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Fractal Nature of the Stock Market

Wednesday, March 31st, 2010

Today is Wednesday March 31st and the market bounced off some key support today, 1162, two times.

The S&P market is holding in there. It does not want to go down and not able to move up, for some time now. A big report is coming out on Friday, the unemployment numbers. The last report was the first decrease in unemployment since the recession started and a back to back positive reading is going to send a strong message to Wall Street. There are many traders and investors thinking only one way. That this market was going to go down. That is having tunnel vision and not usually a good idea. You need to stay open to direction and then interpret the price action to properly trade this market.

I know there are traders who are adamant about this market falling and they may be right, but it has made virtually a complete come back from the drop earlier in the year. If the unemployment numbers are good, it may spark a big rally just be ready either way.

The trend is up and holding, but five trading days ago, we traded at 1177 to the next days low of 1157 and we are currently at 1167, right in the middle. We have bounced up and down inside this range for the last 5 days. That is why yesterday I said that we will probably see inside action over the next day or two, “Containment”. This containment is only adding to the fuel that will be expelled once the market gives way outside of this consolidating range. I will show a chart of it tomorrow and explain a thing or two about it, so be sure to come back and get some insight as to the next big move.

In today’s trading I took 8 or 9 trades and did pretty well. I only had two small losses for a few ticks, the rest gains. I scaled out of the early trades and took an all in, all out approach for the last bunch. equity chart below.

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I have been talking in between various topic’s, like trading within your dominant trading personality. If you trade stocks and look at 15 bar charts, your pool or available trades are going to be limited, but your rewards are going to be much bigger than someone trading 5 or 1 minute bars. Your stops are going to automatically be larger based on your time frame, but everything about trading is still the same and is relative to the time frame you are trading.

That is because the stock market is fractal in nature. Some may not know what that means so I will explain. If you trade daily charts and follow a set trading method, you will have to wait for days as the bars line up to a desired formation or condition as per your method or system. Again, your rewards will be much greater than someone trading hourly bars, but your risk will be greater as well. The stock market shows consistent patterns inside of every time frame and can virtually be traded exactly the same in any time frame producing the same type of results, but with relative returns. I have an example of this fractal nature found in nature itself below.

This is the reason why it is important to trade within the time frame that best serves you and your personality and situation. With the leverage available through trading futures contracts, a trader does not have to trade for very large moves to make a good daily return, but he needs to be able to keep risks small and exploit market moves as they are given to him. Just as the price moves are relative to the time frame you trade, the returns are as well relative. By using leverage in the market you magnify your moves, positively and negatively or you could say, for you or against you.

It has been said, that the smaller the time frame you trade the harder it is. Now, why do you think that is?  I think the reason is, traders are not conditioned enough to react as new patterns are presented to them. They are pron to make more mistakes and to over-trade. What can be done to change this. Practice and get the conditioning you need by knowing what to do and when to do it. Get the knowledge you need to exploit these price imbalances and live your dreams of trading for a living. There is rarely any way around paying your dues if you are going to attain this goal. Many forgo training and leave there results to a combination of idea’s, but never having a complete trading method, and road map to follow. If you are going to trade, you need knowledge and support.

If you become proactive in learning how to trade, you can trade stocks, commodities, forex or any trade-able investment instrument and speed up your learning by trading the smaller time frames. You will be forces to interpret the price action and follow what ever indicators you have if any, to gain the trading edge.  After doing this, you will see that when you go back to higher time frame instruments, you will see, feel and know so much more than when you traded daily, hourly or 15 minute bar charts. In addition, you may find that this smaller time frame type trading is what you are best suited for all along. That is how it was for me, but it took years to figure it out on my own. I am just presenting the idea’s to those who have not thought about it.

Consider it a training boot camp as you get dozens of market conditions reads per session, capturing the trading edge.

Give it some thought, trade on and trade safe.               Video of today’s turning points using tick charts, take a look.

http://www.screencast.com/t/NGJlNTJi                     Equity chart of today’s trades

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Dow Jones Hits 50% Retracement From All Time Highs Today !

Thursday, November 12th, 2009

Today is Wednesday and the Dow finally did it, 10,341 and a full 50% retracement from the all time high’s.

The market quickly shot up on the open and pushed higher, saw a pullback and made another run for new highs. The price action was good today, with trades on both sides of the fence. The bears did not waste any time at having a hand in bringing this market back down. I am sure there has been a lot of people waiting on the sidelines for todays level to be hit.

