Technical Analysis Archive

Exceptional Education, Meaningful Mission

Posted November 7, 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:

 

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Revisiting a Q&A with Dawn Bolton-Smith

Posted September 21, 2017 By APTA.org.au

This article was originally published by the Educated Analyst.

In this edition of Q&A we talk to trader and market legend Dawn Bolton-Smith.  With a career spanning over 50 years Dawn has successfully navigated her clients through stellar bull runs, major crashes and everything in between…

Q.  How did you get into trading/investing?

A.  As a complete novice in 1960 and having accumulated funds to invest, the family Doctor sent me along to his broker who said the market was high (but I didn’t know what it meant); he went ahead and bought me all the good leaders.  The Holt Credit Squeeze in 1961, also known as the “Holt Jolt”, brought the shares tumbling down, and I knew I had to find out what it was all about.  I enrolled at the Stocks & Shares Class at the Mosman Evening College which set me on a career path for the next fifty years.

The Mosman Group under the late Ian Notley were the real pioneers of Technical Analysis in Australia.  To draw up the price charts, we went to the Mitchell Library and copied the prices out of the Newspaper and then exchanged them by tracing with lunch wraps and a tracing light which I still use to this day.

Q.  How long have you been trading the markets?

A.  All told now for five decades – stock market, commodities and foreign exchange.

Q.  Were there any authors, market teachers that influenced your style of trading as you started?

A.   The main textbook at that time was ‘TECHNICAL ANALYSIS OF STOCK TRENDS’ by Edwards & Magee.

Ian Notley was one chapter ahead of the class and for some years he dictated the text, and I think I must have written most of this classic book by hand.  It continues to be the most well thumbed book on my shelf.

Progress was slow, but thorough.  I later acquired a copy of ‘BEAR MARKETS: How to survive and make money in them’ by Dr. Harry D. Schultz, where the lessons learnt from this book were applied for my later prediction of the 1974 Share Crash.

Q.  Which exchanges do you prefer to trade, and if so, why?

A.  The Sydney Futures Exchange is adequate for local markets.  For offshore, the CME and NSYE for their liquidity.

Q.  What time frames do you aim for your trades (short term, mid-term, long term, combination of all 3)?

A.  The time frames using Gann’s Seasonal times provide the best pivot points.

Q.  Do you utilize any fundamental analysis in your trading, or do you use Technical Analysis exclusively?

A.  It is hard to divorce yourself from hearing the fundamentals, but I believe if you can do it – best to board up the windows and use the technicals.

Q.  What is the most important lesson you’ve learnt as a trader?

A.  Not to overtrade and only take the number of contracts you are comfortable with.

Q.  You were the first Technical Analyst to be employed in the Australian Stock Market.
Was there a lot of resistance to your methods by your peers?

A.  I was fortunate to be starting out with the right charts and the advent of the oil and mining booms. I acquired a following with the quality of the analysis I was able to produce.  I was the Chartist in the Bulletin for many years and made some good calls.  I was able to pinpoint the Bass Strait Oil discoveries at the start of the run because of my charts.  Likewise with the Nickel boom and WMC. From the mid 1960’s the mining and oil market exploded and I had acquired five full time assistants, and we had every mining and oil stock on the board charted.  Sadly, following Poseidon, the boom came to an abrupt end as booms always do.  The point I would make here is that the investors decided they couldn’t sell because of the tax, but later there were no profits to tax.  A lot of defunct share scrip is probably still in bottom drawers.

Q.  You successfully predicted the crash of 1974 to within 4 points of the market low.
Would you class this as a major turning point into how your peers viewed Technical Analysis? Did this cause the company to employ more analysts using TA?

A.   I do believe there were more analysts coming into the industry.  The highlight for me was the address I was asked to deliver by the National Times in late 1974 to a group of Economists, Brokers and Fund Managers on HOW I PICKED THE THIRTIES STYLE CRASH! I had done considerable technical work on the long term trend of the Stock Market with a magnificent chart, along with some of the key economic indicators.  It was a case of putting it all together and indeed knowing where the major uptrend line of the All Ordinary Index would bring in support, which it did.   The chart had become rather tattered and Russell Lander said to pass the hat around to buy me some more chart paper!  The chart showed how simple and effective some of the basic principles of TA helped with the predictions.  The major top formations made by the individual stocks also greatly assisted in determining just how far the market could fall.  The extent was greater than the 1929 crash and devastating for non believers.  The inevitable retrenchments occurred in Stock Broker’s offices as the boom subsided and turnovers dried up.  A lot of good people left the industry and said they would never return.

