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Saturday, September 22, 2012
Keystone's UPS Weekly Chart 20 MA and 50 MA Cross Cyclical Market Indicator M Top
Keep an eye on UPS over the next couple weeks. The 20 MA keeps dropping lower ready to cross the 50 MA which would signal that markets are falling into a Cyclical Bear Market pattern. The white lines show the textbook M Top pattern. The red lines show the negative divergence that created the smack down. FDX reported weak guidance moving forward due to a weak global economy so UPS is down in sympathy to FDX as well. Last week NSC reported weak earnings also lowering guidance. If raw materials, packages, parts and paperwork are not moving thru the shipping channels, then the global economy is in a lot worse shape than thought. The 20 and 50 MA cross would confirm the trouble moving forward, or not.
The indicators show that the RSI and MACD line want to see lower prices moving forward encouraging the 20 MA to cross down thru the 50 MA. The histogram, stochastics and money flow are favorable to a bounce now showing positive divergence. The money flow can easily negate the positive divergence this week if the price action moves lower. Also, price has barely placed a lower low than May so further downside is anticipated even if a bounce occurs. Two gaps below serve as targets. The most important thing to watch is if the 20 MA crosses down thru the 50 MA which would signal cyclical market and economic trouble ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
nice indicator, and i can see the topping signal, but how do you deduct from that, that the spx will go to 1440s? and not 1400-1420, which is even sturdier support?
DOW THEORY From Wikipedia) : go to this URL to view the charts http://screencast.com/t/8cPKEjgt , then read about DT.
In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air. Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.
Interesting MCAP, so a drop off in tech volume compared to the overall market volume results in a lower ratio number and results in a market pull back. As the ratio volume moves higher, that is showing that tech participation is strong in the markets, and everything moves higher riding the tech bandwagon. The chart reinforces the daily watching of the COMPQ and SPX, representing tech and the broad market, respectively. If the COMPQ is leading the SPX on any given day, that shows you the bulls got game. if the markets are going up but the COMPQ is not leading, the upside will peter away and fall off as the day proceeds. If the COMPQ leads the SPX down the bears are rockin'. If the markets move down but the COMPQ is not leading the SPX downwards, the bears got nothing that day and the markets will recover as the day moves along.
Yep, Anon, Dow Theory is one of the oldest technical analysis tools from the early days of the stock exchange. There are a few old-timers that continue to track and report on Dow Theory, but those smart people even slightly differ on their approaches. Richard Russell typically provides a good handle on Dow Theory. As the Dow industrials move up and make higher highs, that must be confirmed by the Dow Transportation index, and visa versa, if the Trannies move up, the Dow will move up as well. When one or the other balks, and diverges, that indicates trouble afloat. The trannies have been sick for many weeks now. Now with bad FDX news, and bad rail news, this is confirmed. Watch the Baltic Dry Index (BDI) and shipping companies like DRYS for further hints at global health. Thus, tried and true trading tools such as Dow Theory, weak utiliite for the last couple months, uber complacency with a low CPC and low VIX, etc..., and other items pointed out on the site here creates this dichotomy in the markets.
Markets should go up indefinitely due to QE Infinity, as 95% of the traders now think, but, the tried and true market tools continue to say that markets are toppy now and should roll over, perhaps very strongly moving forward. Thus, all we can do is take it one day, or one hour, at a time. The Spain bailoout drama is important. SOX 395.43 will dictate market direction after Monday's bell.
Great stuff KS. Glad my donation found it's way and I am impressed to see how many followers from different countries you have. That says enough about your work!
Back to shipping and rail, UPS, FedEx etc; I never looked at the market (internals) from this perspective, it's an eyer opener and a must have in every traders arsenal as well as to keep it in the back of your mind all the time, and check in on it every now and then as you do.
that said, your and dow's theory, are confirmed/described in this recent article showing that non of what KS posts or what is described by his true followers is just something sucked out of their thumbs. Bulls, enjoy the QE run while it lasts, because reality is starting to sneak up fast and hard and when it hits, and it will 'cause reality always does, then you'd better hedge your longs or be on your A-game to bring on the shorts and puts!
