One of the more "exciting" technicals in play today was to see if bulls could push the NASDAQ Composite (COMPX) 1,504.04 +0.07%, or the NASDAQ-100 Index (NDX.X) 1,136.26 -0.02% hopping to, or above their December relative highs and give a major index a "first" new relative high after a higher low, but bulls came within a "frog's hair" of such a trade, as the very broad NASDAQ-Composite came up short (by 1.74 points) to near its session lows.
Traders were active again today, especially at the NASDAQ. NASDAQ volumes reached the 1.88 billion-share mark, which outpaced Friday's 1.82 billion, both marking volume levels not seen this year. NASDAQ internals finished the session positive with advancers outnumbering decliners by an 18 to 13 margin, while 220 four and five-lettered stocks traded new 52-week high compares to 23 stocks being sold to new lows. Friday's breadth for this category was 210:16.
I don't know about you, but after tracking some of these internals for the past couple of months, my best impression today would have been that of a Russian weight lifter trying to squat 1,500 lbs, his face red, and jugular vein protruding from the side of his neck as he looked to press the weight to a complete lift.
While the NASDAQ was able to turn a higher rate of volume that in Friday's trade, the NYSE Composite (NYA.X) 5,207 +0.11% turned a growingly steady 1.4 billions share, but didn't exceed its 1.52 billion shares traded from Friday (highest levels this year have been 1.78 billion and 1.79 billion on 01/30/03 and 03/21/03 respective). Advancer outpaced decliners by an 18 to 13 margin, while new highs reached a new peak at 191 compares to 18 stocks trading new lows. Friday's new high / new low showed 191 stocks having traded new 52-week high, compared to just 4 stocks having traded new lows. While not certain, I don't remember that even during the great bull market of the late 1990's that we would have only seen 4 new lows in the NYSE on any given day!
I've learned to not OVERLY-trade a "gut feel," by my gut is turning a bit after today's trade with such impressive volume build, such BULLISHness from the new highs/new lows. This market is definitely BULLISH, but I may well have to think.... "too bullish."
Today's a great day to simply look at the NASDAQ Composite (COMPX) 1,504.04 +0.07% as it came soooooo close to trading its December high. There's just over 3,000 stocks listed on the NASDAQ and while it is easier to control and move around the NASDAQ-100 (just 100 stocks) it remarkable that the NASDAQ could press the December highs of 1,155.68 and not be able to see bulls press the additional 1.74-points needed to get a matching high.
NASDAQ Composite ($COMPX) Chart - Daily Interval
Stockcharts.com hasn't tabulated all of their point and figure charts at the time I finished "marking up" the above chart, but today's is as good a day as any to benchmark the COMPX itself against the bullish %. One thing I'm noting for the first time when doing so, is that past "status" changes in the NASDAQ Composite came very close to the 50% retracement level of 1,314. This is "interesting" in my opinion, as during the advance back in October-December, the conventional retracement (pink) as drawn above would not have been "known" at that time. Not marked on the above chart (ran out of space) was the recent reversal back UP in the NASDAQ-Composite Bullish % ($BPCOMPQ) on April 3rd, which came at NASDAQ Comp 1,400, just prior to the last test of 38.2% retracement at 1,363.69.
One of the "points" I want to make with this VERY broad bullish %, is the AMOUNT OF TIME and change to the market internals (needs 6% change to reverse status on the bullish % chart) to reverse course, and why the narrower NASDAQ-100 Bullish % ($BPNDX) becomes important as it is "faster-moving" as it is narrower.
Some may think it is crazy to begin setting up the "next" bullish entry trade, but right now, I'd be assessing downside risk in the NASDAQ Composite (COMPX) to the 1,363 level, should the market look to take some gains and remove some of the bullish risk that has been built into things the past couple of months.
The ability of the NASDAQ-Composite Bullish % ($BPCOMPQ) to build a series of higher highs and higher lows is encouraging, but as I've mentioned before, the bullish % are not a good indicator for predicting price action, but better for ascertaining what part of the "field" you're operating in, market internals and "who's got the risk" (bulls or bears). A longer-term bull at this point would "feel" much better about things longer-term if the NASDAQ Composite itself could build a higher relative high.