Q.  Can you give details of one of your best trades (setup, entry, exit etc.)?

A.  My best trades came as a result of taking positions early in the trend and locking in the profits as the trend had run its course. There were so many during the halcyon days of the mining and oil markets.  I did have a small suitcase full of oil scrip which in those days was issued in 100 lots but acquired at very low prices.  By the time of the 1968 top – I had emptied the suitcase (a great lesson for buying low and selling high).  In more recent times, I sold Gold Futures at $840 when everyone was looking for $1000, futures opened down $220 the next day.  The optimists were faced with huge margin calls and there was no real recovery as the bear market got underway.    Capturing the bottom of the $AUD after Mr. Keating’s  “Banana Republic” statement was achieved by using Gann Square and Point and Figure chart.  There were many sore heads in the Forex Dealing rooms on that day!  My worst experience was holding too many gold contracts.  Sydney had a big premium on the Friday, but it was wiped out in Hong Kong on the Saturday morning.  The only consolation was that Dr. Harry Schulz had the same position.  It took me a month to get over it.  Lesson learned.

Q.  If you had to pick 3 things no trader should be without, what would they be and why?

A.  An hourly chart on the market I was trading (in the case of ASX 200, a half hourly works best) a hand drawn point & figure chart and access to a good piece of online software (Market Analyst 6 of course!).

Q.  You use Point & Figure charts extensively when analyzing the markets.  Can you explain some of the benefits you find this charting style has over a standard bar or candlestick chart?

A.  My preference for P&F charts has grown considerably over the years and more so since I have been able to draw really long term charts in major indices, commodities and stocks with the aid of an excellent piece of software – Bull’s Eye Broker and using CSI data.  I just print out the chart and copy it onto a piece of chart paper which is then easily updated by hand.  The use of Gann Square overlays produces some amazing geometry and with the use of angles and arcs you can produce great analysis.  P&F charts are considered the oldest form of charting, and simply reflect the supply and demand of any trend where the use O’s and X’s can provide clear answers where the other charts merely stutter. David Fuller of Fullermoney, when asked for his preference – candle or P&F – his answer, “P&F” which he uses extensively with a huge data base.

Some years ago, I did a presentation in Brisbane on P&F with a good set of explanatory notes.  I would be able to email this to any reader of this Newsletter to further their interest.  You learn by doing.  There is a wonderful textbook: ‘The Definitive Guide To Point and Figure’ by Jeremy du Plessis.  Published by Harriman House, you would do well to put it in your library.

As a further point of interest for using P&F charts – they are wonderful for mining stocks.  They give great trend lines and patterns and are simple to maintain.  Coming out of bases provide the least risk and most reward.

Q.  You also utilize W.D. Gann’s theories into your analysis.  Do you find his material, most of which was written in the early 20th century, is still applicable to today’s markets?

A.  I believe Gann’s theories in some ways are more applicable to today’s market.
Basically, all markets are the mathematics of emotion, fear and greed always present.
I have a much treasured GANN SQUARE – W.D. Gann Price and Trend Calculator, 1952 which I obtained from Bill McLaren at one of his seminars some years ago.  Mr. Gann was reputed to have charged $5000 US in 1954 in his personal seminars.  If you learn to understand the real meaning of the Triangle, the Square and the Circle you will then understand markets.

Q.  We’ve seen a lot of volatility in the markets since the GFC, and for the unprepared trader it can cause many problems. Do you have any tips on how to overcome the issues volatility can bring?

