Month: February 2020

What a difference 2 weeks make

There is a human tragedy that is unfolding. I apologize for writing about something as trivial as the stock market.

This meltdown still has time to run. We may have a respite in about a week, but I think the final bottom may be in April. And not because it will be warmer.

The Volume Oscillator has reached unheard of depths.

This longer term chart shows the depth of the move.

Perhaps the best idea for a bottom exists on the weekly chart . While we have reached the middle Keltner, there is about another 10% to the bottom of the band.

The Confidence Index has broken through support.

The Simple Chart has indicators that are close to a support level. But not all are there yet.

I have a proprietary chart that shows a short term low in about a week, but it is followed by another period of weakness about a week later.

I don’t think anyone can assume where we will go from here. Unfortunately, it’s still not safe. As I stated my concerns in earlier posts, I hope I’ve kept some readers safe.

Is it always darkest before the dawn?

Actually, it is darkest halfway between sunset and sunrise. Despite that empirical knowledge, our optimistic selves have jumped on the above idiom.  We are an optimistic species.

But remember, a lunar eclipse (which can only occur with a full moon) can turn empirical knowledge on its head. Just as price has gone parabolic, we need to keep in mind that we are way above support. 

News has been treated in an optimistic manner–both good and bad. Friends who have other people invest their money have watched the gyrations over the past few years with very little fear. (Please read the Feb 2 post for more on news.)

I’m flat, and have very little fear, or FOMO. The T that is building has transformed into one of little strength, now tapping out just above the zero line. The more complex formation, with a true low to come perhaps as late as April, is still developing. No accompanying chart until there is more info.

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I am watching an interesting development in Gold. We have had a few days of premium, rather than discount, at Sprott.  And this is on lower volume. Who’s buying? Miners are participating less than GLD. I am looking at a picture without an answer right now, but I prefer deeper discounts at Sprott to where we are at present.

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GBTC has come close to 14.32 , which is the top of the Optimum Moving Average I am maintaining for it.

Untying a T

The T that was expected to last until mid March has not developed. The VO decided to turn down just at the zero line. It suggests a much more complex bottom. This now reverts to the Halloween version, with a low occurring in mid-March. The VO may not cross the zero line before then.

It is important to remember that the VO is the MACD of the NY up down Volume.

That makes it a lagging indicator. It also allows it to change shape as time passes (based on the MACD parameters), because MACD is a convergence/divergence indicator.

Looking at one of the best indicators I follow (BPSPX), I can’t remain long. But this market mania we are facing is based on passive investing at an incredible level. Are we in 1929? It’s possible, at least in my mind. But I’m not that old.

Bpspx

Found and Lost

Once more, Stockcharts changed the playing field by delaying the update of the Volume Oscillator chart.

In explanation, until recently the VO was updated during market hours. Now, that update doesn’t occur for the previous day until sometime the following day.

While the VO appeared to break above the zero line yesterday, tonight’s chart shows that the VO has yet to pierce the zero line. That doesn’t mean that we do not have a T, but it does withhold confirmation. In any event, having caught the move from Feb 4’s open of 3280, I would now use 3313 as a must hold support.