Ah, here we are. Today's action saw the NASDAQ Composite Bullish % ($BPCOMPQ) see a net gain of 1.2%, which has about 36 stocks generating new point and figure buy signals. This is up from Friday's net gain of 1.33% (roughly 40 stocks) and now has this bullish % reaching a bullish cycle high of 54.67%. In May of 2001 and then again in January of 2002, this very broad indicator reached levels of 56% before eventually reversing lower. This tells us we're at similar risk levels found during those previous times, but internals continue to show good bullish strength.
I received a mixed bag of requests to last week's self-wonderment if "too many" retracement brackets (conventional/monthly/weekly) was too noisy. Some traders (believe it or not) wanted me to ad a DAILY retracement onto the charts for their intra-day trading. Whew! I'm thinking if you're a day trader and trading the intra- day swings, you've got a high-level trading platform set up with real-time charts and good retracement brackets that you can attach from the DAILY S2-R2 levels and make notes each day on where the S1 and R1 levels are at. To tell you the truth, the thing that takes me the "longest" with my charts is updating my weekly charts each Monday and getting all the other things done I need to do in a day.
So, I'll try and mix in various charts as each day passes. Some "love" the more simplistic point and figure charts with notations as to how a MONTHLY or WEEKLY level ties in. I guess we all have our preferences, but I was hoping to "reach a consensus," but that doesn't look achievable after review of my e-mail.
So, here's a chart of the QQQ, which I find compelling and perhaps ties in or relative to the NASDAQ-100 Bullish % ($BPNDX).
NASDAQ-100 Tracking Stock (QQQ) - Daily Chart
The QQQ, came close to trading its December 2nd relative high of $28.79, which would form the "upper-end" of yet another "zone of resistance." The QQQ also came close to testing our new WEEKLY R1 of $28.73. However, unlike other moves higher since the reversal up in the NASDAQ-100 Bullish % ($BPNDX) since March, risk hasn't been as high as depicted by the bullish %. Three- bars ago (Thursday) I profiled an bearish trade intra-day for partial positions in the QQQ puts for September expiration. Yes! I still hold them! That trade was put on at a level now below this WEEK's S1 of $27.39. Right now, the FIRST sign of any weakness in the QQQ would be brought on by DIVERGENCE, where the QQQ would actually close below the last downward trend on its chart, at approximately $28.00.
I've pointed out in the market monitor that these VERY SHORT-TERM downward trends, when broken to the upside have been serving support on weakness. I don't think I'm seeing things either and I believe it is cause by bears, with some larger positions, looking for cover after each of these trends have been broken.
NASDAQ-100 Track Stock (QQQ) - 30-minute chart
At this point, I wouldn't call today's "highs" in the QQQ any more relevant or "sign of weakness" that April 21-22 trade that came UP into the $26.92-$27.06 zone (remember, the red retracement is MAY MONTHLY and wasn't there in APRIL). The only alert to any "new weakness" in the QQQ would be if there were some type of break and better yet, CLOSE below the downward trend, which is near $28.00. I do need to adjust my "thinking" a bit near-term as it relates to when I profiled the QQQ as bearish. I wouldn't have profiled the trade unless I thought it would trade $27 and break below the $26.90 level. With today's test of "upper zone" I've got to be thinking there will be some support found on a pullback very close to my bearish entry and this week's WEEKLY S1 of $27.39 and more likely the $27.00. ONLY on a trade into the zone of $27, would I then begin to think "I was onto something" and perhaps risk as depicted by the Bullish % is coming into play. Also, if we were to see a QQQ trade back near $27 this week, DO NOT be surprised if the current "downward trend" comes back into play as resistance.
Today's action saw the narrower NASDAQ-100 Bullish % ($BPNDX) see a net gain of 3%, so 3 stocks gave new point and figure buy signals. This has the bullish % rising to 76%. Still not as "risky" as December's 82% reading, and nowhere near as risky as November 1999's 93%.
S&P 100 Index ($OEX.X) Chart - Daily Interval
Aside from the January relative high there would appear to be little technical resistance in play on the bar chart until 477. The S&P Bank Index (BIX.X) 292.45 -0.78%, which matched its November and January high on Friday, exhibited what I'd call "profit taking" ahead of tomorrow's FOMC data. Aside from Treasury bonds, the banks would also be a group that would be greatly influenced by tomorrow's FOMC decision on interest rates.
