5/19 Morningline: Stocks and Bonds

The parabolic sar this morning is in bear phase on the blue chip stocks (SPY), with the price trading at the bottom of Friday's range. The so-called fear index (VIX), a measure of SPY's volatility, is trading in the high end of Friday's range.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $119.52
VIX 18.15
TLT $89.87

At 10:00 a.m. Eastern

The Treasury long-term bonds (TLT) remain in bull mode but with little price action. TLT is trading at the top of Friday's range, at a level it saw on April 13 and March 24.

The last time SPY switched into bear phase, on March 19, it only remained there for two days before flipping back into the bull column. The technical negatives, however, are greater this time.

The macd has moved below the zero line. Last time it stayed above.

The fast stochastic on this second bearish day was flipping indecisively between a shallow decline and shallow rise. By the second day of the March bear phase, the stochastic was heading north with conviction back toward overbought territory.

The psar bear phase has been confirmed by Person's Proprietary Signal. In March, the pps remained relentlessly bullish throughout.

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The volume spike that marked the present entry into bear mode was more than 150% of the prior day's volume. In March, the volume spike was much shallower, a mere 15%.

So this bear phase signal has credibility that was lacking a month ago. It, too, may prove to be a mere whipsaw on SPY's road to glory. But the signs point to a more significant correct of the present rise.

The average direction index was in the mid-20s in both instances, suggesting a marginal chance of whipsaws.

Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic

Exchange-Traded Fund Symbols:
EEM - emerging markets
EUR/USD - euro/dollar currency pair
GLD - gold
JNK - high-yield corporate bonds
SPY - blue-chip stocks
TLT - Treasury long-term bonds
USD/JPY - dollar/yen currency pair
USO - crude oil
VIX - fear index

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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