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Market Thoughts

Market Thoughts

by MoleMay 17, 2011

Lets just say that the bear case has been growing at a rapid pace for the last month. I will give you APR margin data when it comes out sometime in less than 10 days or so- but for now- that remains a serious LT issue. I have roughly 40-50 sentiment/ breadth charts I walk through each week and there is ONLY one that is bullish… the AD line. Now the Short-term indicators are not saying sell, just the longer-term ones. So we may be in a process of forming something, but I don’t want to get ahead of myself.

First lets talk breadth.

Here is New Highs as a percent.

Like the summation, things could get nasty. In the past, this could be a first of a second larger divergence.

Now I bring a chart of historic cycle data to point out that the two LT bull markets above are the two longest bull markets since 1909. Or I would be careful of that bet again (Nautilus Capital Research chart)

Ok so you see that this is one of the longer bulls. I would not bet all my money on the fact that this is a 2/13 event. Or in other words, the last two bull runs were the longest two in history, and I am skeptical that that can happen for a 3rd time.

Now back to breadth. Here is the cumulative advancing – declining VOLUME (like the AD line but based on Volume). The data is natural logged for practicality.

This would be an issue…

Here is Advancing – Declining Issues.

Yes, we made new highs ant that is not bearish. However, the mojo of the move is losing its mojo.

So here breadth is fading as well.

Same data as the last chart- shown differently.

The ISEE (sentiment) shows MASSIVE divergence.

I did not expect that, but it is what it is…

The market should not have sold off that weak of sentiment, but it did. May be telling, but patience here.

Here is a LT chart of E-Mini.

I don’t like that. We should have had buyers on previous high.


That is not bullish. If there was stupid event news I would not trust this, but given that there is not, I am watching all of this very closely.

XLF. Guess what no triple bottoms or tops 😉

I only put these longer-term charts up to show that there is a *potential* for something to happen here.

Remember the obvious is obviously wrong… So how about the triple top and the IHS patterns…. (only retail traders BET on those) both ended up failing 😉

Bottom line: there is a bear case, or at least one of the better bear cases in months. Just food for thought. I am not doing much- waiting. I am not calling for P3 and I am not trying to get permabears all fired up. I am simply doing what I do every day- reading the tape. So careful buying the dip, this is not looking healthy.



About The Author
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.

  • Matt

    How do you get a chart of the continuous futures contract with NinjaTrader?

  • volar

    add instrument ##-##

    careful for some reason it did not work on the DX.

    too bad it does not do active 🙁

  • molecool

    It depends on your data provider. But with NT7 you can connect to the free Kinetick historical database via 'ES ##-##' (without the quotes). Make sure that they symbol is properly mapped in the instrument manager. Look up ES in the search function, navigate to S&P E-Mini futures, open it. Go the 'misc' tab and make sure that it says @ES under 'Kinetick'. If you need help send an email to support at kinetick dot com and they'll help you out.

  • molecool

    He also needs to be sure he has it properly mapped to the symbol of his data provider.

  • Joe_Jones

    Either bulls or bears are about to get anal probed

  • molecool

    What a prescient prediction – LOL

  • Joe_Jones


  • volar

    gotcha. I could never figure out why my DX never charted correctly

  • molecool

    Spoos down – VIX down.

  • volar

    by aliens or the fed

  • molecool

    Are you subscribed to real time DXY? I think it costs extra.

  • volar

    I presume I do , I signed up with a free broker (lol) for ICE, NYMEX, CME, COMEX to wave the exchange fees for my DTN.IQ data feed

  • molecool

    “In the past, this could be a first of a second larger divergence.” (regarding new [highs / adv – decl issues])

    Very good eye there – those are the types of things I look out for. Not only the divergence but the divergence in context. These types of observations separate the boys from the men when it comes to TA.

  • molecool

    What free broker? And what's the delay? Because if you only need historical data then you can just use the free Kinetick feed and the quality of the data will be better.

  • volar

    I must thank  Nautilus Capital Research

    They made that chart of SPX cyclical bulls in secular bears, which I presume we are in. And the data would just go to show that odds are very low that we do more than 33M and we are at 26.

  • molecool

    Zero subs – check out the new comment on the hourly Zero.

  • volar

    partnered with DTN.IQ and they wave all exchange fees if use them with ninja and some selected brokers (a list of like 20).

    No delay.. live data. i check the data with my DTN ProphetX and all moves together.

  • molecool

    For some reason the new lines in your comments are all screwed up.

