Russell 2000 vs SP

This ratio is another one to sell. Also, levels such as this have led to a general downtrend in the market before. Most notably, the ;ast time was in the early summer of 2008.

A trade

Selling stocks has been stupid, stupid, stupid for a while now in this relentless, low volume, crappy stock led rally. (Yes I'm bitter.) But maybe it is a good time to sell stocks vs gold.

China

What will this do to copper which is trading at $2 over cost of production with exchange stocks going up and off exchange stocks massive? Can you spell UGLY?

http://www.youtube.com/watch?v=99HNFCn5RP8&feature=player_embedded#!

Lets play a game...

....which one doesn't fit?

OB?

What a run for the small caps recently!

Longer Term

The charts are all TD Sell Set ups completed on monthly charts. The Sequential countdown is supposed to go on in DeMark analysis, but on the monthly charts sometimes a 9 count is good enough for a major reversal as you can. Its all one trade so this isn't too surprising but it is worth keeping in mind from a big picture perspective: Many markets (SP, R2K, Aussie Dollar, Copper, Soybeans) have completed the 9 count.

Wednesday AM

There is a story out about China pulling away from 'risky' dollar assets and into core US Govt securities only. I will say this, technically, if we don't start heading down again soon there is plenty of evidence to say Friday was a low and we are heading back up. As of right now, I am still playing for another thrust lower but the longer we hang up here the warier I become. I think we go and at least test those Friday lows. We will then see if we can hold them. But we should start doing that pretty soon. (like today!)

More lows

I got lightly long Friday but have let that go this morning. Sunday night into Monday morning is usually a ramp job and if that is not occurring with that nice reversal bar from Friday I have to wit and see how things play out. I think we are probably close to a tradable bottom but maybe we need some more fear. Anyway, thats what I think now. We will see what kind of breadth today brings. My 'systematic' pivot has come down tp 1098 which is a good ways away.

Turn?

Shorting under 1100 has been working fine, but I am starting to pick up some divergences on my oscillators and today is a cycle turn day. Payrolls is always a volatile event. Did you see the revisions they are putting in? Things were worse by about 800k jobs. This number with its Birth Death revision has become worthless. I am amazed people think there is any information in it any more.

This has been a good move down. One TD Wave count I am using has this as a B wave. With that in mind and the above qualifications I am going to start to look for some upside if price starts to turn.

Have a good one.

China Real Estate

Feb. 2 (Bloomberg) -- China’s property market “bubble” is set to burst as the government curbs credit growth and clamps down on speculation, according to independent economist Andy Xie.

As bank lending slows, “it’s very difficult to see this demand continuing,” Xie, formerly Morgan Stanley’s chief Asian economist, told Bloomberg Television in Hong Kong today.

Tougher property policies may lower 2010 sales volumes 10 percent, compared with an earlier forecast for growth of as much as 5 percent, BNP Paribas said in a report today. The Shanghai Composite Index has slid 10 percent this year, the worst performer among the 94 global gauges tracked by Bloomberg, on concern that China will add further lending curbs. The index dropped 0.2 percent to 2,934.71 today.

Shanghai Mayor Han Zheng said Jan. 31 property prices are “too high,” undermining sustainable development of the nation’s commercial hub. Asset bubbles are the “real worry” as China emerges from the global financial crisis into a “boom time,” central bank advisor Fan Gang said in Beijing yesterday.

Residential and commercial property prices in 70 Chinese cities rose 7.8 percent in December from a year earlier, the fastest pace in 18 months, the National Development and Reform Commission said. China’s economy expanded 10.7 percent in the fourth quarter, as the government’s 4 trillion yuan stimulus package and a record 9.59 trillion yuan of new loans last year fueled the fastest growth in two years.

Speculation

The government last month raised the amount of money banks are required to keep as reserves and re-imposed a sales tax on homes sold within five years of their purchase. Premier Wen Jiabao pledged in December to stabilize property prices, crack down on speculation and keep housing affordable.

The government told banks to raise interest rates on third mortgages and demand bigger down-payments, a person with knowledge of the matter said. The China Banking Regulatory Commission warned lenders of the risks from “hot money” flowing into the property market, the person said, requesting anonymity because the agency hasn’t published the measures. Mortgage defaults are rising, the person said, without giving figures.

“We’re seeing some significant measures that have been introduced in the last couple of weeks,” Xie, who correctly predicted in April 2007 that China’s equities would tumble, said. “If these changes are implemented, the demand from third-flat buyers is going to dry up and it’s going to have a major impact.”

Vacant

Many properties bought for investment are now left vacant and rental yields are low, pointing to a “bubble,” Xie said.

Shanghai Zendai Real Estate Co. agreed to pay 9.22 billion yuan ($1.35 billion) for a plot of land adjacent to the city’s riverside Bund area, according to the Shanghai Real Estate Trading Center. Zendai is paying 34,148 yuan per square meter for the lot, the highest per meter price paid for land in China this year, according to property Web site Soufun.com.

“Developers paying record prices for land might get trapped this year,” Xie said.

Property prices will be “flat” this year, BNP Paribas analysts Trevor Cheung and Frank Chen said in their report.

Tuesday A.M.

A tiny bump up yesterday. Decent breadth but on little volume. My pivot is 1112ish on SPX. Still look to the short side.

Wednesday Morning

Well we didn't take out those lows but we tested them and we are chopping around before the open. TD Sequential generated some buy signals on multiple time frames (intra-day) with stops around 606 on the R2K futures. With so many external numbers and news events impacting the markets today its going to be tough. Generally, I think if we trade and hold above 1100 on the SPX then one can look for the market to move higher. Below that, look to short. If that 606 level goes on the TF futures then watch for a sharp move lower there.