A.  There has always been volatility in markets not necessarily due to a GFC.  It is very important to have up-to-date charts always, and be prepared for the unexpected. Pre-market preparation is necessary.  Most traders tend to rely on too many indicators – they have their place but I believe the emphasis should be on the price chart.  Moving averages are great, especially 3/5 period crossovers after a long run up (or down).  Getting in too late in a trend brings risk.  I recommend traders and investors use Welles Wilder’s Directional Movement System as a back up to all others.  I believe if you live by the rules of this system you will never be “wiped out”.

A great example was into the 1987 highs – you had three week’s warning to get out of the market.  The Parabolic Stop can keep you trading with the trend.  It works on all time frames. The indicators most used today – RSI, Stochastic, DM, etc were actually borne out of the 1970’s commodity boom, and were introduced to Australia by Mr. Wilder at the Sydney Opera House in 1980.  I always felt I was indeed privileged to have been tutored by him.  Computers were just coming in then but for some years I calculated the indicators by hand calculator – it was a way of really getting to understand how they work in the markets.

You learn by doing and this applies to keeping some key charts by hand and not leaving everything to the computer.  What I have observed over the last two years is the importance of the 30 period moving average.   Keep this one on your charts.

The S&P 500 has had quite a run since the early 2016 lows, not experiencing even a slight pullback of 5% or more, leading many to believe that the market would wobble during the seasonally weak period of August and September. Over the last twenty years, the market has rallied only 55% of the time during August and only 50% of the time during September, losing on average 1.0% and 0.80%, respectively, in those two months before strengthening into the final three months of the year.

seasonality chart
Source: Stockcharts.com

This year’s current path has remained strong, bucking the normal seasonal trend as the S&P 500 hits new all-time highs. This is shown below with the year-to-date performance of the S&P 500 shown by the solid line relative to the 30-year seasonal average.

spx index avg
Source: Bloomberg

With August now behind us, bears are still holding out for a major pullback the last few weeks of September. Unfortunately, the message from the credit markets is not giving them much to stand on.

High yield (junk) bonds often serve as a canary in the coal mine and a good example of this was in 2015 when the BofA Merrill Lynch High Yield Index began to weaken several months before the August 2015 summer correction. Then, as the S&P 500 staged a strong recovery, junk bonds continued to sell off through the remainder of the year, eventually pulling the S&P 500 down a second time.

sp500 boa merrill lynch yield
Source: Bloomberg

Just as the junk bond market led on the way down it also led on the way up, confirming the bottom in February 2016 and then hitting a new high in June, one month before the S&P 500 did the same. So, given the high yield bond market can serve as a useful tool to gauge market risk, what is its current message?

“Don’t Worry Be Happy Now”

The junk bond market is echoing the words of Bobby McFerrin’s famous song as it experienced only mild weakness in the last few weeks and hit a new high last Wednesday, ahead of the S&P 500’s new highs seen on Monday.

sp500 boa merrill lynch yield 2
Source: Bloomberg

The message from junk bond indices is being confirmed by investors′ fears of corporate bond defaults as measured by credit default swaps (CDS) on investment grade (IG) and high yield (HY) bonds. While the S&P 500 didn’t peak until the summer of 2015 before it went through a rough 6-month span, bond investors were getting uneasy a year earlier. The CDS indices on IG and HY indices bottomed in the summer of 2014 and default insurance began to rise heading into 2015 and really picked up steam just before the summer 2015 correction, giving an early warning to anyone listening of coming market turbulence.

sp500 markit cdx
Source: Bloomberg

Major bond investors are signing McFerrin’s song as the cost of CDS protection has fallen since early 2016 and is closing in on the lows seen in 2014 with no early warnings present.

sp500 markit cdx 2
Source: Bloomberg

From a stock market breadth perspective, we are also seeing some encouraging signs of improvement. My last article highlighted that market bottom conditions had not been confirmed (link) but we are now seeing technical evidence to the contrary. For a solid bottom in the markets, you want to see oversold conditions materialize that create enough buying enthusiasm to suggest prices got low enough to bring the bulls back into the markets. Oversold markets that lead to little buying interest tend to be “dead cat” bounces in which even lower prices are needed to entice bulls to enter the markets once more and a bottom to form.