That being said, it is going to be very interesting to see how the market handles this move up. I have a chart posted below of the Dow and it clearly shows resistance at todays high. It has hit that same trajectory resistance many times already and each time has backed off. That may or may not be the case this time. I alway say, trading is moving off of conditional situations. If this, then that. Well, I would say the “This” is, a breakout above the yellow resistance line and the that is, a follow through with the rest of the market coming up the rear.

Now since that has not happen yet, it sure would be different. Most people are expecting a pull back, I say, what if we don’t get one but get a break to the upside. Now would not that surprise most all of the analysts. I think, Yes.

I really don’t know myself this time, but I will not be as surprised as most, to see the Dow up 200 points plus some day next week, or this for that matter. I always say, you have to look both ways. If you just assume that it is going to back off, just like it has in the past, you could get burned. The odds say it does, but, the trend is up and the pessimism is up as well, which is really fuel for the bullish fire.

As I was saying above, if you don’t look both ways, you could get run over. Thats what my mom always told me, I think it is good advise.

I took a few trades after the New York lunch time and did good. Trading small but trading and getting my daily goal +++.  I am doing a lot of work on my website and it is taking a bit of time, I will soon be finished and a little more focused, but I am enjoying the process.

I will cut it short today, but have something interesting to write about tomorrow, I am sure. Until then,

Good trading !

http://www.screencast.com/t/YTY0NWU0NzI 

 

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Wall Street, “BOOM OR BUST”, which will it be?

Wednesday, November 11th, 2009

Today is Tuesday November 10th and all is well on Wall Street.

The Dow came within 54 points of 10,314 today and backed off just a little to close at 10,247, up 20 points for the day. The S&P cash market was flat, no gains.

There was not any news today and there is not any scheduled until Thursday and Friday but nothing big. Next week, there is a long list of important economic news items coming out, so I would expect volume to increase substantially and along with it, volatility. At the high-end of the range as we now find ourselves, it is going to be very interesting to see what the next big move is going to be.

Currently, the momentum is up. You have to give the benefit of the doubt to the bulls. Until a lower low is made you have to stay bullish. Just keep in mind, as I look at the chart, we are smack dab up against resistance right here.

The NASDAQ has pushed back up into it’s over head resistance as well as the Dow. On the 120 minute bar chart I put up yesterday, the Dow has hit that 7 or 8 times. It has not been able to go over it. It has bumped against it and rode the line, but it can not get over it. As time goes by, it inches slightly higher.

Will we see a catalyst to push it over current resistance, or under its most recent pivot low?  One or the other is going to happen and with it, bring increased volatility, hurrah, that means opportunity to me. I was so burnt out on the low volume during the summer months. If you did not trade on the open, you could have been looking at a long day.

All that has changed, although this week the volume has been light. The S&P E Mini’s had only 1.7 million contracts traded. That is still slow. Between 2 and 2.5 million contracts is considered busy. Last year and early in the first quarter that was the norm. It is easy to get spoiled on high volume, but that is where you can bring it in. I don’t advocate trading for “Home Run Trades”, but it is nice to get one once in a while, to make up for struggling days.

All that being said, I usually find myself trading for a modest point return and call it a day. Today, I had two sessions. One, after the New York lunch time and the other towards the close. I have a screen shot of them at the bottom of todays blog.  Trading small, not a big deal, but I did post a screen shot of the close with a couple of tools attached. I don’t say what they are, but it is interesting to see how it correlates for those who have not seen it.

The indicator on the bottom, is a custom tool I created and is designed to be used in conjunction with the other tools I use to build my screen, all of which is not shown. The tools shown and the other that are not, are all designed to work together and give you low risk entry points to capture one point and up trades consistently. The exits are clearly defined if you decide to hold for higher point returns.

Another screen I use is a “Scalp Screen” and this is designed to give you 4, 3, 2 ticks per entry. I use small stops when in this screen usually averaging 3 ticks but we shoot for a high winning percentage, which comes out nicely. Trading for 2-4 points per day is all I believe anyone needs to make a nice return, what do you think?

http://www.screencast.com/t/MDRlMzk3ZG

http://www.screencast.com/t/ZjI4OGJkYmQt

 

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Will we have an “October Surprise”, time is running out !

Tuesday, October 20th, 2009

Today is Monday October 19th and the bulls took over with a very nice rally today.