1440 appears eminent.
ReplyDeletehttp://scharts.co/LwJC24
nice indicator, and i can see the topping signal, but how do you deduct from that, that the spx will go to 1440s? and not 1400-1420, which is even sturdier support?
DeleteDOW THEORY From Wikipedia) : go to this URL to view the charts http://screencast.com/t/8cPKEjgt , then read about DT.
ReplyDeleteIn Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air.
Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.
Interesting MCAP, so a drop off in tech volume compared to the overall market volume results in a lower ratio number and results in a market pull back. As the ratio volume moves higher, that is showing that tech participation is strong in the markets, and everything moves higher riding the tech bandwagon. The chart reinforces the daily watching of the COMPQ and SPX, representing tech and the broad market, respectively. If the COMPQ is leading the SPX on any given day, that shows you the bulls got game. if the markets are going up but the COMPQ is not leading, the upside will peter away and fall off as the day proceeds. If the COMPQ leads the SPX down the bears are rockin'. If the markets move down but the COMPQ is not leading the SPX downwards, the bears got nothing that day and the markets will recover as the day moves along.
ReplyDeleteYep, Anon, Dow Theory is one of the oldest technical analysis tools from the early days of the stock exchange. There are a few old-timers that continue to track and report on Dow Theory, but those smart people even slightly differ on their approaches. Richard Russell typically provides a good handle on Dow Theory. As the Dow industrials move up and make higher highs, that must be confirmed by the Dow Transportation index, and visa versa, if the Trannies move up, the Dow will move up as well. When one or the other balks, and diverges, that indicates trouble afloat. The trannies have been sick for many weeks now. Now with bad FDX news, and bad rail news, this is confirmed. Watch the Baltic Dry Index (BDI) and shipping companies like DRYS for further hints at global health. Thus, tried and true trading tools such as Dow Theory, weak utiliite for the last couple months, uber complacency with a low CPC and low VIX, etc..., and other items pointed out on the site here creates this dichotomy in the markets.
Markets should go up indefinitely due to QE Infinity, as 95% of the traders now think, but, the tried and true market tools continue to say that markets are toppy now and should roll over, perhaps very strongly moving forward. Thus, all we can do is take it one day, or one hour, at a time. The Spain bailoout drama is important. SOX 395.43 will dictate market direction after Monday's bell.
Great stuff KS. Glad my donation found it's way and I am impressed to see how many followers from different countries you have. That says enough about your work!
ReplyDeleteBack to shipping and rail, UPS, FedEx etc; I never looked at the market (internals) from this perspective, it's an eyer opener and a must have in every traders arsenal as well as to keep it in the back of your mind all the time, and check in on it every now and then as you do.
that said, your and dow's theory, are confirmed/described in this recent article showing that non of what KS posts or what is described by his true followers is just something sucked out of their thumbs. Bulls, enjoy the QE run while it lasts, because reality is starting to sneak up fast and hard and when it hits, and it will 'cause reality always does, then you'd better hedge your longs or be on your A-game to bring on the shorts and puts!
US transport stocks signal deeper slowdown
By Arash Massoudi and Vivianne Rodrigues in New York
©AP
A downturn in US transportation stocks is indicating a deeper slowdown in the global economy and suggesting that the broader market rally has more to do with central bank action than fundamental strength from corporate America.
http://www.ft.com/cms/s/0/470a6fec-03fc-...z27LHZew6u
and here's another one on the dow theory, the lagging trannies and how that may signal a sell signal, now on marketwatch.com:
ReplyDeletehttp://www.marketwatch.com/story/do-shaken-transport-stocks-signal-a-sell-2012-09-21