Technical Analysis Archive

This article was originally published by Financial Sense at http://www.financialsense.com/fs-staff/hindenburg-omens-flashing-major-warning-signal-stock-market?utm_source=newsletter&utm_medium=email&utm_campaign=weekly

Today’s chart comes from Jason Goepfert at SentimentTrader.com. Last month, Jason told FS Insider that sentiment readings were reaching extremes, even surpassing 2000 tech bubble-levels of euphoria, which was a “very troubling sign” for the stock market (see Rydex Trader Bullishness Surpasses 2000 Tech Bubble).

This most recent data looks at the total number of Hindenburg omens for the S&P 500, Nasdaq, Dow Jones Industrial Average, and the Russell 2000. In sum, “we’re seeing a market that is split between winners and losers to a degree rarely seen in history,” Jason wrote in yesterday’s Sentiment Report.

hindenburg omens market tops
Source: SentimenTrader.com

You may be asking yourself, what is a Hindenburg omen? Here’s what Investopedia has to say:

DEFINITION of ‘Hindenburg Omen’
A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows – the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).

Additionally, they write:

Traders use an abnormally high number of 52-week highs/lows because it suggests that market participants are starting to become unsure of the market’s future direction and therefore could be due for a major correction. Proponents of this indicator argue that it has been very accurate in predicting sharp sell-offs in the past and that there are few indicators that can predict a market crash as accurately.

For regular updates on market sentiment and other technical measures, we encourage our readers to follow SentimenTrader’s daily reports and research. You can sign up for a free trial on their website (sentimentrader.com), follow them on Twitter @sentimentrader, or through their premium feed at $10/mo by clicking here.

Read next:

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Next APTA Meeting – Tues 1st August 2017

Posted July 27, 2017 By APTA.org.au

Next Meeting

Tues 1st August 2017

The next meeting of the Australian Professional Technical Analysts (APTA) Incorporated will be held at the City Tattersalls Club, 194-204 Pitt Street, Sydney at 6.00pm on Tuesday 1st August 2017.

* Please note that APTA and CMT members receive 3 Continuing Education (CE) Credits for the CMT and AMT qualifications for attending the meeting.

Speakers:

Your Money, Your View

Topic:

Your Money, Your View

Biography:

This is an interactive meeting for members to bring their charts of interest, present their views and seek the opinions of fellow members. The intent is to analyse a diverse range of stocks, commodities, currencies, fx & global indices.

Members are asked to submit their chart of interest with any annotations and markups on a jpeg or pdf file that will be projected on screen to enable discussion.

Please e-mail your copy to treasurer@apta.org.au by 7pm on Monday 31st July 2017. You should identify the time frame & the ticker code.

Being an interactive meeting any attendees may offer their views or thoughts on any particular chart.

There will also be the option to suggest a chart from the floor of the meeting.

Cost:

APTA and CMT Members $FREE

Non-members $30

Note:

All non-members must register and pay prior to the event. Late registration will not be accepted.

Non-members WILL NOT be admitted without prior registration and payment.

Payment WILL NOT be accepted at the event.

APTA and CMT members ARE NOT REQUIRED to register.

Eventbrite - Australian Professional Technical Analysts (APTA) 7th February 2017 Meeting

CMT Members:

Following a collaborative agreement between the Australian Professional Technical Analysts (APTA) Inc and the CMT Association (formerly MTA), members of the CMT receive honorary APTA membership and are entitled to attend all APTA meetings. The APTA Management Committee extend a warm welcome to our CMT colleagues.

APTA Meeting FAQs:

How can I attend APTA meetings?

APTA and CMT members may attend normal meetings at no charge. APTA and CMT members may attend the Annual APTA Luncheon and Christmas Party at a discounted price. 
Non-APTA and CMT members may also attend normal APTA meetings but must register and pay $30 on-line prior to the event. Registration for the Annual APTA Annual Luncheon is more expensive and will be announced in a timely manner by the Committee.

Can I pay APTA at the door to attend a normal meeting?

No. Unfortunately, all guests must register and pay online at least 2 hours prior to the meeting. Payments can not be taken at the meeting and any non-member who has failed to register and pay will not gain admittance.

