Weekly 360° view – 10 / 2012

Summary

Last week’s call worked out, again!  The market closed higher while we got a mild pull back of almost 1%, as written last week.

Setup for week 10 is neutral to slightly bearish, hence I expect a lower close. This call remains valid until Thursday. Friday’s non-farm payroll numbers can be game changing.

 

Want to have actionable trading ideas. Follow my trades with Portfolio Trader and click on the picture bellow.

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Price Action

[bullish]

  • Direction: long term up, intermediate-term up
  • Volatility: very low,  ranked long-term volatility bellow  intermediate term volatility
  • Trend-health: long-term trending environment (TSI >1.65) and intermediate trend conditions have weakened.
  • Channel: intermediate channel position very low.
  • OB/OS: RSI(5)>50 and <75, RSI(10)>50 and <75
Overall price action is providing a bullish environment (B-J).

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Seasonality

[neutral]

Seasonality is bullish for March (K). First week of March is neutral (L).

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Correlation

[neutral]

Correlation (M) among S&P500 members remains VERY low (<0.1) and continued to weaken.

Read more about  my correlation related research here.

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Breadth

[bearish]

Market Breadth (N) is at high absolute levels and continued to go-up, indicator value is at highest quartile. In the past this has been a highly negative setup.

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Sectors

[neutral]

No particular conclusion can be drawn from sector setup (O).

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Bonds

[positive]

RISK ON for the bond market (P). Generally this is positive for the stock market, especially with a combined setup of DIRECTION & VOLATILITY.

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Comments

  1. BruceT says:

    Hi Frank
    Can you explain the basis for your bearish interpretation? The majority of the indicators are bullish, inclding one with a 65% win rate and one indicator that is ebarish with a 35 % win rate so I would say those two offset each other and the remainder are bullish. But your interpretation says otherwise and so far the action this week is in line with your prediction.
    Thanks
    Bruce

    • Hi Bruce,

      good to see you here, hope you are well!

      I know PURE price action is positive! BUT: Correlation isn’t good, seasonality isn’t favorable, market breadth is negative. In my last post I’ve outlined the importance of correlation.

      While I’m a 100% systematic trader I haven’t found a way to put the “Weekly 360 view” into a comprehensive trading system.

      Please let me know if you have any other idea what to add to this weekly report.

      Frank

Trackbacks

  1. [...] For last week I’ve been neutral to slightly bearish as written (link) seven days ago. Until Tuesday the market showed a considerable pull-back (2.15%) . Though the week [...]

  2. [...] Returns March 11th, 2012   For last week I’ve been neutral to slightly bearish as written (link) seven days ago. Until Tuesday the market showed a considerable pull-back (2.15%). Though the week [...]

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