5/31 Forex

The U.S. equity and bond markets are closed Monday for Memorial Day, but forex trading, of course, never ceases.

There are no new phase switches by Person's Proprietary Signal on the 16 currency pairs that I follow.

FRE Watch

Freddie Mac (FRE) has moved to bull phase on the parabolic sar and Person's Proprietary Signal. The macd, although still bearish, spent the latter half of last week rising toward the zero line.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
FRE $1.24

Friday's rise put the price within the May 24 trading range, the day on which the stock tumbled to $1.13, the lowest point on the three-month chart.

RAD Watch

Rite Aid Corp. (RAD), the pharmacy company, has moved into bull mode on the parabolic sar and Person's Proprietary Signal, and the macd is heading in that direction.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
RAD $1.15

The price action, however, is ambiguous, with Thursday's rise that triggered the phase shift being taken back on Friday. So it's a "trust me, have I ever lied to you?" signal.

ABK Watch

Ambac Financial Group Inc. (ABK) has moved to bull phase on the parabolic sar and Person's Proprietary Signal, as the macd creeps up toward the zero line for a seventh trading day.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
ABK $1.20

ABK is the second-largest bond insurer in the United States.

The signal switches kicked in Friday on a huge, 26% price increase that brought up to mid-way in the May 18 decline.

6/1 Almanac

Monday, May 31, is a market holiday. On Tuesday, June 1: Manufacturing index, auto sales, construction spending.

There are 18 days before the June options expire, 46 the July and 81 the August.

On the jump, market stats, econ reports, trading calendar and a good book...

AOD Watch

Alpine Total Dynamic Dividend Fund (AOD) is starting to show signs of a technical reversal into bull phase.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AOD $6.83

At 1:58 p.m. Eastern

The parabolic sar is showing bullish on Friday. The macd has moved up toward the zero-line for three days in a row. And all important, the price four times this week has shown either a higher high or (once) no change from the prior day's high.

BP Watch

You can hear the bands and wild cheering from hundreds of miles away: BP plc. (BP) has succeeded in capping its underwater gusher in the gulf. BP bulls rejoice! Yes?

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BP $43.15

At 11:20 a.m. Eastern

Uh, no. It is true that British Petroleum (as it used to be called) has moved to bull phase on the both the parabolic sar (first phase switch since April 22) and Person's Proprietary Signal (first switch since April 26). And it's also true that the macd this morning was briefly above the zero-line on the fourth day of a rise.

But the chart actually bodes rather ill for this bad news/good news stock.

F (Ford) Watch

Ford Motor Co. (F) is showing bull phase on the macd, the first phase switch on that stock since April 29.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
F $11.84

At 11:00 a.m. Eastern

The phase switch coincides with reports that Ford is about to shut down the Mercury line of cars, but macd has been toward the zero line for the past five tarding days.

FNM Watch

Fannie Mae (FNM) has switched to bull phase on both the parabolic sar and Person's Proprietary Signal. It's the first phase switch since the stock turned bearish on April 27.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
FNM $0.97

At 10:27 a.m. Eastern

The stock so far today has come to within 1¢ of the 61.8% Fibonacci retracement level of 99¢, a major reversal level for this issue.

5/28 Forex: A Huge Haul

A number of late switches to bull phase on Person's Proprietary Signal (pps). The currency pairs involved are:

• AUD vs. JPY, NZD and USD
• CHF/JPY
• GBP vs. JPY, USD
• NZD/USD
• USD/JPY

That's a bigger haul than I've seen for some time. A reminder: With the pps, after the phase switch I'm looking for a retracement toward the pps moving averages and then a bounce as confirmation. Like any signaler, the pps is prone to whipsaws.

5/28 Morningline

Welcome to Weird Week, that time of strangeness that starts the day before a three-day holiday weekend and continues through the Monday following the holiday week.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $110.03
VIX 30.04
TLT $96.52

At 9:45 a.m. Eastern

During this period, all experienced traders take off, and the interns are left in charge, building fortresses out of used pizza boxes in the corridors of their Wall Street towers and holding battles with golf- and spit-balls.

5/28 Almanac

On Friday, May 28: Income and spending, consumer sentiment, last trading day before the three-day weekend.

There are 22 days before the June options expire, 50 the July and 85 the August.

On the jump, market stats, econ reports, trading calendar and a good book...

Need a job?

Need a job? High-velocity trading companies are hiring mathematical logicians to help handle their 4-second strategies.