Can I pay APTA at the door to attend the Annual APTA Luncheon or Christmas Party?

No. Unfortunately, ALL attendees (including APTA and CMT members) must register and pay online at least 2 days prior to the luncheon and 5 days prior to the Christmas Party. Payments can not be taken at the luncheon or party and any person who has failed to register and pay will not gain admittance.

How can I get the details of the event?

Details are available at the APTA website at www.apta.org.au .

How can I be notified of upcoming meetings?

Join the APTA Newsletter mailing list at www.apta.org.au .

Could I invite a friend/colleague to come along to an APTA meeting?

Of course. If you have any friend/colleague that may be interested in attending as well, feel free to invite them, but please remember that they must register and pay prior to the event.

Comments or questions are welcome.

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Point & Figure Diary

Posted July 20, 2017 By APTA.org.au

Artricle originally published at StockCharts.com by Bruce Fraser.

http://stockcharts.com/articles/wyckoff/2017/07/point–figure-diary.html

Regular readers have been following the epic saga dating back to 2011, when Dr. Hank Pruden published his Point and Figure (PnF) count for the new bull market. This count projected to a range of 17,600 to 19,200 for the Dow Jones Industrial Average ($INDU).  When this objective was met we said: ‘But wait, there is more’. Almost exactly a year ago, in this blog, we revisited the original Accumulation and found that an additional count could be added to the PnF price objective.

The 17,600 to 19,200 count was very useful as the $INDU was stopped in this range for more than two years. That range produced a Stepping Stone Reaccumulation PnF count.  The larger Accumulation count and the new Reaccumulation count approximately confirmed each other (click here to review these PnF charts). The cluster of count objectives target 22,000 to 24,500. As we move toward these price targets, new Reconfirming counts continue to be generated. This brief update is to illustrate a new count that arrived in the month of June since our last post on this topic (these PnF counts can form quickly).  Links to the prior posts are below.

We use 60-minute data and ATR (20) scaling to generate this PnF study.  In the month of June, a Reaccumulation formed matching the previous and larger PnF count. Recall that when the Reaccumulation count approximately matches the prior count the trend is often set to resume. This week $INDU jumped to a new high just as the most recent Reaccumulation equaled the prior objective. This is an obscure timing tool that often comes in handy (click here for more on this technique).

As the Dow Jones Industrials stair steps upward, it is appropriate to ask if the count generated from the chart above is the final high? Recall that our price objective window reaches to nearly 24,500.  We will continue to use our Wyckoff tool box of chart analysis, trendline studies and Point and Figure counts to light the way to the conclusion of this campaign, wherever it may take us.

All the Best,

Bruce

Additional Reading:

Point and Figure Pie in the Sky? (click here for a link)

More Pie. Bigger Sky! (click here for a link)

Exceptional Education, Meaningful Mission

Posted July 19, 2017 By APTA.org.au

Have you ever wanted to be a part of an organization with clarity of purpose? With international reach and growing global membership? With integrity and core values you agree with? Do you desire to give back to the industry and take part in a mission driven body of professionals managing market risk?

Through your participation in various events, we know you recognize the educational benefits of membership. As an investment professional, we encourage you to take the next step as an advocate of professional ethics, accountability and competency. The next 50 years of the CMT Association will depend on even greater engagement from the investment industry and professionals like you.

The Australian Professional Technical Analysts (APTA), in association with the CMT Association drives value through three main areas: the CMT curriculum, educational programming, and our growing professional network:

 

Welcome to the CMT Association

Posted July 19, 2017 By APTA.org.au

After nearly 50 years of service to the financial industry, the Market Technicians Association proposes that we become the CMT Association. The Association’s leadership including Board Members, founding members, and senior staff, recommend that members approve changing our organization’s name. Having carefully considered all implications of the legal name change, the leadership feels that it is imperative to rationalize the number of acronyms out in the industry. We hope you’ll read the description below of the rationale and view the short presentation above. We’ll need your feedback on this proposal before we introduce the new brand to the industry. Pending approval by a vote of the Membership, you’ll see the new look and name anywhere we’re out in public, like our website, publications, digital webcasts, and on our social media outlets including LinkedIn, Facebook and Twitter. You will see new signage and materials at your local chapters, as well.

