US - Market Direction 01 (May 08 - Jul 08)

[winston]

1H Window Dressing is coming up..

If the market does not bounce up over the next two weeks, I think it would be quite safe to short the market.

[blid2def]

The current NYSE short interest ratio is 13.92 , which is very close to the high year high of 14.45 set about a few days ago. To give you a relative magnitude for comparison, at the start of the January correction, it was was around 10.

MM, I can't see the historical info on the site, so if you've any visibility of them - do you know what's the short interest ratio and % of volume like for Mar 07, Sep 08 and Mar 08 - right before each of the rallies?

An interesting contrarian view is that high short interest means that if the market does turn up, high short interest ratio becomes a bullish sentiment indicator as all the dwarves run to cover their positions, driving things up.

Here's an interesting article from Mar 07:

Source: http://uk.reuters.com/article/marketsNe ... 4252007032

NYSE short interest jumps in March
Wed Mar 21, 2007 8:10pm GMT

NEW YORK, March 21 (Reuters) - Short interest on the New York Stock Exchange rose sharply in March, the exchange said on Wednesday, signaling a rise in bearish sentiment as volatility picked up in the U.S. stock market.

As of March 12, the number of short-selling positions rose to 10.51 billion shares, up from about 9.56 billion shares in the previous month.

Short interest on March 12 was equal to 2.8 percent of the total shares outstanding on the NYSE.

Investors who sell securities "short" profit from betting stocks will fall. Short-sellers borrow shares and then sell them, waiting for the stock to fall so they can buy the shares back at the lower price, return them to the lender and pocket the difference.

Short interest in the stock market is often a gauge of the level of skepticism among investors, with rising short interest signaling more skeptics and vice versa.

The short interest ratio can act as a similar signal, with a high ratio considered a bullish indicator by some investors, and a low ratio deemed bearish.

The rise in March represented a turnaround from February when short interest fell, compared with the previous month. Short sellers had been struggling to record profits since the market turned up in July and major indexes began hitting a series of record highs in the last few months of 2006.

But market volatility picked up and stocks started to fall sharply in late February amid increased risk aversion among investors and a fallout in the subprime lending sector. (Reporting by Emily Chasan; Editing by Jan Paschal; Reuters Messaging: rm://[email protected]; Tel: +1 646 223 6114))

Result? DJIA flashed a follow-through on that same night, and went on a 1,200+ point (~10%) run....

And my point is? Shit, I got no point hahahahaha... okay, just thinking that this thing can be like a circle - everywhere is a corner.

[millionairemind]

Wah GR, you are making me work man!!! Here is the info and you owe me one kopi !!

I do recognize that there are camps that see high short interest ratio as a contrarian indicator. From my observation, it has always been that a massive correction occurs around 2 weeks when the NYSE short interest ratio hits a peak and then it comes down just before the follow thro' day rally.

If the current high NYSE short ratio leads to a rally, it could just be massive short covering. The fact that this NYSE short ratio has been kept high for the last 3 weeks worries me. It crept even higher as the correction progresses.

Here are some dates and the NYSE short ratio... you can do your own inference.

The correction date is the 1st day when correction started. The follow thro' day is the confirmation of the new uptrend.
26Jul07 Correction = 8.05 (guesstimation from chart)
30Aug07 Follow thro' = 6.8 (guesstimation from chart)
Below are actual values.
09Nov07 Correction = 8.52
28Nov07 Follow thro' = 8.12
07Jan08 Correction = 10.05
24Mar08 Follow thro' = 9.35
22May08 Correction = 13.72
Current NYSE short interest ratio = 13.90 (highest around 14.45)

I hope this helps.

[kennynah]

16Jun08 - Post Market Review (Part II)
17jun08 - 650pm +8GMT


DJIA 15 Mins Chart



The djx(1/100th of DJIA) remained above 121.80, so we do not have a resumption of the downward move, and we still have the potential for a bounce to develop on the daily chart.
On the short term chart we have a pretty strong shorter term resistance level just barely above 123. Notice how each time the price has fallen from this resistance it has set a higher low. This shows that buyers are showing up sooner each time. This pattern is referred to as an "ascending triangle"(which was indciated as the "wedge"), and many times the resolution to this pattern is that the buyers will push the price up thru the resistance to create a breakout, which also sets a "higher high" which following the higher low creates a new uptrend.

With most chart patterns, it is not guaranteed that buyers will be able to break thru that resistance. The reason ebing that the volume has been declining in the last 2 days.

Sellers are not chasing after the price to push it lower at this time, which is why many times the buyers will succeed and create the uptrend. But if the 123 area holds as resistance and sellers begin to show up and push the price down to break that uptrend line of the higher lows, then the pattern has failed and the potential for the price to move lower is increased dramatically. This is especially so, when the 121.80 region is compromised. Hence, watch very closely if index should trade lower than this level ((121.80)).

So, this means that we continue to have the dominate potential for a bounce to develop on the daily chart, and a break above this resistance at the 123 area would be the confirmation that the bounce is underway. But again, indexes do not move up or down in a straight line. It can gyrate around this region, breaking up and move down again. We must be acute aware that we are not at the 2007 clear strong uptrend situation now.

Should this bounce fail to develop, or worse yet, starts to develop and just as quickly fails with the price plunging right back below the 123 area, then we would have potential for the next downward move to develop. Hence, dont "show hand" just becos 123 resistance is broken. By now, we should be well accustomed with "one day wonders". If one is Long and this break up occurs, do consider taking profits at some point.

An oscillator indicator (but this is a different topic altogether) can be used to give us clues to help with "timing" and with where the oscillator is currently at on the daily chart it is very likely that it would be a few days before a new downward move would develop. This means that should the price breakdown thru that short term uptrend line, then while we have potential a new downward move could develop, the risk would be high that the recent lows could act as support and either create a sideways range on the daily chart, or possibly form a bottom on the daily chart, so we would have to watch out for that very closely.

Again, trade what we see, and not what we think....remains the safest trading adage.

[blid2def]

LOL - MM, kamsia very muchie. Okay. next time kopi one cup with milk and sugar.

[Chiron]

Run pause run, perfect fit for a sustain trend move (up or down) until resistance/support broken.

[kennynah]

DJX 15 mins chart shows weakness...in fact, one 1 bold swing, DJX 15 mins channel BROKEN down... careful....

[kennynah]

17jun08 - Post Market Review

All 3 major indexes Volume was lighter than previous day's. NYSE Composite was a little higher.


DJIA lost 109 points @ 12,160
SP500 lost 9 points @ 1,351
Naz Comp lost 17 points @ 2,457

Gold was little changed @ ~883
Oil was gave up <$1 @ ~133.75


DOW - Daily Chart (Downtrend Continues)




DOW - 15 Mins Chart >> The Weakness of DOW Unfolds



VIX - Well Supported from Falling

[kennynah]

1035pm 18jun08 +8 GMT

DJIA gone below 12077....

Naz testing 2430 key support

spx staying below key support 1250

all these means.... tough times ahead for cows...

[kennynah]

1057pm +8 GMT 18jun

all 3 indexes have gone to Hong Kong ...