25Mar2011 Aus time - after overnight trading in the US ratios NYSE=12.5 (flat/rising); NASDAQ=5.9 (rising); SPX 50dma stocks=304 (rising). Entering longs with close stops at recent lows for equities showing confirmed downtrend breakout. Libor's and rising OIS rates support buying dips on speculation.
VIX index is below 20, but has technically broken a down trend (bad overall, temporarily safe).
H/L ratio's below 2.0 provide similar circumstances to the 2008 market tank.
-------------- 24Mar2011
An update on previous post on the indicators that underly the Hindenburg call - signalling a market top. Note, this signal is clearer with stronger upward trends. Since mid 2010, equities have moved up in this period, but 52week lows within this time would be fairly flat.
Thus knowledge flows like water - Hindeberg Omen explained pretty well
...using the H/L ratios of NYSE and NASDAQ. The previous post covers the period back to Jul/Aug 2004. Lower to sideways remains likely from current levels.
The actual signal is very choppy and noisy - but using the MA's in the background shows the concern in these trends.
NYSE using NYHLR - note the MA for guidance, higher is better,
- signal above MA's is upwards trend, currently indicating sideways/down market
The recent NYSE NYHLR signal you can get here
(note the ratio can go to zero)
Nasdaq seems to have a reliable history of trending H/L ratio -
- below MA's is a weak market, higher is better
Up above it is always a positive. Both indexes could be showing a H&S pattern with the head at Jan 2011. A positive is they are yet to make new lower lows.
The recent NASDAQ H/L Ratio signal you can get here
(note the ratio can go to zero)
Another trend is the number of S&P500 stocks trading above the 50 day moving average -
currently exactly 50% (250#) are trading above the 50 day MA, with this signal below it's MA's indicating a similar outcome to the above ratios
It supports the fact that markets top out on neutral underlying stock performance - that is stocks top before the market tops.
Food for thought in choppy sideways markets - but be cautious nonetheless. Close failing long equity positions and hold off until these indicators claim at least the lowest MA for a positive trend change.
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