There is Something Rotten in Denmark

By: Stock Barometer | Fri, May 9, 2014
Print Email

5/9/2014 5:50:08 AM

Good morning Traders,

Underlying the market price action, there is a lot going on. First, since it is Friday, we look at our money flow updates.

Cumulative Equity Money Flows Chart

Second, here is the weekly reading from equity money flow, which we believe is a contrary indicator - meaning as money flow reaches a peak or a trough, it is a sell or buy in the market, respectively.

Equity Fund Money Flows Chart

Keeping with the sentiment theme:

Equity Put/Call Ratio Chart

We are at a relative low, but not a historic low. Because of the functioning of the market, the more bearish people get, the more bullish potential energy is building in the market to rally. So in the short term, I would say that this is bullish.

QQQ versus SPY Relative Strength Spread Chart

Relatively speaking, the QQQs are on a sell signal compared to the SPY. This, especially from a low level, tends to be more bearish. Remember, all these charts are available as an individual subscription and if you write your own newsletter, you can subscribe and publish these charts as part of your articles. Visit www.stockbarometer.com to learn more.

And finally, the barometer.

Daily Stock Barometer primary System Chart

There is no doubt about it, the conditions are ripe for a sell off and the triggering of the head and shoulders top in the QQQ. The internals on the Nasdaq side are SO bearish compared to the NYSE. So we remain in Sell Mode, looking for price action to break down. I'm not long term bearish - I'm looking for a sharp move lower - and maybe not even a break of the head and shoulder pattern as the right shoulder could form a more complex pattern.

That being said, the level of fear is building, making the timing of this sell a little suspect. I prefer to see the market sell off on complacency, not fear. That doesn't mean that the market can't sell off, just that this is where it gets tricky - as a bullish catalyst could light the fuse of fear in the market, which would materialize as a strong advance of short covering. And if the fear has to clear out of the market, it would be like a fire running until all the combustibles are spent.

Regards,

 


 

Stock Barometer

Author: Stock Barometer

www.stockbarometer.com

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend.

Our goal is to make you money. We offer you the tools and information to do so and leave it to you, the individual investor, to apply them in the best way possible.

Important Disclosure: Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

For a complete understanding of the risks associated with trading, see our Risk Disclosure.

Copyright © 2004-2014 Investment Research Group, Inc.
d/b/a www.Stockbarometer.com. All Rights Reserved.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/