ACE: The set-up for early 2016 looks ominous for stocks. Bearish ADX and Lower Highs! (1/1/16)

Mike Carlton Has Had Over 50 Followers Rank: 19 Followers: 88 Votes: 68 Years Member: 7 Last Update: 9 February 2016, 0:36 Categories: Momentum Stocks
Trend Analysis
Ratio Analysis

Visit Ace's "Talking Stocks" Forum

Three (3) new features of my Chart List are my favorite hand-picked IBD 50 Stocks, the Spyder Sector ETFs and the 13 Wonders known as the Internet of Things stocks!

The first two pages contain charts that measure perceptions of the overall markets. The main equity indexes (S&P500/ Dow Industrials/ Nasdaq) and key measures of bond markets, the TED Spread, Gold, Currencies, and special ratio charts in the special 'Ace way' that makes things clear and simple to see.

The 9 major Sector SPDR ETFs are tracked with Ace's favorite trend indicators and oscilators! If one understands the trends and cycles of these charts, then they will have a very good grasp of the major rotations of the smart money traders. These charts show up on Page 19 of my Chart List and their symbols begin with the letter 'X'.

The second new feature is a hand-picked selection of the IBD 50 stocks. I use many of my favored indicators on these DAILY charts, including the dynamic 13. 50, 100 and 200 MA lines. (IBD usually shows WEEKLY charts-- you can see DAILY here!) I show the proper bases on these charts as base theory is critical in the IBD 50 stock selection and CANSLIM systems. Of course, IBD 50 and CANSLIM are successful trading systems developed by Investor's Business Daily. These charts start on Page 10. I am not associated or affiliated with the IBD in any way and my charts are interpretations based on IBD theory, Please visit their website to learn more at www.investors.com .

Finally, I have added a section known as 'the Internet of Things.' These are the 13 wonders identified by many investors as the key stocks leading the internet revolution as we enter the middle years of the 21st century. The Internet of Things is expected to be the most profound tech revolution in the next several years.Now, track these stocks with me beginning on Page 12.

Finally, I thank you for YOUR VOTES!

Less

-0.1 a $SPX - The Big Picture Chart

I thank you for your votes and support. On this board, WE are here to make profits in the stock market--pure and simple! By the way, I am an Associate Member of the Market Technicians Association (MTA). -Mike

-0.1 a Dow Jones Industrial Average ($INDU)-400 day line and its meaning

UPDATE: February 5, 2016. Well, for many months, I warned traders and investors about a nasty stock market to come. And on the first day of the NEW YEAR, I warned that early 2016 had a very ominous look to it on the charts. And, here we are, about 5 weeks after that call and the year 2016 is off to the worse start of any year in the modern era! Stay tuned with ACE, as he has made great calls in bear markets before. Unlike so many who proclaim they saw 2000 and 2008 bear markets coming, ACE has a proven track record at calling the Bear Markets before they begin, and while they occur. And guess what, folks? This Bear Market of 2016 is still in the early innings, according to ACE.


UPDATE: August 20, 2015. As expected, a bounce did follow the 400 day tag, but as I also expected, this one didn't last because it occurred AFTER a Death Cross. Today, the Dow broke the 400 day line support decisively!

UPDATE: August 15, 2015, the Dow Industrials tagged the 400 day line again this past week. I would caution that unlike the last 3 tags of the 400 day, this one occurred after a Death Cross. But so far, the Dow has lifted higher after that 400 day tag. Will the 400 day be the turnaround point like it has been the last several years?

Previous comments about the 400 day tags: The 3 most recent Devil's Crosses (13-99 down-cross) led to significant sell-offs....in fact, each of the previous 3 Devil's led the Dow down to the 400 moving average line. The 400 MA line is the long-term bull/bear line, and usually not well known by amateur technicians. You can see how each Devil led to the 400...and how each tag of the 400 zone led to a bounce-back for the Dow. In some cases over the years, the 400 MA line failed to hold support...examples include the 1987 and 2008 crashes. The 13-99 was the final warning to get out before those two crashes occurred. In early February, 2014, the Devil's Cross was narrowly avoided. However, keep an eye on this in case it should change again.

-0.1 a ETF Top 5 Index (!SPWTOP5)

Thanks to CARL SWENDLIN, a top technical analyst and blogger at www.StockCharts.com for coming up with this idea of measuring the price momentum of the top 5 ETFs.

