13 December 2010

Sorry if the charts suck.  I'm on the road and this laptop is so bad that I can't even adjust the zoom in paint.  If I've ever helped you earn some money, donate something to help me get a better laptop.  ;)

 Percent of stocks two standard deviations below 40 day moving average seems to be rising while the market is rising (SPY is actually two std dev above 50 day right now).  Remember two standard deviations is significant in statistics because anything inside that amount represents the result expected 95% of the time.  Between the indexes and the individual stocks, there is still more confusion than on father's day at an orphanage.  However the Russell 2000 has remained strong.

Percent of stocks two standard deviations below 200 day moving average also is in a positive up-trend since early 2010.  Note that the "floor" after the Greece crisis never returned to levels before it.

Nasdaq advance/decline was negative today and barely above the previous high.  Overall advance/decline still didn't make a new high.  McClellan was up today, but up less than it was on Friday.  Still quite a ways below highs.  The Nasdaq Summation index (NASI) is nearing old highs.

I've been reading Bert Dohmen's book Prelude to Meltdown about his Wellington posts during 2007.  He  evaluates mainly liquidity standpoint as well as sentiment.  From a liquidity (not money as in gold, but as in credit - important because credit can disappear far faster) standpoint, there are some liquidity problems rearing their head in the municipal bond market which really hasn't recovered since 2007.  LIBOR is still on the floor.  The CPI adjusted monetary base actually is under 0% growth for the year.  However, it grew around 100% in 2009 - resulted in a 80% rally.  I made a new scan to replicate his "buying climax" data from Investor's Intelligence.  It will take a while to compile a useful trend, but today there are 369 buying climaxes.  A buying climax is when within the past week a new 52 week high was made and the current close is under the close a week ago (five days).  The Euro broke its negative trendline today, but failed at the 200 day EMA.  The AUDUSD carry trade is still below highs, but trending upwards.  I believe (my application crashed) that the AUDJPY made new highs today so that "liquidity" providing trade is still alive and well.

Best of luck.

Oldie, but a goodie.