Yeah. From the guys who gave us the May 6 flash crash . . .

http://christianmarks.wordpress.com/2010/05/25/mathematical-logic-finds-unexpected-application-on-wall-street/

AOD Watch

The Alpine Total Dynamic Dividend Fund (AOD) continues its climb (so appropriate, given the name) for a third straight day, but with declining volume and little technical improvement.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AOD $6.85

At 1:00 p.m. Eastern

I've got skin in the game on this one. Despite the risk to principal of high-dividend funds and stocks, the yield is very attractive, especially with a money payer like AOD.

The yield is 1.75% per month (21.08% annualized). That can help overcome some down days. although it pales to insignificance in the face of a decline such as the most recent, From a swing high $9.36 on April 21 to a swing low of $6.04 on May 25.

UNP Watch

Amusingly, a day after Jim Cramer put out a buy list with Union pacific Corp. (UNP) on it, analysts have downgraded the railroad company's stock.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
UNP $70.75

At 12:33 p.m. Eastern

So it's Wall $treet vs. the "Buy!Buy!Buy!" guy.

In terms of technical analysis, UNP is a mixed bag; if it tilts either way, it is only very slightly.

AAPL Watch

News that Apple Inc. has become the world's biggest tech company is, of course, much less than it seems.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AAPL $250.94

At 11:30 a.m. Eastern

AAPL's market cap exceeded Microsoft's (MSFT) as MSFT slid 7.7% intra-day. AAPL was also down, but by less.

So, one day reversing that pattern, and the relative rank of the two companies reverses. It's not a horse race. They're separate companies, separate stocks, with varying technicals, fundamentals, markets and decision-making styles.

GLD Watch

Gold always fascinates, and these days you don't have to be Goldfinger, with a warehouse full of the stuff, to play. The exchange-traded fund GLD will do nicely.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
GLD $118.98

At 11:06 a.m. Eastern

Jim Cramer this week released a buy list with GLD on it. I like Cramer's style, but not always his recommendations. Part of it is a difference in time frames: He looks at the longer term, and I counter that in the long terms, we're all dead (or at least ensconced in an assisted living facility).

FNM Watch

Fannie Mae (FNM) credit up for a third straight day, and the macd continued to rise toward the zero for a fifth trading day.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
FNM $0.94

At 10:29 a.m. Eastern

Today's extremely narrow trading range, so far this morning, is within the the range set on May 24, the day the most recent swing high was set, at 97¢.

Narrow trading in FNM is more attractive that other narrow trading, of course. With a price of 93¢ or so, every penny means a 1% move.

5/27 Forex: Euro

Person's Proprietary Signals has again proved itself to be a fickle friend, disappearing from the EUR/CHF currency pair after showing bear phase Wednesday morning.

Forget Albion. Perfidious Person's has perfidy down to a science.

EUR/USD and EUR/GBP retained their bear signals but have not yet been confiremd by a test of the pps moving averages.

5/27 Morningline

Blue-chip stocks this morning opened with the third up-gap in a row, followed, as yesterday, by narrow trading. And an intra-day decline to follow?

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $109.12
VIX 30.18
TLT $98.13

At 9:57 a.m. Eastern

Blame the upcoming holiday, maybe. The markets always get so quirky when a holiday looms. I've always suspected that the smart traders take off early, leaving the interns in charge.

5/27 Almanac

On Thursday, May 27: Gross domestic product, weekly jobless claims.

There are 23 days before the June options expire, 51 the July and 86 the August.

On the jump, market stats, econ reports, trading calendar and a good book...

NLY Watch

Annaly Capital Management (NLY), one of my favorite dividend plays, has gapped up this morning and is trading narrowly about 1% above Tuesday's close (at around $16.57 as of 10:15 a.m. Eastern).

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
NLY $16.57

At 10:15 a.m. Eastern

The chart shows bull signals galore: The macd and Person's Proprietary Signal moved into bull phase on Tuesday; the parabolic sar followed today.

5/26 Forex: Euro

Person's Proprietary Signal (pps) is showing bear phase on three euro pairs. The pps has been ghosting against the euro of late, so the signals may or may not persist until the end of the U.S. market day.

5/26 Morningline

Don't break out the champagne yet. Blue-chip stocks gapped up at the open and are trading more than 1% above Tuesday's close. But the move leaves prices within Monday's and last Thursday's and Friday's trading ranges, so no big deal.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $108.97
VIX 30.18
TLT $98.13

At 9:47 a.m. Eastern

The VIX -- the so-called "fear index" -- has dropped sharply and is showing bear phase on both the macd and on Persons' Proprietary Signal (pps). A bearish VIX is bullish for stocks.

Why The Market Moved

A 512-tick chart of 
Wednesday's trading on SPY:

Blue-chip stocks did a stunning see-saw today, traversing more than 3% intra-day.