  • tradingmom

    Hourly zero thinking about breaking that trendline…

  • BobbyLow

    With discretion being the better part of Valor I sold and booked a little profit on my June SPY Puts.  I still have July SPY Puts.  I also booked a little profit taking half of my TLT Calls off the table.  

    I'll probably make another adjustment prior to the close.   I was undecided on what I wanted to do so I made half a move.  I guess one could call that a “half assed” move.  🙂

    We are currently back over VWAP but still don't have Positive Volume over Negative Volume Yet.  

    Looks like the “Market” is trying to spread it's love around today.

  • fraterperdurabo

    Looks like we are at a crossroad – either we kiss previous SPX low goodbye or blast through by EOD. SPX low goodbye or blast through by EOD.

  • Onorio
  • Matt

    Thanks so much, that's really awesome stuff!

  • Matt

    So you literally pay nothing for your real-time data feed? Any activity fee? I'm interested to sign up if there is no catch.

  • volar

    u have to pay for $130 bucks a month for the DTN.IQ data.

    However, I already pay for that on my prophetx system. Or in other words I would be paying for exchange fees twice, so they waved it

  • fraterperdurabo

    Looks like TLT topped out for now.

  • DarthTrader

    TOS locking up  in lots of computers right now

  • jigdaddy

    yeah mine is locked up..only prophet charts working

  • jigdaddy

    are you playing AGQ again?

  • jigdaddy

    any update on the Net Sell Line Levels on SPX?  do you have one for ES you can kindly share for da subs?  🙂

  • BobbyLow

    Could be.  She's riding on top of the 25 BB right now. I still have half and didn't make any more adjustments to my account.  Besides taking half measures when I'm undecided, I also believe in “when in doubt, don't”.   Today was beyond weird.  

    Every time, I think this market couldn't be more fucked up, it proves me wrong.  Let's see what tomorrow brings us.

  • Gold_Gerb

    Yesterdays copper under 200MA.

    but what about today!? – (sigh) a never ending battle.

  • ultra

    Powerful CS buy setup on SPX, unless I am very much mistaken – the pin below the May 5 low of 1329.17 just before the close yesterday created a daily fake-out buy. This failed today – but with a hammer, the combination of which is potent.

    Long on break of today's high.

  • convictscott

    Thats a hell of a post Volar! The depth of your work is amazing, and FWIW its gels exactly with what I am seeing from my rudimentary price based stuff.

    Some setups for today, all are triggered on break of the daily high, stop at the daily low.

    Silver is still a retest variation buy, nice small range here.
    Gold is a fakeout buy with a hammer, good setup
    Euro is an inside day
    USDNZD is a fakeout inside day. Good looking setup, thanks Ultra 🙂

    To me the silver long looks good here, complete with a bullish non-confirmation, gold making new lows without silver following.

  • volar

    thanks man.

    in the short-run i have mixed feelings,however the new high just started to smell like a rotting skunk about 2 weeks ago. I was thinking it was just noise, but crap is starting to add up

    but we all know that will happen when we least expect it and maybe some of the short-run indicators start saying sell

    Keep me abreast on the rudimentary price stuff!

  • Onorio

    Nice call on the yen Scott 🙂

  • OldChicago

    “gold making new lows without silver following.”  – Is this bullish for silver? Is silver now leading?

  • convictscott

    Bullish for BOTH. If the downtrend is intact both metals should be making new lows together.

  • convictscott

    Born to serve 😉

  • convictscott

    Exactly the same as me. My argument is essentially that when we made new highs, it should have seen a capitulation of the 3 or 4 remaining bears, and a rush of new money causing a blow off top.

    There were no bears to capitulate, and no fresh buyers. To me the uptrend was still very much intact until the rally off the pullback was weak and insipid.

    As you say, its all starting to add up. Too soon yet to be sure.

    One guy who I really trust is Mark Minervini (market wizard) His risk model moved to sell recently, and every single time hes done that over the last few years its been right. He only posts every few months, but its worth reading an archive of his blog, his rare calls are right on the money.

    What he does is he takes the stocks which declined the LEAST in the last bear market. Then he takes those stocks, and looks at the first ones of those to make a new 52 week high coming out of the bear market. He calls them “market leaders”. When his “market leaders” stop making new highs while the indexes do, thats distribution to him. Seems to work very very well.

  • convictscott

    I'm not sure which is stronger and weaker here. Silver *was* the strongest on the way up, and it unwound faster, making it the weakest.

    However over the last day, gold was weak enough to be sold to new lows, while silver was not.

    Personally I give more weight to the most recent information, so today IMO Silver is stronger than gold. 

    This “see sawing” is not consistent with a market in an uptrend.