In my last post, I said the S&P needed to stay above where it was and only had a few points of room before a little pull back was going to be initiated. The future’s market pulled down to that level  in the after market and it suddenly blasted off. I guess the traders saw that same support area I was looking at and decided it was a good area to buy off of and they did. They Dow closed up 96 points and the S&P up over 10 points.

It looks like the top of the channel has a little more room in it before it meets up to the overhead resistance present by the rising long term wedge formation. The last few days gave it a little more room to move up. We are getting closer to that 50% mark for both the Dow and S&P. Once we get to those numbers, something is going to happen, that is for sure. I know that there are a lot of traders watching those numbers and I would bet they will be looking for an excuse to lighten up. Even if the uptrend stays intact, the volatility is going to pick up.

The month of October has traditionally been the worst trading month of the year by all historical standards. So far, we are getting through it OK. There are 9 trading days left in the month, lets hope we can get into November without any major damage. As a trader, it does not really matter, but for the investment community, I am sure they feel the way I do.

Below, I have a chart for you to look at. This is a monthly chart of the S&P.  I believe the March bottom was an immediate reaction to a natural retracement level of 62%, a Fibonacci number. From the lows of 1982/83 to the highs of October 2007, a 25 year bull run, the market pulled down to a natural support zone and bounced straight up and has not looked back. This bounce has created in my opinion a sort of V bottom. By rushing the bottoming process, to me sets the stage for a pull back to the middle of its range, somewhere near 900 area. It is still to soon to make that call since the market is still climbing, but once this rally objective has been reached, traders will be looking for a whole new set of objectives.

Earnings season has started and usually last about 4 weeks. We are only into it the first week. I really don’t pay much attention to these numbers as they are all built into the price. Reading price action tells all. So far so good. I wonder if there are going to be any surprises though, let us just hope it is not the scary kind, if at all.

http://www.screencast.com/t/IIjKrI2VKRos             Monthly S&P 500 cash chart

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Daily chart of Dow Industrials with commentary

Wednesday, September 30th, 2009

Today is Tuesday September 29th and we had a consolidation day today. There was not a lot of movement during the day, other than marking some time and drifting sideways. That actually serves a purpose, in that it can bring in rotation. What I mean by that is, weak hands are getting out while stronger hands are getting in.  With this move as extended as it is, others would call the late comers as, Johnny come lately.   These are the people who are just now convinced that the rally could be for real and they want in.

There is still room to the upside but it is getting squeezed by some strong overhead resistance on the daily chart. As time is moving forward, the momentum is slowing. The resistance overhead on the Dow has hit an upward sloping line eight times and each time it has been met with a move off of that area. This one is very clear on the daily chart. The bottoms have been rising at a faster pace but not by a whole lot. What is developing is called a rising wedge and this happens to be in a up-trend. Do you know what happens when you have a pattern like this? What is the next move when the pattern is broken? Well, the pattern is by no means broken yet, and from the looks of it, has a little more room to the upside, but not much. Looks like 10,000 will be a likely target for the upside, something I have been saying for a while.

The bottom of the rising wedge would put it at around 9300, but that would be if it just fell off a cliff and went straight down, not to likely, but that is where support comes in at the bottom of the pattern. It will likely bounce at least once off of that level once it gets there and it will get there, that is for sure. As time passes, the support level will rise, eventually choking off the low, until it is broken. The tops have found resistence at a slower or lower trajectory and what you get is a rising wedge.

When it is all said and done, the pattern will break and at that break, you can expect at the very best case scenario, a move back down to the middle of the march rally. The low on the Dow was around 6500 and let us assume that the high is going to be 10,000 so a move to around 7900 will bring it to a little more than a 50% retracement. That will be the best case scenario. That will take place when the lower support is broken and again that is currently as around 9300 and rising.

I did just see another rising wedge in the context of the bigger rising wedge that I have been just discussing. That is inside the upper leg of the current move we are now in. Is is getting squeezed and has bounced off of that level with yesterdays low of 9640. So that is the where we are right now. If this small rising wedge gets broken to the downside it is going to more than likely move over and or down to the lower rising wedge that I had been discussing above.  That is the major support for the whole move.

With all the talk, I will now have to post a chart of what I am saying so that you can see now with your eyes what I am saying in words. So check below the Dow chart and see the notes that I have made on it to see if any of that makes any sense to you, hopefully it does.

