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I%27ve marked the monthly MACD buy and sell signals here for the Nasdaq 100.
Sentiment data is updated on Thursdays. Bullish signals occurs if the green bars fall below 35 (green line in upper section) or if the red bars exceed -50 (green line in lower section).
Bearish signals occurs if the green bars exceed 55 (red line in upper section) or if the red bars don%27t cross -20 (red line in the lower section)
Pension Partners provided some additional color via a tweet. They peg the extreme bearish survey posture at 26% bulls, which has occurred only 10% of the time since the survey began in 1987.
The bullish extreme, in their study is when the bullishness exceeds 52%. When I made this particular note the survey had been under 26%, like at 17% which portended very good forward returns. (date of this update 6/5/16. I believe the bullish survey number had been as low as 17%.
I have marked the monthly MACD buy and sell signals on the chart with green vertical lines for buys and red for sales. The monthly MACD is a powerful but slow moving signal. It has protected its followers from getting killed at the major market tops. It is slow to react to market bottoms, as we just saw at the XMAS eve. 2018 bottom. Monthly signals are considered only valid "at month end"...between month ends one can anticipate because the indicator adjusts daily. At the moment (March 10) it indicates it is likely that the MACD switches to sell at next month end.
This chart contains the weekly action in the $SPX since the 2009 bear market low. Along the various bottoms I%27ve drawn a trend line, which currently would provide "theoretical support" around 2,600. I use the term theoretical, because all support is "theoretical" until it holds. As I write this the market is in a wicked correction. One can see from this chart how far price action has diverged from trend. One can never know when a catalyst will occur, like corona virus or oil price war, that will serve as a mean reverting event. We have two as I write this note.
The weekly chart, that precedes this one, is getting too "scrunched up" to be visually appealing. This chart shows the same period, using monthly bars. "Theoretical support" around 2,600 is easier to see.
This is a commonly used Vanguard ETF that mimics the entire market. I like to see if its signal "confirms" the signals on the narrowed Nasdaq 100 and SP 500
This is the All World Index. I use it to confirm whether or not the world wide markets, as a whole, confirm or fail to confirm the signals in our domestic markets.
This is the All World Ex-US Index. I use it to confirm whether the rest of the world, excluding US, is stronger or weaker, based on monthly MACD signals, than our domestic and world markets.
IWM is a small cap index, the Russell 2000. It has lagged the performance of the larger stocks and will not be on a MACD buy signal at 7/31. I include its chart because I am looking for confirmation between markets. Small cap strength often leads markets off bottoms. Small caps never got close to a MACD buy.
I added this chart to track the 12 month rate of change. The markets have had wild ups and downs, since September 2018.
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