-0.1 a NYSE Summation Index (Ratio Adjusted) (EOD) ($NYSI)

February 5, 2016 UPDATE- Keep in mind that when RSI 30 up-crosses occur on the $NYSI chart during a BEAR MARKET TREND, that such bounces can be weak or short in duration. This is because the RSI is a cyclical indicator, and such indicators are weak when the counter-trend is strong.


Sept 6, 2015 UPDATE- The RSI just barely cleared 30 on the Friday before Labor Day, despite a 272 pt (Dow) sell-off that day. Typically, US stock markets rally when the NYSI RSI clears the 30 mark, so long as the new trend can continue


May 31, 2015: UPDATE - The RSI double dip on $NYSI is a rare and ominous occurrence. Note that NYSI continues to move lower and form a divergence against the stock markets, but for how long can this charade last?
-----------------------------------------------------------------------

The Summation Index ($NYSI) is an accumulation of McClellan Oscillator readings which helps to smooth out the volatile swings found in the McClellan. The Summation Index is popular with sophisticated traders for spotting significant tops and bottoms in recent trends.

For me, the key graph on the Summation has always been the RSI(14) oscillator...as you can see, the oscillator tends to call tops and bottoms off of significant multi-day trends.

I watch for readings under 30 (oversold) and over 70 (overbought) and the confirmation is usually provided by a break back toward the middle as the RSI line crosses over the 30 or under the 70 mark. Keep in mind that the NYSI can remain overbought (or oversold) for a very long time. This is because major TRENDS can over-ride the cyclicality of the markets, which is what RSI tracks. When trend continues higher (which reflects herd trading), a mistake that some amateur chartists make is to assume a long or short position as soon as the overbought or oversold position is reached on the RSI. The proper time to go long or short is when the RSI begins to climb back toward the middle space (between 30 and 70), at least with the $NYSI chart, imho! That%6

-0.1 a S&P 500 SPDRs (SPY)-Quadruple Witch Follow-on Effects

So, is it safe to go long after a Quadruple Witch day event? Maybe not! This chart shows that 67% (8 of 12 over the last 3 years) of the Quad Witches led to more selling in the days immediately after a witch event.

-0.1 aa 10-Year US Treasury Yield (EOD)/2-Year US Treasury Yield (EOD) ($UST10Y:$UST2Y)

The 10-2 Yield Spread is very similar to the Yield Curve. The Yield Curve is a component of the Leading Economic Indicators, a US government forecasting tool. The Yield Spread often foretells where the US stock market is headed. If the spread line is rising, that's considered bullish...and falling is bearish. This chart includes a line to measure the direction of the S&P 500 ($SPX).

-0.1 aa Baltic Dry Index (EOD) ($BDI)- Weekly 12 years

The Baltic Dry Index hit a new all-time low on November 19, 2015. Is this signaling some sort of global slow down even as stock markets rally?

-0.1 aa Copper Futures - COMEX (EOD)/Gold - Continuous Contract (EOD) ($COPPER:$GOLD)

UPDATE: November 20, 2015. The Au-Cu Ratio snaps a 4 Year solid support line. Yet, the large divergence to the S&P 500 continues. Prior to the Fed's QE policies, the S&P tracked closely to this ratio. Perhaps with the Fed attempting to raise interest rates by 2016, the divergence could come to an end?

UPDATE: January 13, 2015., THE COPPER-GOLD RATIO CONTINUES TO PLUMMET SUGGESTING A SLOW DOWN IN THE WORLD ECONOMY IS REAL. The CU-Au Ratio has proven quite accurate in the past, and this divergence from the rising US equities market suggests that US stock investors may be in for a rude surprise soon!

-0.1 aa Dow Jones Corporate Bond Index (EOD) ($DJCBP)

January 15, 2016: One way to spot a recession is to see if the Corporate Bond Index is moving lower. Next to US Treasuries, and sometimes Municipals, the Corporate Bonds are considered to be the blue chip bonds for income investors. They are relatively safer investments as compared to Junk Bonds and Stocks. If the Corporate Bonds start falling and hitting lower lows, then this would be a very bad sign for the economy.

-0.1 aa Nasdaq - Advance-Decline Volume ($NAUD)-Weekly cumulative

The Nasdaq Advance-Decline Volume Line is a good measure of Market Breadth in the most popular index for traders.This line is shown in a cumulative measure for spotting trends and long term perspectives. A rising line signals robust strength, while a falling line hints at weakness and possible bear markets.

This information is presented for education purposes only. StockCharts.com is not responsible for any comments, advice, or annotations presented on this page. Please review our Terms of Use for more details.