Why? AP knows, or says they do.

5/26 Almanac

On Wednesday, May 26: Durable goods. (And today, some fairly stunning market stats.)

There are 24 days before the June options expire, 52 the July and 87 the August.

On the jump, market stats, econ reports, trading calendar and a good book...

5/25 Forex: Euro ghost signals

I've often remarked in these columns about the sad tendency of Person's Proprietary Signal to disappear in the middle of the day: Now you see it, now you don't.

The pps bear phase on EUR/USD and EUR/GBP is playing "now you don't" at this point, having disappeared as the euro retraced its decline back up to near it's opening levels.

No guarantees, of course, on whether the ghost signals will reappear before day's end. But at present, both pairs remain in an unconfirmed pps bull phase.

NLY Watch

Annaly Capital Management Inc. (NLY), a dividend play yielding 16% a year, has again moved into bulll phase on the macd, this time with far greater conviction.

Yesterday NLY showed an anemic bull phase, and then pulled back, ending the day a hair's breadth below the zero line.

CAG Watch

ConAgra Foods Inc. (CAG) has flipped into bear phase on the macd today. The signal's direction is in line with a downtrend that began on March 23.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
CAG $23.72

At 1:00 p.m. Eastern

In a broader sense. CAG has been on the upswing since December 2008, tracing a series of higher highs and higher lows. It would take a decline below $22.19 to break that uptrend.

5/25 Forex: Euro Bear Signals

Person's Proprietary Signal has switched to bear phase in the euro against the U.S. dollar (EUR/USD) and British pound (EUR/GBP). Neither signal has been confirmed.

The switch comes after an unconfirmed bull whipsaw lasting two days in the case of EUR/USD, and three in the case of EUR/GBP.

5/25 Morningline: Other Indicators

Among the other indicators I follow, it's like going to a beach party when you're high school. You know the class drunk will get drunk. You know the class clown will pull a stunt. You know the shy kid will hang back. You know the jocks will do dumb jock things.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
JNK $36.92
GLD $117.23
USO $31.29
EEM $35.66
EUR/USD $1.2245
USD/JPY ¥89.68

At 10:23 a.m. Eastern

5/25 Morningline: Stocks and Bonds

Blue-chip stocks have moved below the low set on Feb. 5. It's significant because it means that stocks have set a lower low in the latest broad swing in prices.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $105.43
VIX 40.79
TLT $99.20

At 10:10 a.m. Eastern

At this point it can for the first time rationally be said that stocks are setting up for a downtrend.

Treasury long-term bonds were trading down intra-day after opening up at the top of Friday's trading range.

The so-called fear index, the VIX, opened 12.6% above yesterday's close, only to retreat sharply.

NLY Watch

After moving into bull territory earlier in the day, the macd on NLY retreated and at the close was at 0.00116 below the zero line.

So the bull signal turned out to be a ghost bull, although the macd trend is still pointing up toward the zero line, and the stochastic is on the rise through the neutral zone.

My earlier posting.

5/25 Almanac

On Tuesday, May 25: Metro-area home prices, consumer confidence.

There are 25 days before the June options expire, 53 the July and 88 the August.

On the jump, market stats, econ reports, rules, my holdings and a good book...

ABT Watch

Abbott Laboratories (ABT) has been on my radar since the parabolic sar moved into bear phase on on May 6.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
ABT $47.66

At 2:42 p.m. Eastern

Tech Analysis: 200-day MA

In analyzing how technical tools have performed in analyzing SPY during the recent europanic, I left out the 200-day moving average, the true love of the long-term technical trader.

SPY gave a bull signal on June 1, 2009 by trading entirely above the 200-day moving average. The theoretical entry price, at open, would be $93.67. The exit signal came last Thursday, May 20, at $109.38, as SPY traded entirely below the 200-day moving average.

NLY Watch

One of my favorite dividend plays, Annhaly Capital Management Inc. (NLY), has moved into phase on the macd, albeit a bit anemically: Only 0.01% above the zero line, and a downward trend.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
NLY $15.94

At 1:24 p.m. Eastern

So, by my rules it would not be a directional play. However, a 16% annual dividend yield on this real-estate investment company can overcome a lot of technical angst.

FNM Watch

Fannie Mae (FNM) has hit the nine-month swing low of 88¢ two trading days running. That price was a strong bounce point when it was touched on Nov. 30, and Friday was the first time it has been touched since then.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
FNM $0.94

At 12:05 p.m. Eastern

In the 35% decline from the April 13 swing high, FNM has sliced through two Fibonacci retracement levels like butter, not to mention the once sacrosanct 99¢ support level.