One measure I use to gauge an oversold market is by tracking the underlying behavior of the 3000 stocks in the Russell 3000 Index, which represents 98% of the entire US market capitalization. In the middle panel blow, we measure negative momentum with the percentage of members with their MACD line in positive territory. Readings of 30% and below tend to mark oversold markets and, in late August, we reached the most oversold levels seen since the November 2016 elections.

To answer the question if prices moved low enough to entice bulls into the market and signify a low, I look for buying enthusiasm as evidenced by a surge in positive momentum measured by the percentage of stocks that experience a MACD buy signal. On that front, the recent rally has led to the strongest surge in momentum since the February 2016 lows as nearly 40% of the 3000 members in the Russell 3000 experienced a MACD buy signal (third panel below).

russell 3000 index
Source: Bloomberg

Bottom line: Given little signs of anxiety coming from the credit markets and a resurgence in market internal momentum, it appears as though the path of least resistance is higher and bearish hopes of a market decline in the seasonally weak part of the year are unlikely to come to fruition.

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Harvest, the world’s fastest-growing investor network, today announced a ground-breaking partnership to make the best thinking and most innovative strategies of the world’s leading technical analysts available to investors – all in one place.

The new partnership between Harvest and the CMT Association provides proprietary access to videos featuring presentations of leading market analysts such as Ralph Acampora, Chris Verrone, Barry Ritholtz, Robin Griffiths, Hank Pruden, Dan Wantrobski and many others from the Association’s 44th Annual Symposium.

This development builds on the success of the collaboration between Harvest and the CMT Association to bring the educational content from live events, seminars, and workshops to a global audience through an industry leading digital platform.

“The CMT Association is excited to expand our relationship with Harvest. Our mission is to advance the discipline of technical analysis. Harvest is essential to bringing the latest developments, applications, and market analysis to a global network of investment professionals.,” said Tyler Wood, Managing Director of Global Business Development for the CMT Association. “The exchange of ideas used to happen exclusively at live meetings, but the world is flat now and our members are using technology to connect 24 hours a day anywhere in the world. Content has to be accessible anytime from anywhere, that’s what Harvest provides.”

The new Harvest-CMT Association Symposium Network features topics including:

  • “Cross-Asset Strategy: Technical Tools for Global Macro Investing”
  • “TechoQuant; The Merger of Technical Market Insights and Systematic Trading”
  • “A Tandem Walk Down Wall Street: Two New Statistical Tools”
  • “New Ideas in Technical Analysis”
  • “Implied Volatility as a Market Indicator”

“Harvest is always seeking to partner with top investors and their credentialing, professional associations,” said Peter Hans, CEO of Harvest. “The CMT Association has long been a supporter of our platform and we are looking forward to welcoming more of its members into our network.”

Full-access subscriptions to the Harvest-CMT Association Symposium Network are $199 per user annually and include archives from the 2017 and 2016 annual events. Symposium registrants receive free access after registration. Access includes video, slides, asynchronous conversation and networking of all presentations, panel discussions, workshop sessions, and bonus interviews,

About the CMT Association

CMT Association is a global credentialing body with nearly 50 years of service to the financial industry. We believe technical analysis provides the tools to successfully navigate the gap between intrinsic value and market price across all asset classes through a disciplined, systematic approach to market behavior and the law of supply and demand. The Chartered Market Technician® (CMT) designation marks the highest level of training within the discipline and is the preeminent designation for practitioners worldwide. Earning the CMT demonstrates mastery of a core body of knowledge of investment risk in portfolio management; including quantitative approaches to market research and rules based trading system design and testing. We strive to further the profession with diverse opportunities in continuing education, advocacy, ethics awareness, and networking.

About Harvest

Harvest is a digital distribution and behavioral data platform that enables financial firms to compliantly reach connect a targeted, investment-focused audience, in scale. Harvest’s machine learning technology offers financial firms the ability to optimize data-driven sales & marketing ROI. By sharing and distributing insights on Harvest, firms can engage with a reader base of more than 500,000 institutional investors, RIAs, financial planners and High Net Worth investors.