Tuesday close

That was a really bad close. I made a little from teh long side today but only got flat when it started to roll and did not get short. I hate that because if we give up yesterdays lows overnight I think it has the potential to get ugly fast. This market has changed character. It is reacting to earnings differently and oversold conditions differently. There is A LOT of external data points that will be buffering the tape left this week too.

Tuesday a.m.

We could bounce here. I got flat early last night. Never did get my full short on which is bothersome. Oh well. If we keep sliding here it will mean something far more serious is afoot and I would have to re-access. As of now I may play (lightly) for a small bounce and then look to sell again. Tentative plan.... nothing set in stone.

Friday A.M....after the break

The market has had two pretty good down days and is approaching the round 1100 level. We had closing TICK number under -500 and heavy volume to the downside. Conditions like these have reversed violently to the upside for the past several months. I am very curious to see what today brings. Could we see a change in market character?

Rail road earnings belie the idea that the economy is turning around.

Broke 1128 SPX

Thursday AM

Chop chop chop. Break out of 1150-1130 SPX should continue for a few days at least. I am still working teh short side of things.

After Brown's Win

Well.... I got my rally yesterday.... but no failure. That makes me wish I had not increased my short to 50% position, and it also appears as if I will get to add at higher prices. As I noted on Friday, I may regret adding on the break down, but I am just going to have to live with it. CSX was yesterday and some banks today.

We may get up to 1170 SP and 1930 Naz. I have posted earlier that it would be ironic that we bottomed at 666 on the SP and we may top at 666 on the Russell 2000.

Dollar is strong this morning. China has reportedly curbed banks lending until the end of the month.

1128 level ES

This is an important short term level as the chart shows. We keep bouncing off of it. If it breaks it may break hard. (Or we just go higher off of this latest test of it::).

Tuesday after MLK day

We'll get a lot of earnings this week. The market didn't respond too well to the ones we received last week. As I have been preaching, sentiment is elevated and last Friday's action was enough to turn some of my breadth indicators down which could mean we have seen some sort of top. The TICK numbers on the close were not that bullish because they did not come in at extreme negative readings; they were actually positive. I have about half a short on and was looking for a pop this morning that failed to add more. We are around unched on the futures as of now. I remain bearish here and am looking to add shorts for at least a multi-week correction.

I should also mention that IF Brown wins tonight in Mass., that would most likely be interpreted positively by the market. Gridlock.

Update

I am going to have to suck it up and increase my shorts. Breadth is horrible and action like this after Intel is not to be dismissed. I may regret it by the end of the day but as of now I can't ignore this price action.

Friday Morning

Intel posted a strong number (huge gross margin helped), and JPM this morning has a little for both sides. WE have a lot of economic numbers this morning. This market keeps trying to make a new high and then backs off. Looks like topping action to me and my plan remains the same. The Euro is down this morning and is worth watching. The CRB is on important moving average resistance on the weeklies so I am watching the action in the commodities and commodity currencies closely. Its still all one trade pretty much. I can't wait until these correlations fall away from 1 and -1.

Have a great Friday.

Thursday

We get Intel tonight and JPM tomorrow as well as Op-Ex. Should make for some volatility.

My outlook has not changed, although yesterday was stronger than I would have liked to have seen. I actually trimmed some of my short back pretty much at levels that I had put it on. Yesterday was not as strong up as Tuesday was down, but it showed that the buyers still await the dips.

Follow through

Most dips since March 08 are bought. Sentiment numbers are really really bearish and there are signs of weakness in some leaders. Breadth from a volume perspective shows the potential of a decent correction, the AD line on the NYSE not so much. The Nasdaq AD line though shows a big divergence and that is why I am concentrating my short there. I didn't add any more yesterday afternoon, but will look to do so today. At the same time, I am fully cognizant of markets ability to press to new highs so I will cut back if I see broad based strength. All in all though, I still am looking to the short side with no interest in buying here.

Update

Been increasing short position a little. Let's see what happens after 2:00.

After Alcoa

Alcoa was a bit of a disappointment for the Street and CHina has raised bank reserves so we are looking at a down opening on the stock markets. Correlated 'risk' markets are off as well. I will just have to see what happens after the first hour and where breadth is. I may just have to go in and increase my short at these levels depending on what I see.

Monday morning

Looks like the China exports number is going to give us some more push up. I still plan to sell into it at the levels I have mentioned before. Put Call numbers are extremely heady and breadth just gets narrower and narrower.

Payrolls

The Employment report this morning is sure to generate volatility. My plan remains the same. I am net short now, though not in huge size. I am hoping we push higher for more substantial size. Will sell the Naz 100 all the way up to 1160. Over 1165 for any decent amount of time and I am out.

Beta

Hoping for some more push

Money was put to work in the first day of the year which is not unusual. I am hoping for the Naz 100 to push up towards 1919-1931 on the futures by the end of the week for some decent short exposure to that index. Over 1965 and I will have to cry "uncle."

Starting the New Year

I will start the New Year on the short side. The last hour of 2009 was pretty bad. It was bad enough to drag the NYSE McClellan Sum down. The Nasdaq AD line turned down after a glaring divergence. The Naz 100 futures have generated TD Sequential Sell signals on the daily and weekly charts. Interestingly the 30 year future generated a TD Sequential Buy Signal on the weekly chart. Sentiment numbers as reported by SentimentTrader.com are heady to say the least. Fundamentally, I think stocks are overvalued so I prefer the short side anyway.

We will see what happens.