Category Archives: Sentiment

Margin Debt Redux

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The following was kindly contributed by Paul from Maine……..

I’ve been fiddling with some numbers in Excel and thought you’d find it interesting. It concerns the correlation of NYSE margin debt with the S&P 500.

Margin gives investors and traders the opportunity to borrow money in order to enhance their returns. NYSE margin debt concerns the aggregate value borrowed by all participants utilizing that particular exchange.

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VIX’s Bollinger Band and the S&P

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Below is a chart that shows a nice correlation between the price action of VIX and SPY and their 20, 2 Bollinger Band. What the chart shows is that typically when the VIX hits the upper level of its Bollinger band along with SPY hitting the bottom of its BB, it marks a low in the market and a bouncing point. It is same on the opposite side of the Bollinger Band, so when VIX touches the bottom of its BB and SPY touches the top, this marks a top in the market.

VIX touched the touch of its BB yesterday but SPY did not. This pattern usually jump starts when both hit the BB and the VIX will typically hover around its BB for 2 – 4 candles. For SPY to hit its BB it would need to get to 203.38, which is right around the March lows. This correlation is pretty strong and it shows there is some potential for further downside but it is limited. Plus our signal is flashing oversold I know not music to Slopers ears so be careful!

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Duck, Duck, Goose

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Wednesdays before expiration (especially on FOMC days) are special days.

Volume is split between 2 contracts.  We have stops getting killed on both sides of indecision, and then a lot of chop, chop, slam….  chop, chop, slam….  It reminds me of the old Duck, Duck, Goose game.  Only this time, retail stops are left holding the bag and can’t find a chair or get a break.

The witching hour appears to be the hour going into oil pit close.

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Crude Market Forecasts

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The news scams and crude market forecasts are becoming even more crude.
You can read last week’s Bloomberg article quoting the helpful folks at GS here:
Bloomberg: Goldman Says $40 Oil Call May Be Too Low as Demand Surprises

Then, you can enjoy this chart showing what appears to be a nice Distribution Zone, followed by a 10+ sigma, 7-handle move to down.  Please enjoy the custom selected colors:

Crude Reality

Long live 50s!   Errrr…. 40s!

If you really wanna have a blast, join the fun at #RigCountGuesses.

Where’s the Fear?

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The market has fallen a little over 3% since it hit its highs and in the new bull fed supported market this is considered a crash, there is an overall lack of fear this decline compared to the last declines. Looking at the chart below you can see that the VIX index rallied at least 40% before the market bottoms. The stepper the decline the larger the drop but on average the VIX climbed 86%. So where are we now. Well the market has declined around 3.9% and the VIX has climbed about 35%. So what does this all mean, well it means there is a strong possibility that the market has another 2-3% decline and the VIX has another 5%-10% rally before we can start thinking a bottom has been put in. Of course the markets can prove us wrong but history does repeat its self. Click the chart to zoom in. (more…)

Still Crude: EIA, EIA, oh

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Old MacDonald had an oil farm, E-I-A, E-I-A, Oh!
With a stop run here and a stop run there,
here a stop, there a stop, everywhere a retail stop, E-I-A, E-I-A, Oh!

Wednesdays are Prince Spaghetti Day.  They are also when the US Energy Information Administration releases its weekly petroleum status and crude oil inventories (except during holiday weeks).  Check out the last 3 EIA news scam days.

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