A review of prices shows that technical analysis would have kept the savvy trader safe from most of the pain.

Private Trader Changes

I'm making some changes to my routine on this market letter.

First, I'm ditching the parabolic sar in favor of the macd zero-line crossover, with a 0.2 threshold, as my principal signal. The other requirements -- a strong trend, trading with the trend and avoiding earnings announcements -- remain unchanged.

Second, I'm changing my measure for the direction of the trend from the 5-day simple moving average to the 14-day exponential moving average. This brings the period analyzed into line with the tool I use for determining trend strength, the average directional index.

5/24 Forex

There are no new Person's Proprietary Signal phase switches on the 16 currency pairs I follow.

5/24 Morningline

Narrow trading with the exception of the euro, which is falling sharply against the U.S. dollar, and the VIX, down sharply, suggesting the recent europanic has indeed been excised, or at least gone into remission.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $108.80
VIX 37.33
TLT $98.56

At 10:58 a.m. Eastern

Limits of Technical Analysis

The recent market panic challenged technical analysis, with whipsaws and large moves that sent the heart pounding, and not in a good way. In this study I look at how the technical tools that I use fared during  the market panic.

In this discussion I'll look at SPY, the exchange-traded fund that tracks the S&P 500 and that is always one of the most-traded issues in the markets. At the end of the piece, I present tables showing the net gain and loss for the technical indicators I've been using.

Which indicator did best? It was a surprise.

5/24 Almanac

On Monday, May 24: Existing home sales.

There are 26 days before the June options expire, 54 the July and 89 the August.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/21 Watchlist: Forex

Added EUR/USD to the bull list.

Person's Proprietary Signal analysis:

Confirmed, bull:

• EUR/GBP, 5/20. In@ £0.8577.
• EUR/USD, 5/21. In@ US$1.2490. New today.

Confirmed, bear: None.

5/21 Watchlist: Stocks

The recent declines have wiped out the Watchlist, leaving only one bear position. I'll be putting together a paper this weekend on where I go from here, in light of the total failure of the technical indicators in the face of a massive news and policy panic.

"In@" is the price at which the signal was opened.

One stock showing a parabolic sar bear signal:

• ABT, 5/6. In@ $50.01. Up to within Thursday's range.

---

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---

New to Private Trader? Check out the Reader's Guide. New to private trading? Here's a look at How to Become a Private Trader.

5/21 Forex: EUR/USD

The euro-dollar currency pair (EUR/USD) switched to bull phase on Person's Proprietary Signal today.

The euro has been rising against the dollar for three days following an steep decline that pushed it well below the lower Person's Pivot, and it is still trading below the pivot today.

The pair closed above the pps moving averages on Thursday, and today opened well above the averages, which counts as confirmation.

5/20 Morningline: Other indicators

The more specialized indicators are lit up bright green this morning, with the exception of gold, which is declining a bit. Their prices are up, but by under 2%. Still, it's a sign that the panic phase might be coming to an end.

The euro, said to be the culprit in the whole panic event, was showing bull phase on Person's Proprietary Signal in trading against the U.S. dollar. The pps does have a tendency to give disappearing ghost signals from time to time, it is true. However, bull phase brings it into line with the parabolic sar, which moved to bull phase on Thursday.

Just as Robert Frost wrote that good fences make good neighbors, it can be said that a happy euro makes good markets. It's a testable hypotheses, and we shall soon see.

For 401(k) and IRA Investors

For mutual fund holders, note that the S&P 500 (as traced in the exchange-traded fund SPY), has pierced below an upward-pointing 12-month moving average, before retreating above it.

A monthly close below the 12-month moving average would signal that it's time to move money out of an S&P500 mutual fund and into cash.

Under the rules, the entry signal on July 31 would have gotten you into the S&P 500 fund at $87 on SPY. An exit this month at $107, just below the moving average, would let you exit with a 20% profit in 10 months.

Not too shabby at all, considering that we're talking about long-term trading in vehicles that discourage active management of your funds, especially retirement funds in a 401(k) or IRA.

5/21 Morningline: Stocks and Bonds

Blue-chip stocks have gapped down again at the open and are trading below Thursday's close, but are rising intra-day. This is options expiration day, which generally imparts at least a slight upward spin to the markets. Today -- all bets are off.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $107.03
VIX 44.55
TLT $98.53

At 9:58 a.m. Eastern

Treasury long-term bonds are trading higher with a rather striking downward bias intra-day.

On the jump, I'll be discussing today's signals, but also taking a decades long view to try to understand just how ugly it can really get. (Sneak Preview: Pretty ugly.)

5/21 Almanac

On Friday, May 21: Last day to trade May options.