Range Bound NDX

Posted August 31, 2017 By APTA.org.au

Originally posted on StockCharts.com at http://stockcharts.com/articles/wyckoff/2017/08/range-bound-ndx.html

by Bruce Fraser

Mr. Wyckoff called his charting methodology ‘Tape Reading’. Determining the present position and probable future direction of prices from their own action. Prices have tendencies which can be detected on the charts. Context is the idea that recent price action will provide clues about what to expect next. This is at the core of how to use and profit from the Wyckoff Method.

In our Market Outlook and Stocks Review webinars (Wednesday 3pm PDT), Roman and I work with our attendees to develop mastery around anticipating the tendencies of the markets. One of the most valuable mastery skills is identifying (early on) when a trending market becomes a ‘Range Bound’ market. In the June Market Outlook sessions, we began observing a ‘Change of Character’ in the Nasdaq 100 Index. This change of context, we concluded, would have consequences for the action of this index for the weeks, and possibly months to come. Let’s review how the Wyckoff Method informs our analysis and tactics with a case study of the current position of the NASDAQ 100 (NDX) Index.

A ’Reverse Use of Trendlines’ establishes an upward stride and a trend channel. A Throwover (and Overbought condition) of the channel is accompanied by a rush upward into a Buying Climax (BCLX). This crescendo of the NDX arrives after a long uptrend. Note the minor test of the BCLX four days later. Then a massive down bar jolts the NDX with a return back into the channel. This is a ‘Change of Character’ and Wyckoffians would conclude that a ‘Range Bound’ market will likely follow. Resistance is formed by the BCLX and Support by the low of the Automatic Reaction (AR). Volume is high off the peak and indicates the presence of Supply. Large interests and possibly the Composite Operator (C.O.) are selling large amounts of stock. We look for three general scenarios to accompany a new Range Bound environment. First is a pause in the uptrend, called a Reaccumulation. Second is a reversal into a bear market decline through the process of Distribution (rarer as bear markets do not come along often). Third is an intermediate decline that does not interrupt the major bull market uptrend. In all cases the uptrend is paused for some period of time. Reaccumulation is most common as it is a pause in prices that eventually resumes into a fresh uptrend, and tends to happen repeatedly in a bull market. But, we must be on the lookout for scenarios 2 and 3.

Note how NDX slightly exceeds the AR defined Support Line but then it holds at the July low (which is also a breach of the trend channel). A rally follows with 12 up days to the Resistance defined by the BCLX. This rally has climactic qualities and is not sustainable. Then an Upthrust and an outside reversal bar in late July concludes the advance. This is latent Supply which reemerges with a bulge in volume. This indicates that selling and Supply is not yet exhausted.

How can Wyckoff help to determine what to do next? Whether Reaccumulation or Distribution, a Range Bound market begins the same basic way with a climactic stopping action and the presence of active supply (selling). If Reaccumulation is forming there will be evidence of selling becoming exhausted and the renewed absorption of these shares near the completion of the Reaccumulation. Look for volatility to diminish, over time, as the trading range matures. If Distribution is forming volatility will continue and volume will remain high as price drops toward Support (this can happen repeatedly). Now, we need to see if NDX can decline toward Support. We will watch for how quickly it declines and if volume expands. Generally diminishing price spread and modest volume would be a bullish sign. A higher low above the early July low would also be constructive for a Reaccumulation. Distribution would likely produce price lows below the Support line and the prior lows and would be labeled a Sign of Weakness (SOW).

Recently NDX was hovering around the BCLX level. This is important Resistance. It would be better to initiate buying closer to Support or after a robust Jump above the trading range. If NDX can Jump up and out of the current trading range a new uptrend could be beginning. Diminishing volatility and volume after the Jump out would be good evidence of the completion of absorption. If Distribution is forming we would look for a SOW (possibly more than one) followed by a rally (possibly more than one) into a Last Point of Supply (LPSY).

Range Bound markets can go on and on. Point and Figure count objectives grow bigger during these periods of trendless prices. If Reaccumulation is forming then stock is going from weak hands to strong (absorption). The C.O. will do all it can to keep prices trendless until every share is vacuumed up before prices begin rising. Whether Distribution or Reaccumulation is forming, Context provides a road map for what to expect next as conditions unfold.

