Tactical Market Timing as of Close of Friday, January 22, 2010

Tweet Tactical Market Timing as of Close of Friday, January 22, 2010

Fari Hamzei
We went thru a tumultuous week of corporate earnings, political, financial and geopolitical surprises, some with dire unintended consequences. 

Those of you who attended my last market timing webinar held on Monday January 18th(http://hamzeianalytics.com/Educational_Webinars.asp), should remember my dire warnings.  Our charts had a series of bearish divergence setups.  Brad Sullivan's comments were also spot on.  Now let's go thru our proprietary charts:

Our Timer Chart shows a shallow rise, and not a hard spike, in Down to Up Volume Ratio.  This is a mood change IMHO.  SPX was at MR1 Level (Monthly Resistance One) on Friday OX (Jan 15).  Last three trading sessions, nastiest since prior March 9th lows, while producing a slightly higher volumes, pushed SPX down to MS1 Level (Monthly Support One).  Our CI Indicator turned south sharply.  No index was spared. 

Vols spiked.  VXO hit +4 sigma.  The intensity is worse than late October sell-off, and yet the McClellan Oscillator readings are higher than October lows.  IMHO, the selling has just begun.  Mid-day Friday, I posted this on Twitter: http://www.twitlonger.com/show/4q85g

Percent of SPX components above their 200 day Mov Avg reversed hard, breaking their 20 and 50 MAs.  Notice the divergence with price around the 95% Level.  This is NOT good.

Our coveted SP1 Indicator broke its rising trendline as SPX went thru its -2 sigma band and its MoMo brethren reached a short-term oversold condition.

Bottom-Line:  We should be nearing a short-term oversold condition culminating in a dead-cat bounce.  Tape feels HEAVY.  What is next could be very nasty for our fragile jobless recovery.  Not sure PPT can do anything about this one. 

SIGNIFICANT INFLECTION POINT MAY BE AT HAND

Tweet SIGNIFICANT INFLECTION POINT MAY BE AT HAND

Jeffrey Spotts, CMT

In our view, several markets, sectors, leadership groups and commodities are at an important turning point. Although we have been a bit early in this analysis, there are many opportunities for positioning in excellent risk/reward setups. Our view is that at least a weekly 4th wave pullback is in the making, allowing for a good long entry later this year. However, this condition may not present itself for several weeks, even months.

European markets have daily and weekly sell signals, perfectly set into TD PROP MOMENTUM levels:

UKX (FTSE Index) weekly repelled from weekly risk and TDST levels, with price flip (new “1” count down)

DAX index into weekly sequential 13 count with new “1” count (price flip)

CAC index into same weekly risk level and new count down

Asia weaker. The HSI and SHCOMP have broken down, with confirmed tops. Please note that Chinese markets have not made a higher high since November, unlike their European counterparts. Interestin article in Bloomberg whereby Chanos is being mocked for his newly positioned shorts in Chinese markets. Perhaps this is anectodal, complacent sentiment.

HIS weekly with 13 sell signal and close below previous 13 weeks of trading.

SHCOMP with weekly 13 sell signal, lower high, and price flip

 
Many leadership stocks in major markets have sell signals, adding to the quality of the market calls.

Apple Computer (AAPL) has rare monthly 13 sequential AND combo sell readings

Financial stocks seem to be making a parallel with the history of the Technology sector. Technology went through its bubble in 2000, after which the sector had a decent rally, and subsequent, long-term sell off, until bottoming this past low. Financials look to be finished with its rally, and is not poised to make further lows. Our focus is on the credit card sector, where politics, limits and regulation are coming.

American Express (AXP) weekly 13 combo sell and price flip

 
Commodity-related equities have undoubtably been the leadership in global equities over the past year. This group is highly correlllated to emerging markets. There seems to be room for significant pullbacks in these areas.

The Dow Jones US Basic Materials index (DJUSBM) with daily sell signals at high.

As stated, our view is that many markets are poised for a significant pullback, with at least a several week duration. Sentiment surely supports this with recent AAII and other investor polls.