Friday is the last trading day for May options. There are 30 days before the June options expire and and 57 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/20 Watchlist: Forex

Added EUR/GBP to the bull list. Two successful exits.

5/20 Watchlist: Stocks

Think of the back of baby duck, covered in down, and you'll have the theme of today's Watchlist.

Everything is down. The least down is ABT on the bear list. The most down is PCAR on the bull list.

5/20 Forex: EUR/GBP

The EUR/GBP currency pair shows a switch to bull phase on Person's Proprietary Signal.

After opening above the pps moving averages, the price briefly dipped below, and then retreated upward, which counts as confirmation.

Theoretical entry, then, is at £0.8577, and the upper Person's Pivot is at £0.8873.

The prior bear signal was given on April 15 and confirmed the next day, for theoretical entry at £0.8758. The nimble trader would have exited when the lower pivot was touched on May 6, or perhaps the next day, for exit at around £0.8440 at a 3.6% profit.

5/20 Morningline: Other Indicators

Other indicators are also showing wide moves this morning, with the exception of gold, oddly, which has barely budged.

Corporate high-yield bonds, oil and emerging markets down more than 3%; and the dollar-yen exchange rate, down nearly 2%.

The euro, said to be the culprit behind all the drama, is down about half a percent against the dollar.

5/20 Morningline: Stocks, Bonds and Fear

Yesterday I posed the question, would the U.S. markets respond to the euro, which affects finance and exporters to Europe, or to the U.S. domestic recovery, which affects everyone.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $109.77
VIX 40.59
TLT $98.18

At 9:55 a.m. Eastern

And the answer is (drumroll) . . .

5/20 Almanac

On Thursday, May 20: Weekly jobless, leading indicators.

There are 2 days before the last trading day for May options, 30 the June and 58 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/19 Scan

Few new bull phase switches in today's scan, but many to the bear side.

5/19 Watchlist: Forex

Added EUR/CHF to the bull list. Exited two: One success, one failure.

5/19 Watchlist: Stocks

No new additions to the Watchlist as I evaluate my analytical methods in light of Friday's market-wide whipsaw, which devastated the Watchlist. I discussed the way forward in a posting on Sunday.

Bottom line: The parabolic sar (psar) is broken. The Person's Proprietary Signal (pps) is not. See details below.

5/19 Forex: EUR/CHF bull signal

The euro rose sharply against the Swiss franc (EUR/CHF), trading 1.2% above Tuesday's close. The move triggered a switch to bull phase on the Person's Proprietary Signal.

I'll use SF1.4140 as the bull-phase entry point, the price as of this writing.

5/19 Morningline

Blue-chip stocks opened below Tuesday's range but then moved up. Treasury long-term bonds opened at the top of the range and moved nowhere.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $112.73
VIX 33.13
TLT $96.01

At 9:53 a.m. Eastern

Gold was down 1.5% from Tuesday's close, and the euro was up 0.8% against the dollar, the two big movers at the opening.

5/19 Almanac

On Wednesday, May 19: Consumer inflation.

There are 3 days before the last trading day for May options, 31 the June and 59 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/18 Scan

Again, few new phase switches in today's scan, marking the tentative nature of the market movements this week after the prior week's drama.

I won't be doing individual write-ups this week as I continue to assess my rules in light of the brief May 6 software-driven collapse in stock prices and the longer-term decline cause, it is said, by worries about the euro.

My current rules are these:

5/18 Forex

No new phase shifts in Person's Proprietary Signal (pps) on the 16 currency pairs that I follow.

5/18 Morningline

Friday's trading range continues to bound prices of the major indicators this morning. Gold, trading lower, is the exception, as it shows a new bear-phase this morning on the parabolic sar.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $114.94
VIX 28.38
TLT $94.81

At 9:45 a.m. Eastern

Blue-chip stocks continue to show a divide between a bull-phase parabolic sar and a bear-phase Person's Proprietary Signal. Treasury long-term bonds show the opposite division: A bearish psar and a new, tentative bull-phase switch on the pps, a retry of Monday's ghost signal.

5/18 Almanac

On Tuesday, May 18: Producer inflation, housing starts.

There are 4 days before the last trading day for May options, 32 the June and 60 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/17 Watchlist: Forex

Added AUD/NZD to the bull list.

5/17 Watchlist: Stocks

No new additions to the Watchlist as I evaluate my analytical methods in light of Friday's market-wide whipsaw, which devastated the Watchlist. I discussed the way forward in a posting on Sunday.

5/17 Scan

Very few signals in the scan today. I won't do individual write-ups until I've competed my re-evaluation of my methods for analyzing stocks. Nor will I add anything to the Watchlist.

