This week we switched from worrying about an “overbought” signal to worrying about being suddenly oversold. You see, the daily charts for the indices seem to have actually indicated a neutral posture with negative trend, as in moving averages has consolidated. The equity-by-equity picture is a bit bleaker, as we are suddenly in an confirmed selling situation and bordering on an oversold. It still seems like a gentle consolidation with the longer term moving averages rather than a violent correction. The weekly charts are showing this “gentle” pattern.
Overall, interest rates (FVX, TNX, TYX) are still pointing upwards, and gold downward. In effect, all trends are intact, even though the equities action and the general economy news did affect the weekly overall volatility.
Since it seems the patters are intact, one would wait for the oversold signal, and depending on the horizon (short, medium or long), the trend, daily, or weekly indicators should guide your action and evaluation.
My usual tables follow. This is as of the end-of-day December 13, 2013.
|Index/ETF Symbol and Name||Daily 3-EMA-7||Weekly 3-EMA-7||Perceived Trend|
|SPX||S&P 500 Index||Neutral||Up||Negative|
|DJIA||Dow Jones Industrial Average||Neutral||Up||Negative|
|COMP||NASDAQ Composite Index||Up||Up||Negative|
|GLD||SPDR Gold Trust ETF||Down||Down||Neutral|
|VIX||CBOE Volatility Index||Up||Neutral||Positive|
|FVX||CBOE 5 Year Treasury Note Yield Index||Up||Up||Positive|
|TNX||CBOE 10 Year Treasury Note Yield Index||Up||Up||Positive|
|TYX||CBOE 30 Year Treasury Bond Yield Index||Up||Up||Neutral|
Important to note that FVX, TNX and TYX move in the opposite direction of the underlying treasuries (Positive for Yield is Negative for Bond price).
The per equity tables are below. My Oscillator stands at -58%, significantly lower than last week’s -5%, which is indicating a confirmed market “negative” sentiment, bordering on oversold. This per equity move is much more violent than the overall indicies indicate.
To keep things simple, I view the oscillator in mind as 1/3rd’s. That is: 67%-100% is overbought; 33%-66% confirmed positive sentiment; -32% to 32% is neutral; -66% – -33% is confirmed negative sentiment; and lower than -67% as oversold.
|Symbol and Company Name||Daily 3-EMA-7||Weekly 3-EMA-7||Perceived Trend||Is a Current Holding?|
|jcp||JC Penney Company, Inc.||Neutral||Down||Negative|
|jpm||JPMorgan Chase & Co.||Up||Up||Neutral||Yes|
|gs||The Goldman Sachs Group, Inc.||Up||Up||Positive||Yes|
|wfc||Wells Fargo & Co.||Neutral||Up||Negative||Yes|
|nly||Annaly Capital Management, Inc.||Down||Down||Neutral||Yes|
|mo||Altria Group, Inc.||Neutral||Up||Negative|
|vz||Verizon Communications Inc.||Down||Neutral||Negative||Yes|
|gps||The Gap, Inc.||Down||Neutral||Negative||Yes|
|anf||Abercrombie and Fitch Co.||Down||Down||Negative||Yes|
|dis||The Walt Disney Company||Neutral||UP||Negative|
|mdlz||Mondelez International, Inc.||Up||Up||Neutral|
|ba||The Boeing Company||Neutral||Up||Negative|
|lmt||Lockheed Martin Corporation||Neutral||Up||Neutral|
|de||Deere & Company||Up||Neutral||Positive|
|emr||Emerson Electric Co.||Down||Up||Negative||Yes|
|dow||Dow Chemical Co.||Up||Up||Positive||Yes|
|adm||Archer, Daniels, Midland, Co.||Neutral||Up||Negative|
|pot||Potash Corp. of Saskatchewan Inc.||Down||Down||Negative||Yes|
|bmy||Bristol-Myers Squibb Company||Down||Up||Negative|
|csco||Cisco Systems, Inc.||Down||Down||Negative||Yes|
|ngg||National Grid plc||Down||Up||Negative||Yes|
|wmb||Williams Companies, Inc.||Down||Neutral||Negative|
|wm||Waste Management, Inc.||Down||Up||Negative|
|nsc||Norfolk Southern Corp.||Up||Up||Neutral|
IMPORTANT DISCLAIMER: It is important that you understand and agree that all information provided in this newsletter rely on publicly available data and tools with no guarantees of quality or suitability for any purpose, and that I can be long or short in any of my trading-set equities, at any time, with or without regard to indicated trends and described analytics, and that I do not give buy or sell or any other financial recommendations, and that any and all actions based on this commentary are solely the responsibility of the reader.