The bullish sentiment is down to 46% and that is 1% lower from last week. This is going in the right direction and allows for more room on the upside for the bulls if they can muster it. A reading of 55% is considered extreme and we are well off of that right now. It is interesting to see what will happen. I will leave the possibility open that the upper line that I discussed where the resistance was coming in at multiple times, that is that can get broken to the upside, then you may have a new pattern that could form and that would a parallel channel. The lower yellow line will become exactly parallel to the new location directly on top of the highest peak. We can look at that if and when the time comes. We have plenty on the plate to watch and see develope.

Thats it for now.

 http://www.screencast.com/t/WAe6CAPyqO               Daily chart of the Dow

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Reversal on Wall Street

Thursday, September 24th, 2009

Today is Wednesday, September 22nd and the markets were on the move today.

Things started to move after the fed announcement at 11:15 am this morning. The market shot up several S&P points only to sell off soon there after. It looked like an 18 point sell off from top to bottom in less than an hour. When you get moves like that, it is best not to fight it. Look for entry points in the direction of the sell off. If your timing is not right you can suffer a loss, so stay alert for the next one.

That sell off today, did not look to good for the bull’s. The current uptrend is still somewhat in tact but it can not suffer much more of a draw down from here. The bulls need to come back in and bid this back up. Another day like today and it may all be over. We will get that bounce back up that I was talking about yesterday and that is going to tell the story. If it is a week recovery bounce, the bears may elect to sell into strength and there goes your rally. Very critical area, so stay alert.

We came very close to 10,000 Dow and not far from 1100 on the S&P there may be traders and investors jumping the gun. No one wants to be left at the gate holding the bag. You look down into it and find out that its empty inside. Many of these guys probably said I had enough and started to close out positions. Well lets hope the rally can stay in tack for a little while longer. It will not be up to me, but we can choose to see it, then react off of it.

Below, today’s turning points.       http://www.screencast.com/t/oDxnBv2Iw

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Index’s Making Room to Run, buying time

Wednesday, September 23rd, 2009

Today is Tuesday, September 22nd and the investors bought the dip and we are back on top of the upper range. The momentum has turned higher and now we will see if the next day or two will produce the new breakout and sprint towards 1100 S&P and 10,000 Dow.

The market sentiment is allowing the move to go higher, because over the last few weeks, less market timers and general market followers have become less bullish. They feel that the market cannot go higher and is due for a drop, at least more of them do this week than last week. In fact the percentage has been going down over the last 4 weeks and the numbers are as follows. They are 51.5, 50.6, 48.3, 47.8. The last one was from last Tuesdays reading and has continued to decline. That will allow for more room for the market to expand before it comes to exuberant and falls. When you have skepticism like we are seeing in the face of a huge rally, that only add’s more room to run. It works in the opposite direction, because the majority is usually wrong. I will keep you posted on the numbers.

Below are the turning points for today in the 400 tick chart. This is about the equivalent to a one minute time chart. The volume was very light today and don’t think we even hit 1,500,000 contracts traded on the e-mini. I know the volume and larger swings will return, but it is not here yet.

I am very interested in how the market is going to handle hitting the 1100 S&P and 10,000 Dow. If we do see price rejection off of those numbers with a steep sell off for a few days initially, you more than likely will get a quick recover back up. So when the time is right, I will point out what to at least be aware of. It will be in that recovery back up that the we need to really watch. We will be watching volume on the NYSE and the ability to stay above that sharp pivot low. Usually at a top, you will see big down turn, big upturn and a failure or another breakout. It will be interesting.

I do believe this flu thing coming up will have an effect on earnings and could take the hot air out of the balloon on Wall Street. There is a lot of controversy over the issue and it is causing quit a stir. As of right now, it does not and has not been to much of a problem, but the powers that be, seem to think it is. This also should be on your radar to watch. The market very well may react to some event that suddenly makes things worse, what ever that may be.

One thing on my mind is the passage of the health care bill. I do believe the people at the top really want that bill passed. Most people know that it is going to cost them. I can tell you, Americans are not interested in shelling out more money one way or another. If they want to get it passed, I believe the stock market will have to stay up in these higher levels until that time. If we get the drop that I expect will eventually come, it is going to be a WET BLANKET for the passage of the bill. People will be screaming mad and more broke than they have ever been. So look for passage before the big drop. If there is no passage of the bill at all, then that to could send things down.