All the Best,

Bruce

For more on Distribution (click here and click here)

For more on Reaccumulation (click here and click here)

This article was originally published on MarketWatch.com at http://www.marketwatch.com/story/the-dow-theory-is-telling-us-to-chill-about-the-health-of-the-bull-market-2017-08-22

CHAPEL HILL, N.C. — Did the bull market end on Aug. 7, when the Dow Jones Industrial Average and the S&P 500 closed at their all-time highs?

The Dow Theory is surprisingly sanguine in its answer: Maybe, maybe not.

However, this market-timing system is unambiguous about how we should behave: Since a definitive answer won’t be known for quite some time, we should give the bull market the benefit of the doubt.

In other words, we need to chill.

The Dow Theory is the oldest stock-market timing system that remains in widespread use today. It was created a century ago by William Peter Hamilton, who at the time was editor of The Wall Street Journal.

Before discussing what needs to happen for the Dow Theory to provide a definitive answer to whether the Aug. 7 high was the final top of the bull market, I need to acknowledge how surreal it is that so many investors are even wondering whether the bull market remains alive. After all, it was just a few short weeks ago — early July, in fact — that the Dow Theory declared the bull market to be alive and well. And, despite the market’s recent turmoil, the Dow industrials DJIA, +0.90%  and S&P 500 SPX, +0.99%  are just 2% below their all-time highs of 22,118.42 and 2,480.91, respectively.

The stock market must jump over three successive hurdles to generate a bear-market signal, and it hasn’t even cleared the first.

One reason so many investors are nevertheless concerned: The Dow Jones Transportation Average DJT, +0.87%   has nose-dived and is now 7% below its all-time high from mid-July. In the words of Richard Moroney, editor of Dow Theory Forecasts: “Historically, the economically sensitive Transports have often served as a canary in the coal mine, warning investors of a deteriorating outlook for the economy and corporate profits.”

Ominous though this sounds, however, Moroney and the other Dow Theorists I track are still bullish. That’s because the stock market must jump over three successive hurdles to generate a bear-market signal, and it hasn’t even cleared the first.

Those three steps are:

1. Both the Dow Jones Industrial Average and the Dow Jones Transportation Average must undergo a “significant” decline after hitting new highs — “significant” both in terms of time and magnitude.

2. In their subsequent “significant” rally following the decline referred to in step No. 1, either one or both of these Dow averages must fall to surpass their highs.

3. Both averages must then fall below their lows registered at the bottom of the decline referred to in step No. 1.

Notice that I put “significant” in quotes. That’s because there isn’t universal agreement on what magnitude of market moves is necessary to satisfy. Some Dow Theorists argue that, per Hamilton’s original indications, a move under the first step isn’t “significant” unless it lasts at least three weeks and corrects at least one-third of its previous move. On this interpretation, the market hasn’t come close to that first step.

To be sure, Jack Schannep, editor of TheDowTheory.com and one of the Dow Theorists I track, believes that in today’s fast-paced market environment, a smaller and shorter move can still count as “significant.” Under his version of the Theory, he told me in an email earlier this week, even a 3% pullback over a 10-day period qualifies.

Notice carefully, however, that even using Schannep’s more sensitive triggers, the stock market still hasn’t satisfied Step No. 1 of the three-step sell signal process, since only the Dow Transports satisfy.

Read: ‘Bull market check list remains intact’ despite pullback, Morgan Stanley says

Meanwhile, another core principle of the Dow Theory becomes particularly relevant: It holds that the previous signal is assumed to remain in force until it is reversed. And, since that previous signal was a buy signal, we should assume the bull market is still alive.

The more significant question investors should be asking: Why are many investors so eager to declare that the Aug. 7 high was the bull market top? From a contrarian point of view, of course, their obsession is a positive omen, since the hallmark of a major top is a denial that a top is imminent.

That’s not what we’re seeing today.

In fact, my own measures of market sentiment are also showing a healthy level of skepticism among stock-market timers about the bull’s health. While there are no guarantees, that increases the likelihood that the bull market’s final high is still ahead of us.

Now read: Here’s the shocking truth about the Russell 2000’s P/E ratio

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com.

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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