with the market so volatile, we stick closely to our trading rules and wait for a ZLR with the CCI(20) in our specified range.

The Nasdaq Composite CCI(20) Weekly began a down trend two weeks ago, but now has two weeks above zero. The CCI(20) must be in the +50 to -50 range for a valid ZLR (Zero Line Reject) signal, so a strong downward week in the next week or is likely to signal a short entry.

Industry Rotation the last two weeks: Bullish: Oil (XOI), Oil Services (OSX), and Gold & Silver (XAU) are in the bottom five. Semis (SOX), Internets (DOT), Networkers (NWX), and S&P Retail (RLX) are in the top five. Bearish: Banks (BKX) are in the bottom five.

Focus This Week: Has the Banking Index (BKX) made a long term bottom? Normalizing it against the S&P (SPX) we see that it is coming off recent lows just a bit below those it made at the end of the dot com bubble in 2000. Recovery may not be quick, but the drop since early 2007 has been remarkable, and it is likely that upward adjustment has now begun.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged.

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August 10, 2008

8-8-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 9:58 pm

Sand 2 Pirls Commentary for the week ending 8-8-08:

Market Breadth: Bulls showed a bit more strength this week as our Bull/Bear Point and Figure ratio rose from 0.45 to 0.54, still strongly in bear territory. There are about 1.9 stocks in bearish P&F patterns for every one in a bullish pattern. The new format Sand 2 Pirls P&F Market Breadth Summary Chart now shows us market that may be making a bearish bottom, with bulls beginning to show the strength needed to take control. Last week the total count of securities in Bullish or Bearish patterns increased by 10% to 1342. Bearish patterns actually increased by 3%, while Bullish patterns increased by 24%. 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 sixth time in twelve weeks and with a rise of 167 points. At -515, it appears to have made at least an intermediate bottom three weeks ago, and is now above the March 2008, January 2008, April 2007, November 2007, August 2007, July 2006, and October 2005 lows.

The Nasdaq Composite Index has a count of two (2) accumulation days and one (1) distribution day in the last two weeks and is currently in neither accumulation nor distribution mode. The last three weeks it also 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, this week the DOW (DIA) ended the week in accumulation mode while the S&P (SPY) ended in neither accumulation nor distribution mode.

Momentum: Since Tuesday 7/29 we been in an uptrend by Woodie’s definition. On Tuesday 8/5 we got a ZLR (Zero Line Reject) signal, but he CCI(20) was outside the +50 to -50 range, so we do not take the trade.

The Nasdaq Composite CCI(20) Weekly began a down trend last week. It is now just above zero. The CCI(20) is in the +50 to -50 range for a valid ZLR (Zero Line Reject) signal, so a strong downward week in the next week or is likely to signal a short entry.

Industry Rotation the last two weeks: Bullish: Semis has left the bottom five. Gold & Silver (XAU) and Gold (GOLD) are in the bottom five. Bearish: Banks (BKX) has left the top five.

3 box 2% reversal P&F Chart of Banking Index (BKX)

Focus This Week: Does the Banking Index (BKX) show enough strength to sustain a recovery? Not quite yet. It needs to rise another 6% to show produce a Bullish P&F signal and after that not drop more than 6% or risk forming a new Bearish pattern.

–Donald Pirl www.s2pmarketsignal.com

S2P Market Signal Commentary may be freely forwarded and otherwise distributed providing content is unchanged and authorship acknowledged.

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August 2, 2008

8-1-08 Market Commentary

Filed under: Market Commentary — dlpirl @ 3:13 pm

Subscriber email sent 8-2-08:

Market Breadth: Bears again lost just a bit more ground this week. Our Bull/Bear Point and Figure ratio rose from 0.40 to 0.45, still strongly in bear territory. There are about 2.2 stocks in bearish P&F patterns for every one in a bullish pattern. The new format Sand 2 Pirls P&F Market Breadth Summary Chart now shows us market that may be making a bearish bottom, although bulls are not yet showing the strength needed to turn the tables. Last week the total count of securities in Bullish or Bearish patterns decreased by 4% to 1223. Bearish patterns decreased by 7%, while Bullish patterns increased by 4%. 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 fifth time in eleven weeks and with a rise of 179 points. At -682, it appears to have made at least an intermediate bottom two weeks ago, and is now above the March 2008, January 2008, April 2007, November 2007, August 2007, and July 2006 lows, but is still below the October 2005 low.
The Nasdaq Composite Index has a count of three (3) accumulation days and one (1) distribution day in the last two weeks and is currently in neither accumulation nor distribution mode. The last two weeks it also 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, this week both the DOW (DIA) and the S&P (SPY) ended the week in neither accumulation nor distribution mode.
Momentum: At close Tuesday 7/29 we had 6 days with CCI(20) above zero which by Woodie’s definition is an uptrend. We now wait for the CCI(20) to give a ZLR (Zero Line Reject) entry signal in the +50 to -50 range.
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 now has 6 weeks below zero beginning a down trend, while the Daily CCI(20) has now had 6 days above zero and began an uptrend this past week.
The Nasdaq Composite CCI(20) Weekly pattern had a total of thirteen weeks in a Long trend without giving a Long entry signal and now has six weeks below zero, beginning a down trend. It is now just below minus 50. A valid Zero Line Reject (ZLR) Short entry signal requires that the CCI(20) be above minus 50.
Industry Rotation the last two weeks: Bullish: Airlines (XAL) continues its recovery, Banks BKX) are in the top five. Oil Services (OSX) and Gold & Silver (XAU) are in the bottom five. Bearish: Brokers (BKX) and Networkers (NWX) have left the top five. Oil (XOI) has left the bottom five. Semis are in the bottom five.

Focus This Week: Has the bear market bottomed? The Citigroup Panic/Euphoria Model and the AII Sentiment Indicator say “Not yet” and we agree. As a contrarian indicator, at market bottoms, bearish sentiment typically is much higher than now.