The new brand name better matches what the Association has become: the provider of the preeminent global designation for financial professionals committed to advancing the discipline of technical analysis. When our Association began, we operated for years without a credentialing body, exam process, or even a formal charter. Since our legal incorporation in 1973, we’ve been the Market Technicians Association, but the Chartered Market Technician designation was not offered until 1988.  Over the years, we preserved the MTA name and did not consolidate the branding of our two acronyms – MTA and CMT.

Today, the CMT Program is central to every initiative and represents the professional identity of nearly all our Members. The new name reflects our continued commitment to our global members and unique capability to advance the discipline of technical analysis among industry professionals. This name change allows us to consolidate the MTA and CMT acronyms to improve our brand recognition and elevate the prominence of our CMT charterholders’ designations worldwide.

Our rebranding effort intends to align with industry best practice. In our field, other notable organizations are designation-centric, such as the CFA Institute, CFP Board, and CAIA Association. We also aimed to reduce confusion in the marketplace around our multiple acronyms, and better match our name to our core value proposition and the constituents we serve. A small team of staff and volunteers worked with professional designers to create something crisp, approachable, professional, modern and connected.

CMT Association Logo

proposed logo as part of 2017 brand recommendation

The “M” of the logo creatively represents a bar chart, but it’s stylized and emphasized through color to connote the importance of “Market” within our name. The study of price behavior is about markets in comparison to the study of fundamentals and the assessment of companies. Our decision to use the acronym in the logo was also inspired by the diversity of our members. A “CMT” is a portfolio manager, a research analyst, a financial advisor, an asset allocator, a quantitative trading system developer, and many more things – but always a professional committed to advancing the discipline of technical analysis and upholding the highest ethical standards in the industry.

 

Description of design choices

 

We hope you like this new look for the CMT Association and welcome your feedback through this brief survey. Look out for more updates and a broader industry presence as we continually try to better serve our members with the preeminent global designation and highest member value in all our programming and initiatives.

Ralph Acampora: Dow Theory Divergence Signals Caution

Posted June 16, 2017 By APTA.org.au

http://www.financialsense.com/ralph-acampora/dow-theory-divergence-signals-caution?utm_source=newsletter&utm_medium=email&utm_campaign=weekly

The following is a summary of our recent interview with well-known market technician Ralph Acampora, which can be accessed on our site here or on iTunes here.

Divergence in Sectors Says Be Aware

We’ve seen Dow Industrials heading higher recently, while Transports have been struggling. From Acampora’s Dow Theorist perspective, he sees indications that the move higher may be wearing thin.

“For those who follow the theory, in any kind of rally from current levels, you want both indicators to make new highs,” he said. “If they don’t, then this divergence … suggests that maybe we’re in the latter innings of this move.”

When he looks at current charts, particularly in the tech sector, for example, he’s starting to get a nosebleed, he stated.

“It’s starting to go parabolic,” Ralph said. “I don’t know how greedy one wants to be. If you want to hang in there and try to get every nickel out of the run, God bless you, go ahead. But you better have some stops in there somewhere along the line because you can’t continue at that rate.”

Still a Secular Bull, But Watch out Short-Term

Despite divergences, Acampora is still a secular bull. A secular move can last for a couple of decades, he noted, and with this current move higher beginning from the low of March 2009, he believes we still have room to go. But that doesn’t mean we won’t see problems develop in the short-term.

“We’re 8 years into this, and we haven’t had a significant pullback or correction in quite some time,” he said. “When I look at the current market, I see it as very split. For example, look at today. The Nasdaq is at an all-time new high and the Dow is struggling. That’s classic.”

Various sectors are doing well, such as Technology and Industrials, while others are making new lows, such as energy. The financials are rolling over, he added.

“For the first time in many months, I’m taking my foot off the pedal a little bit,” he said. “I don’t want to sound like a super bear because I’m not … I am a secular bull, and I’m looking at the long-term, and I’m very optimistic. But in the near term — and I define the near term as the next several months — I think you have to be very selective.”

He likes Consumer Discretionary (XLP), Consumer Staples (XLY), Industrials (XLI), Technology (XLK) and Utilities (XLU), he noted.