See the posting "What Next?" from Sunday for a discussion of Friday's carnage.

5/17 Forex: AUD/NZD

The Australian dollar/New Zealand dollar currency pair (AUD/NZD) has switched to bull phase on Person's Proprietary Signal.

The price today dropped below and then moved above the lower Person's pivot at NZ$1.2518.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AUD/NZD NZ$1.2555

At 10:03 a.m. Eastern

The forex pair had shown a bull signal on Friday, which closed out the Watchlist signal. As is not uncommon with the Person's signal, the signal disappeared and now has reappeared.

5/17 Morningline

All indicators are trading narrowly within Friday's range. It's the usual stunned reaction after a major, somewhat devastating move. Oil (USO) is the exception, trading below the range.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $114.26
VIX 31.06
TLT $94.78

At 9:45 a.m. Eastern

If traders were rational beings, then the large move would have happened for rational reasons, and the next trading day, we would all move on, unstunned, to the next set of rational decisions.

It doesn't work that way.

What Next?

Friday's whipsaw across the markets left my Watchlist in shambles, and the whole method of technical analysis that built it without credibility.

I'm fact-based trader. My definition of insanity is doing the same thing over and over expecting it will produce a different result.

5/17 Almanac

On Monday, May 17: International capital, housing markets

There are 5 days before the last trading day for May options, 33 the June and 61 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/14 Watchlist: Forex

Added EUR/CHF to the bull phase.

5/14 Watchlist: Stocks

OK. Euro II: The Sequel. The market moved broadly lowered today. And by broadly, I mean BROADLY.

Nearly all of the bull signals of the the last two weeks were reversed as Person's Proprietary Signal (pps) moved into bear phase. It send to lead the parabolic sar (psar), and so I use it as a skedaddle signaller.

My scan of all optionable stocks having 3 million share or more in volume (and priced at $5 or more) shows only 40 or so at this point with price increases.

The pps bear signals came on sharp price drops that wiped out all gains and put the stocks into losing territory

DISH Watch

The satellite TV program distributor DISH Network Corp. (DISH) shows a parabolic sar bull signal after an appeals court reversed a patent ruling favorable TiVo in a lawsuit brought by DISH and others.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
$23.19

At 12:19 p.m. Eastern

The DISH price bumped 10% over Thursday's close before giving up nearly half of that as the initial exuberance faded. (I presume because people actually read the ruling -- what a concept!)

DDS Watch

The retailer Dillard's Inc. (DDS) is showing bull phase on the parabolic sar after earnings were announced this morning. The price is up 12% over Thursday's close.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
DDS $28.73

At 11:21 a.m. Eastern

Normally I would avoid a stock that shows such a rise on news. I mean, the word is out. The joy is already in the price of the stock. Where's the chance for profit?

DDS is an exception, in my book, for these reasons:

YHOO Watch

The media company Yahoo! Inc. (YHOO) has moved to bull phase on the parabolic sar. The shift in the technical signal has not yet been confirmed by a price move.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
YHOO $16.44

At 10:33 p.m. Eastern

An analyst report this morning rated YHOO as a buy.

5/14 Forex

The forex trends have certainly been consistent, despite all the euro excitement. No new phase shifts in Person's Proprietary Signal (pps) on the 16 currency pairs that I follow.

AUD/NZD, which has been been in bear phase on the pps since April 23, is showing a new parabolic sar bull signal this morning. The pps, however, has not yet followed.

5/14 Morningline: Other Indicators

In other indicators, everything is down except gold, which is up just a bit. Crude oil is down by a full 2%. High-yield corporate debt -- junk bonds -- is also down, by more than a percent.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
JNK $38.24
GLD $121.22
USO $35.53
EEM $39.66
EUR/USD $1.2447
USD/JPY ¥92.28

At 10:12 a.m. Eastern

This is the same pattern that held sway in the markets during the period of maximum fear of a Greek default on sovereign debt.

5/14 Morningline: Stocks and Bonds

Fresh europaranoia in media reports this morning. Blue chip stocks (SPY) are trading down by more than a percent, below the range set after the May 6-7 mini-panic and mini-collapse.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $114.18
VIX 30.78
TLT $94.64

At 10:01 a.m. Eastern

The fear index (VIX), which measures the volatility of blue-chip stocks, is up by 15% or so. Treasury long-term bonds (TLT) are also up by more than a percent.

5/14 Almanac

On Friday, May 14: Retail sales, industrial production, consumer sentiment.

There are 8 days before the last trading day for May options, 36 the June and 64 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/13 Watchlist: Forex

In the forex Watchlist, no exits, no new signals.