I would think the MARKET would view a RATE CUT and an UNPLEASANT surprise from the Fed. The reason I say this is that I think the BANKS have RISEN based on the thought of economic improvement. I would view a Fed rate CUT as concern among FOMC policymakers that the economy is in trouble.
The S&P Bank Index (BIX.X) did trade the upper-end of its bullish regression channel in Friday's trade, where the BIX.X traded a high of 295.15 and closed at 294.76.
S&P 500 Index Chart - 5-point box
A 3-box reversal back to 915 wouldn't be overly surprising for the SPX's PnF chart as it moved 1-box above our "bullish resistance" trend line. Most of the overhead supply the remained from January should be gone by now and sets the stage for a test of WEEKLY R1 of 940. The first sign of weakness on the SPX chart would be a double-bottom sell signal at 900, something that the SPX hasn't done since giving the triple-top buy signal at 855.
I thought I placed the various "inflection points" of the bullish % on the SPX's point and figure chart in the past, but I got a couple of e-mails over the weekend from traders asking me to do this. Starting in the upper-left, I "tied in" how the bullish % most likely read after reaching the "peak" in early December (red C on a PnF chart). The decline to 58% was enough to see the bullish % reverse the needed 6%, but a "sucker rally" into January (red 1 on PnF chart) wasn't quite enough to see an UPWARD 6% reversal on the bullish % chart.
I think the SPX chart with Bullish % tied in does a VERY GOOD job of explaining how EARLY it would be for BEARS to be taking full positions at this stage in the game. Was there time or decent entry point to look short in January?
Did any BEAR "need" to pick a top and be FULL POSITION short/put in December? No. The "best" trade came AFTER a breakdown, not only in the SPX chart, but the bullish % also showing internal weakening.
Today's action saw the broad S&P 500 Bullish % ($BPSPX) see a net gain of 1.4%, so 7 stocks saw new point and figure buy signals. Remember, when the bullish % grows higher, these aren't stocks that are giving "just another" consecutive buy signal. These are stocks that had generated a "sell signal" at some point, but today traded at a level above a point where there was enough supply to limit further upside price gains. Today's action has this bullish % growing to 60.8% and still may have some room to December's 68% level. As it would relate to the "euphoric" state of bullishness in March of 2002 as noted in the VERY broad NASDAQ Composite Bullish %, the SPX Bullish % reached 77% in March of 2002.
Dow Industrials ($INDU) Chart - Daily Interval
The Dow traded 8,600 right out of the gate this morning, and that was enough to generate a double-top buy signal. Once the Challenger report was released for April announced layoffs, the Dow lost its steam and the afternoon rally attempt to 8,580 came about 10-points shy of the morning high.
I checked the intra-day charts and only the NASDAQ Composite and NASDAQ-100 came close, or achieved their morning highs. The SPX, OEX and Dow all came up short.
The first sign of trouble on the Dow's point and figure chart wouldn't show up until a double bottom sell signal at 8,300 and that's right at the apex of the Dow's "bullish triangle."
We can perhaps see that 8,300 level represented by the above bar chart, but first-thing-first! The Dow did work itself above a "zone of resistance" from 8,476-8,493. I would have thought however that the Dow would have "launched" toward those 4-levels of resistance near 8,700.
On Friday, the Dow Industrials Bullish % ($BPINDU) saw a net gain of 6.66% as two stocks gave new point and figure buy signals. Today's action saw no net change in this VERY NARROW bullish%. Still "bull alert" as its bullish % grows to 56.67% and would need a reading of 62% to achieve "bull confirmed" status.
Pivot analysis matrix
There are few MONTHLY levels that would come suspiciously close to correlating. I do see some correlation tomorrow with the NDX MONTHLY R1 and DAILY R1, but that's as close as today's. One could think.... "If the NDX/QQQ reached its bull run peak," then today might have been the day.
Lots of levels show up as support tomorrow at the WEEKLY pivots and DAILY R1s. As noted in Friday's late-evening market monitor and briefly in tonight's wrap, it has been awhile since we've seen the WEEKLY S1s traded and support looks formidable tomorrow at the WEEKLY pivots.
"Red arrows" are still have the buying in Treasuries drawing my concern with regards to where the cash is coming from to keep the major indexes at these highs.