That may seem pessimistic, but if its true, isn’t that whats important. When, things are going good, they just are and the opposite is true. There is no recover as of yet. We may get one, but it has not materialized. The jobs picture is the worst in 70 years I just heard in California, over 12 percent and getting worse. The stock market always looks out 6-9 months out. Right now it is saying that a recovery in the numbers are going to start showing up. It may be that the numbers the market is reacting to are from the stimulus injected into the economy with no real staying power. If that is true and there is no real punch to follow up behind it, the air is going to come out and fast. We have all the ingredients for just such a reality. But as day traders, we need to look inside each individual day and find the  opportunities that exists, thats our job, thats what we do.

http://www.screencast.com/t/BDp915vYoDZZ            Turning points for 9-22-09  on the 400 tick chart

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Index’s Marking Time

Sunday, September 20th, 2009

This is for Friday’s market action, September 18th. Things were pretty quiet on Friday with the market marking time, going sideways. It did stay above some key support and again, we will have to see what it is going to do around the last pivot high and low to help give us an indication of future prices.

I have below a short video of the cash market in a 60 minute time frame. This goes back to January of this year, a long term look at the hourly S&P cash. I have posted turning points, based on my method. This again is the cash market and it may have been difficult or impossible to get orders off exactly at those points because of the night trading and the cash market having often times to play catch up to the futures on the open, but barring that, it is pretty close.

There is also a tick chart showing turning points for the day. There were not many trades and directional changes on Friday, but still enough for someone to have picked up at least a couple of points, even on just one trade.

Back to the hourly chart, notice how we are at the high end or what seems like an extended position. It can go higher, but the market is not going to like it if that last pivot low is broken, especially since Fridays action had the whole day marking time and building up pressure. That pressure will be released, in one direction or the other, but if the pivot low gets broken, it would appear that others will jump on board to lock in some of those profits from last weeks push higher. Time will tell?

The best to you all,

Vince

http://www.screencast.com/t/vnBHH4VVNY                 Video / 60 minute cash S&P from January 09

 http://www.screencast.com/t/VfbcjxMSHY                   Video /  Friday’s Turning points –  233 tick chart

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Early pullback but market closed slightly higher

Tuesday, September 15th, 2009

Today is Monday September 14th and the markets pulled back but the pull back started on Sunday evenings night trading. From Fridays close to the session lows, was over 12 point, but the market started its recover and at the open it just continued all the way back up and then some. The S&P close up about 6 points but as I write this the aftermarket is off 4 points and now is very close to being flat for todays session. I think we may still have some downside coming, but again I will leave an open mind and just read the charts. Today we did hit a 50 % retracement point from not the all time high but a significant turning point (1433),  close to the all time high, that is being watched by numerous traders and investors across the globe. I will be watching closely for a downside break. Todays action put in a very large pivot point that if broken will send prices at a minimum back to the middle of the range. Tomorrow I will show you a 60 minute chart of where prices are likely to go when and if we get that break.

I wanted to make a comment on an article that I saw, about an Nobel Prize winning economist, Joseph Stiglitz. He said that the problems in the banking industry are now worst off than they were in 2007 before the crisis.  In the U.S. the to big to fail banks have become even bigger. He also stated that we are going into an extended period of a weak economy. This guy was the former chief economist at the World Bank. I am not easily impressed by credentials but this news also confirms similar reports that I have come to hear, about the same thing. There is trouble brewing out there and it will spell trouble for the S&P and there forward looking earnings projections. Keep your eyes open and be careful.

Below are some of the trades my method generated today. You can see the up and down arrows at key turning points. This is out of the 233 tick chart and most of them are in the up direction because that is what the market was saying at the time. I did think that we were going lower around the 10:30 am area, but the market quickly reversed and blew past overhead resistance to continue higher. I did see the trade at 11:30 pretty clearly after a long waiting period. Initially it did look short, but quickly saw things differently to adjust for the breakout.

Tomorrow will be an interesting day, because there will be a lot of news coming out which should bring in the volume, always a good thing.

Last point for today, the market sentiment numbers for last week softened up a little at 48% bullish. That is off about 3%. If we are going to go higher, this easing off is a very good thing. We were getting close to being to optimistic and that could be signalling the top, but that did not happen. If we are able to pull back over the next few days this would set the stage for yet another easing in the numbers. When the bulls take back control, there will be room to the upside for the numbers to adjust themselves to the upside, giving us the signal, but at higher prices.

That is it for now.

http://www.screencast.com/t/2CeF6TyV             Turning points for part of the session

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Contrarian Thinking for Today Stock Market

Friday, June 5th, 2009

Today is Thursday June 4th and the market pulled up off of yesterday’s low.