5/13 Watchlist: Stocks

Four stocks added to the bull signal list. No exits. Many pullbacks while remaining within Wednesday's trading range.

5/13 Scan

As always these days, it's difficult reading trend strength using the average directional index. Blame the May 6 mini-panic, which poisoned that and some other indicators.

Plan B is to use the macd as a backup directional signal (since it only uses closing prices, not intra-day highs and lows, and so wasn't poisoned by the panic), and to 20-day moving average (of closing prices) as a trend strength indicator (also direction).

These meet my criteria for a bull play, but I don't like the trend indicators.

Gambler's Fallacy

Investopedia's definition of the day is "Gambler's Fallacy", a subject that ought to be of intense interest to any self-aware technical trader.

NFLX Watch

The movie rental company Netflix Inc. (NFLX) shows a parabolic sar bull phase on a sharp price rise that continues an uptrend that began in October 2008, and the most recent swing up that began last January.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
NFLX $115.74

At 11:05 a.m. Eastern

The thing not to like about NFLX is that it has gone so far so fast. The price has doubled since the beginning of March. That leaves most traders scratching their heads and saying sagely, "Well, it's already had its move."

F (Ford) Watch

Ford Motor Co. (F) is showing a bull signal on the parabolic sar after the automaker's executive chairman, Bill Ford, said the board would make reinstating the dividend a top of discussion.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
F $12.84

At 10:48 a.m. Eastern

The amorphous prospect of a dividend discussion in the sweet bye-and-bye caused a 1.5% gap up at the open, but otherwise the price went nowhere.

EBAY Watch

The online auction service eBay Inc. (EBAY) is showing a parabolic sar bull signal on a 2.9% gap up at the open. The price bump followed analyst upgrades and assorted happy talk.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
EBAY $23.08

At 10:33 a.m. Eastern

JNK Watch

High-yield corporate debt (JNK) are showing a bull signal on the parabolic sar. The exchange-traded fund, which tracks junk bonds, had been trading sideways for nearly three months before a May 4 break sent the price downward by 8.3% in less than a week.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
JNK $38.96

JNK was pushed even lower by the mini-panic of May 6. I'm ignoring that low in my analysis, for reasons set forth in the two Skynet Panic essays listed at the end of this analysis.

JNK is mainly a dividend play. It pays monthly with a current yield of about 9.7%. The next ex-dividend date is June 3.

5/13 Forex

There are no new phase switches from Person's Proprietary Signal on the 16 forex currency pairs that I follow.

5/13 Morningline

Blue-chip stocks (SPY) and Treasury long-term bonds (TLT) were trading narrowly this morning, stocks down and bond prices up, both by very samll amounts.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $117.21
VIX 25.86
TLT $93.21

At 9:49 a.m. Eastern

5/13 Almanac

On Thursday, May 13: Weekly jobless claims, Big Ben.

There are 9 days before the last trading day for May options, 37 the June and 65 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/12 Watchlist: Forex

In the forex Watchlist, no exits, no new signals.

5/12 Watchlist: Stocks

Four stocks added to the bull signal list. No exits. All Watchlist stocks are behaving in line with their signals.

5/12 Scan

This was a difficult scan to deal with. The average directional index (adx), which I use to gauge the strength of trends, isn't providing clear guidance. I've had to alter one of my tools to accommodate the problem.

Here's what I've done:

IYR Watch

The exchange-traded fund that tracks real estate, IYR, is showing a parabolic sar bull signal, which is line in with a fairly messy uptrend that began in March 2009 and marking, perhaps, the resumption of an upswing that began last February.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
IYR $53.65

At 2:55 p.m. Eastern

I call the uptrend "messy" because IYR has been prone to repeated phase switches: Eight of them show on the three-month daily chart, with the shortest being two days only.

SPY Watch

The exchange-traded fund that tracks the S&P 500, SPY, is showing bull phase on the parabolic sar.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $117.24

At 2:25 p.m. Eastern

The signal is in line with uptrend that began in March 2009 at $67.10, and a near term upswing that began Feb. 5 of this year at $104.58. The swing high, on April 26, was $122.12.

GCI Watch

The largest U.S. newspaper chain, Gannett Co. Inc. (GCI), is showing bull phase on both the parabolic sar and Person's Proprietary Signal.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
GCI $17.06

At 11:03 a.m. Eastern

A new upswing would continue the price rise that began in March 2009 at $1.85. The stock is now trading around $17.