What Might Trigger a Move Lower?

The traditional 6-month presidential honeymoon period in markets is almost over, Acampora stated. We also haven’t seen tax cuts or regulatory reform yet, either, and he sees these as increasingly less likely to materialize soon.

“Honeymoons come to an end,” he said. “Even Ronald Regan’s honeymoon only lasted 6 months, and then he had a bear market. That’s not unusual.”

We often see markets stumble starting towards the end of a new administration’s first year and into its second year. However, the second half of the president’s term can still produce moves to the upside, which is what he expects will happen.

We’re also seeing a Federal Reserve that appears likely to raise the key interest rate again in June, which might produce a stumble in the markets, Acampora noted.

Words of Wisdom for Investors

For younger investors, Acampora still advises putting money away on a dollar cost average basis as early as possible. For those closer to retirement, dividend-paying stocks are attractive.

At heart, he’s optimistic about the economy.

“I have a farm in Minnesota, and on the farm, I have a big barn,” Acampora said. “I’ve been in Wall Street for 50 years. This summer, I’m going to hand paint the largest chart of the Dow Jones Industrial Average in history going back 50 years. I’m going to put a little quote at the end of it: ‘It pays to be an optimist.’”

Listen to our daily interviews with leading guest experts by clicking here.

Learn the Benefits of Footprint® Charts

Posted June 12, 2017 By APTA.org.au

 

Click here to view on YouTube.

Trevor Harnett answers the question of why some traders always seem to have a better read on the market.
You will learn:
– What Footprints are
– How Footprints help traders
– Practical methods for using Footprints in various markets

NASDAQ 100 Index. A Current Case Study.

Posted March 14, 2017 By APTA.org.au

http://stockcharts.com/articles/wyckoff/2017/03/nasdaq-100-index-a-current-case-study.html

Point and Figure charts are generated from price volatility, unlike a vertical (bar) chart, which is plotted as a function of time. This is particularly valuable to Wyckoffians who are always on the search for a Cause being built. Causes lead to Effects; Accumulation results in Markup and Distribution turns into Markdown. Point and Figure analysis provides a method for estimating the potential extent of that Markup or Markdown. We have spent considerable time on methods and procedures for PnF analysis, and will continue our skill building using these powerful charts.

Here is a current and fascinating Point and Figure case study.

The NASDAQ 100 ($NDX) is at an interesting juncture. Using a one box PnF chart (daily data) and ATR 20 scaling, let’s see how much can be learned about the present position of NDX. Accumulation evolves into a markup during the first part of 2016. A horizontal count is taken at 4,181.58 and projects to 5,039.34 / 5,325.26. This is a move of intermediate magnitude (potentially). And this is the first segment of an Accumulation that could include a larger PnF count. We can identify the stride of this advance with trend channel construction (anchor points are circled). In late 2016 a Reaccumulation forms which provides another PnF count (in red). This count approximately matches the larger base PnF objective, giving us added confirmation of the price target.

Notice what happens next. On the run from the bottom of the trend channel to the top, an acceleration of NDX throws over the upper trendline. This Climactic action occurs at the upper bounds of two PnF counts and the Overbought line of the trend channel. We expect this activity to stop the advance and result in a range bound market. This is a classic culmination of technical events. Confirmation of the conclusion of this Buying Climax surge would be a quick return under the Overbought line and a bout of price weakness (which would be labelled an Automatic Reaction).

Does this mean Distribution is forming? There are reasons to expect the upward trend to continue, after a pause. On the NDX chart only the first segment of the Accumulation has been counted (try counting the entire Accumulation). Also, the trend channel is still in force and it is expected that a return to the Demand Line (either suddenly or by drifting sideways) will result in an attempt to resume the rally. We will watch the progression of NDX closely for either the completion of another Reaccumulation or signs of Distribution.

All the Best,

Bruce

Review the PnF of the NASDAQ Composite (COMPQ) published a year ago by clicking here.

Thank you for checking in with comments and questions. It is clear that you are practising and developing your PnF skill sets. My hope is that these case studies will answer many of your questions and provide additional tips and tricks for your Wyckoff toolbox.

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