As I mentioned yesterday that the market was in a pretty good position to follow through with some upside early momentum at the open. Well, the momentum just carried on through to the rest of the day as well. The Dow was up 74 points and the S&P about 10, roughly 1% on each. Nothing really more to say about market direction than I have already said, so I will just keep it moving.

In today’s trading, I did pretty good at a little over double daily goal. Started out up and stayed that way until I was done. Traded for around 90 minutes today and moved on. I did notice later in the day that the markets just did not want to go down. I consolidated for quite a while there at the top today.

When I see a market do that for a long time, we usually see a pretty big move coming soon after. All of the consolidation has stops on both sides of the fence and since the move has been to the upside, there may be a lot of stops under today’s lows and all along the way. Tomorrow is going to tell us a lot. Where we close on tomorrow’s session may give us insight into the next 2 or 3 days of action. There is room to sell off for a day or two and still remain intact. Let’s just watch it and it will tell us what we need to know.

I hope everyone liked the little lesson on how to draw parallel lines, when you don’t have all the information. It can help give insight into what may come next. That is part of the battle. If you can extract information from price action you tend to be more in control of your environment. That atmosphere can only give you more confidence when mapping out your strategy and getting what you came for.

Yesterday I had a quick mention about people in the know, having insight into market direction and thought I could say a little more about how some of that could happen. Markets are driven my money, I think we all know that. But there are factors that much of the general public are not really aware of and one of those things is the “money supply”.

The available money in the system at any given point in time has a lot to do with market direction. As the federal reserve expands the money supply this makes credit more available. With more credit available, the markets have always been a benefactor in this environment. In contrast, when the money supply is being pulled in the opposite direction, money for loans through the banking system is not as available and requirements tend to get tighter. This restricts the money supply.

The stock market direction is very tied to these conditions and one in the know can draw some very interesting conclusions. The money supply was always published as M1 M2 and M3. They do not report on, or make public, all of these measurements of money as they always did in the past. The change came a couple of years ago. Since then there is only small amounts of information available to the public, not enough to come to the same conclusions as one would be able to do in the past.

One other measurement of available money is mutual fund reserves. This has always been tracked and closely monitored. When you reach a certain percentage of cash on hand, often this, as well as other factors, when combined can spark rallies that have sustained buying power. Again the same is true, if mutual fund reserves are very low, that can mean there is not much fuel to toss in the fire and things often pull back. Consumer sentiment has a lot to do with this as well, because when people are feeling good, they like to invest. The opposite is true, as things turn negative, investors tend to pull in their horns and raise cash.

All of this is usually done at all the wrong times. When it’s going well is usually at the top, so Joe investor comes in and adds to his holdings, only to soon see it evaporate before his eyes. When there is blood in the streets, as it has been called, everyone is getting out because they can’t stand the heat any longer, right at the bottom. Go figure!

For some reason, that is how it too often gets played out. People are usually followers and get sucked in by the herd mentality. That should be a parallel for sheep, not people. We know what happens to them after that. Slaughtered.

One more point to help bring that out. You can watch the headlines or major news magazines, like Time,  Newsweek and others. So too often, those headlines about the market usually work in the exact opposite. They might imply by the article that the market should be continuing up from there. That is a sure sign that it is about to drop. The same is true at the bottom of markets, feeling hopeless, a turn around is at the door. It’s funny how that is, but it is, I have seen it dozens of times over the years.

Here are some contrary sentiment numbers over the last 4 weeks. Bearish newsletter writers have become less bearish over the last 4 weeks in a row, not good for the bulls. Less and less of them are bearish on the market, 34, 29, 28 and now this week 25.  A number of 20% signals an almost sure move down, or until the numbers change and that usually only happens when a sell off is under way.

The funny thing here is the bullish side has not really moved and is at 41, 41, 41, and 42.5. A move of 35% or less usually brings in a turn around. Before the rally started, we were about 26%, one of the lowest readings I can remember since following this over 20 years ago. I don’t remember the bearish sentiment going down while the bulls are almost staying still, other than this week.

There is something going on. Neither number is extreme yet, but we will keep an eye on it. If anyone wants to know the website where you can pick up this information for free, just send me an email and I will forward it to you. It is two days delayed upon release, but it still good for free.

Have a great week end and we will be back at it on Monday.

http://www.screencast.com/t/eGLMnT56or Today’s equity chart

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