INTC Watch

The semiconductor behemoth Intel Corp. (INTC) shows a bull phase this morning on Person's Proprietary Signal, a day after the parabolic sar turned bullish.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
INTC $22.80

At 10:51 a.m. Eastern

The signals can be interpreted as marking the resumption of a sometimes choppy rise that began in February 2009 and that doubled the price of the stock, and of the more immediate rise that began in February of this year.

5/12 Forex

There are no new phase switches from Person's Proprietary Signal on the 16 forex currency pairs that I follow.

I'm starting to miss the Greek Debt Crisis. It might have been costly to traders on the wrong side of the euro, but at least it was interesting.

5/12 Morningline: Other Indicators

In other indicators, even gold is barely budging after Tuesday's run-up to an all-time high. All of the indicators I follow (except for Treausry long-term bonds) have a slight upward bias.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
JNK $38.77
GLD $121.19
USO $36.84
EEM $40.51
EUR/USD $1.2680
USD/JPY ¥93.07

At 10:01 a.m. Eastern

5/12 Morningline: Stocks and Bonds

Boring trading morn'.
Stocks and bonds do spin in place.
Nothing goes nowhere.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
SPY $116.35
VIX 26.20
TLT $93.12

At 9:49 a.m. Eastern

5/12 Almanac

On Wednesday, May 12: International trade.

There are 10 days before the last trading day for May options, 38 the June and 66 the July.

On the jump, market stats, econ reports, rules, my holdings and a good book...

5/11 Scan

Today's scan was complicated by problems in determining whether a signal bull is with or counter to the prevailing trend.

The depth of the downward correction the past week has confused the issue to an incredible extent, and has distorted the trend measure tool, the average directional index, that works so well in less volatile times.

5/11 Watchlist: Stocks

Three stocks added to the bull signal list. No exits.

5/11 Watchlist: Forex

In the forex Watchlist, no exits, no new signals.

CIEN Watch

Ciena Corp. (CIEN) is in its third day of trading within a range, bounded by two lines in a Fibonacci grid that measures downwrd retracement of the rise from $10.53 on Dec. 18, 2009 to $19.48 on May 3, 2010.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
CIEN $16.81

At 3:20 p.m. Eastern

The stock is trading between the 23.6% line at $17.37 on the high side and the 38.2% retracement at $16.06 on the low side.

QQQQ Watch

The exchange-traded fund that tracks the Nasdaq, QQQQ, shows a parabolic sar bull signal after a gap up at Monday's open and then range trading for two straight days.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
QQQQ $47.80

At 3:04 p.m. Eastern

The bull signal is in line with an upward trend that began in November 2008, and with the most recent swing that began in February last.

(Note that DIA is also showing a psar bull signal, with similar price patterns.)

The chart and the technicals are a bit bizarre, as seems to be the case throughout the markets these days.

BBY Watch

The electronics retailer Best Buy Inc. (BBY) shows a parabolic sar bull signal on a price increase that has brought it to just below the 20-day moving average and around 8% above the recent low.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BBY $44.61

At 2:44 p.m. Eastern

This stock forces the trader to focus on the concept of "trend". We all know that an uptrend is a series of higher highs and higher lows. But when is the present uptrend considered to be with the larger trend, and when is it countertrend?

A tough call in this case.

BBT Watch

The banking company BB&T Corp. (BBT) is showing a parabolic sar bull phase on a price increase that is approaching the most recent swing high.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BBT $34.81

At 2:27 p.m. Eastern

A persistent push past $35.40 would confirm that th euptrend has indeed resumed. The most recent increase began in late February.

ARM Watch

The auto component maker ArvinMeritor Inc. (ARM) shows a parabolic sar bull signal that is aligned with an uptrend that has been in place since March 2009.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
ARM $16.22

At 2:14 p.m. Eastern

ARM, in line with the rest of the market, corrected during the first half of May, with its lowest close around 14% below the highest high.

MCO Watch

Today's New York Times has an disturbing read about Moody's (MCO) and what happened after the SEC gave notice it was investigating the credit rating company.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
MCO $21.75

At 10:58 a.m. Eastern

Although the SEC Wells Notice was first publicized on Monday, the SEC actually provided notice to the company on March 18, nearly two months ago.

5/11 Forex

No new Person's Proprietary Signal phase switches in the 16 currency pairs that I follow.

5/11 Morningline: Other Indicators

Gold alone (GLD) is on the rise this morning, trading 1.9% above Monday's close. Among the sliders, only emerging markets (EEM) is down by more than 1%.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
JNK $38.70
GLD $119.74
USO $37.15
EEM $40.25
EUR/USD $1.2745
USD/JPY ¥93.73

At 9:55 a.m. Eastern

The more specialized indicators that I follow, just like stocks and bonds, are going nowhere fast, but they are learning toward the downside.