And here’s the SPX chart with all the indicators.
Short-term, somewhere half-way between oversold/overbought, but longer term (top stochastics) shows that the index may drop further.

End of transmission

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Click to enlarge

And for comparison, here’s the $SPX Chart for the same period

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There have to be some people who have been waiting for the last 4 years to break even. Wonder if they’ll leave the market once they get there, or will they decide that “markets always go up over time, might as well stay in”? Anyway, looks like that point is relatively close.

Click charts to enlarge

1-Year Chart

5-Year Chart

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Click to enlarge

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$BKX, Bank Index

This is in a very ugly territory. It hasn’t been this bad since the start of the 2008-09 “event”.

$BPNYA, NYSE Bullish Percent Index

Crazy sharp drop. Once again, hasn’t been this bad since ’08-09.

$BPSPX, S&P 500 Bullish Percent Index

Same as above

$NYSI, NYSE Summation Index

It’s in the negative territory (dotted line), but I’m most interested here in how it correlates to market prices. It’s pretty good for showing direction but not the size of the move.

$VIX, Volatility Index

An obvious inverse relationship here.

Looks very choppy, sort of a deciding moment.

I think most of these indicate there will be 4-12 weeks of basing action and a continuation of the bull market, but wouldn’t bet real money on it.

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Investors have heard many decry the decade of the 2000s as the “lost decade.” A dollar invested in the S&P 500 on the first trading day of 1999 saw it worth just 65 cents a decade later (3/31/09 is our cutoff point). This “underperformance” is seen by many as a failure of the U.S. economic engine.

If we look at the Top 20 performers of the S&P 500 during that same time period, we see a vastly different story. Instead of a 35% loss during that time, the Top 20 earned an average 426% return in stock price, excluding dividends. What accounted for this differential performance during this “lost decade?”

The rest is kind of TLDR, but if you’re curious, the source:
Lessons from S&P Recession Survivors [PDF]

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Immediately above is a weekly chart of the SP500 holder SPY with the daily dates most of the major lows and highs labelled. Click on it to zoom-in on this chart.

As you can see, it is not uncommon for a major low or high to fall between the 18th and 24th of the month with a focus on the 21st. Many believe this takes place due to the changing psychology of investors and traders as per the zodiac annual cycles every 21st of the month http://en.wikipedia.org/wiki/Zodiac.

In any case, whenever the market is making a major swing low or high into the time period of the 18th to 24th of the month, I am always on the look out for a big turn. Since the market began crashing following the May 19, 2008 top, there have been two instances where prices had the opportunity to make a major swing low into the 18th to 24th time period. These were Sep 18, 2008 and Oct 24, 2008 which resulted in 12% and 20% rallies respectively. I think this Friday Nov 21st low has a much better than even chance of producing a +25% rally.

Source: Market Karma

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• $$ 2009 Bradley Turn Dates

• This morning Japan is still coming to terms with the scale of destruction following Thursday’s deadly earthquake. The Bank of Japan has stated that it is ready for some thoroughly considered actions to help the country recover. This is thought to include both traditional and non traditional monetary policy steps to help get the country back on its feet. The central bank is also thought to be keeping an eye on the ‘wolves’ in the currency markets who may be looking to short the yen aggressively. This highlights the possibility of direction intervention from the Bank of Japan in forex markets.

• As to be expected, volatility abounds with the yen swinging widely in illiquid early Monday morning session. The USD/JPY is currently trading higher, but with the Bank of Japan keen to defend the yen the picture will remain unclear for some time. This is especially the case with aftershocks still hitting parts of Northern Japan and reports of further explosions at the Fukushima Daiichi nuclear plant.

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• The EUR/JPY is trading higher by 0.51%, as the stronger euro pushes against the weakening yen. The euro is showing broad based strength outside of this pairing though with the EUR/GBP up 0.47% and the EUR/USD up 0.25%.

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• The euro is pushing higher after European leaders surprised with a general agreement to extend the size and scope of the European Stability Mechanism. In return for selling off nationalised assets such as Hellenic railways and Thessaloniki water, Greece will have its interest charge cut by 1% to just above 4%. A similar deal was offered to Ireland to reduce its crippling 6% bailout loan, but the Dublin government has refused to accept the condition of increasing its corparate tax rate above 12.50%. Some euro skeptics including the Telegraph’s Evans-Pritchard see the deal as a subjugation of peripheral nations that will only heighten tensions in the periphery.

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• Markets seem impressed for now. JP Morgan raising its rating for European banks this morning.

• The weaker yen and receding oil prices are helping to push money back into the US dollar, with the AUD/USD and NZD/USD down by 0.5% each this morning. With Japan and acting as an important trading partner for these nations, the Australian dollar is pushing lower ahead of the release of the minutes from the last RBA meeting tomorrow.

• Gold gapped open higher early this morning and is trading around $1427, while WTI crude prices have dropped below $100 as MENA tensions subside.

• Stock market futures point to a weaker start to the trading week, testing the gains made on Friday.

Bet Idea:

• The developing situation in Japan makes markets especially hard to read at present especially with regard to those forex pairs directly impacted by the disaster.

• Those pairs relatively unaffected such as the EUR/CHF are trading well within average volatility ranges which could present a breakout possibility. The Swiss franc is trading slightly lower on speculation that Swiss re-insurers are on the hook for large liabilities in Japan while the euro is bouncing strongly following the weekend’s surprisingly conclusive meeting of European leaders. However, Europe is rarely that simple and as the Telegraphs’ Evans-Pritchard points out, it would be no mean feat for Greece to raise 50bn euros from selling public assets, with many social, political and legal obstacles to overcome. The European banking stress test MK II also rumbles along in the background.

• So while the EUR/CHF is relatively stable this morning, there is a reasonable chance it it too could see an increase in volatility in line with the general forex market.

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One way to play this might be an IN/OUT trade predicting that the EUR/ CHF will close outside of 1.2800 or 1.3100 in 7 days time for a potential return of 105%.

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I assume that if you continue reading my blog, we’re sort of on the same wave. But when I go through these periods of singular stock focus, it must get boring or annoying pretty quickly. If I know what you like, I can serve you better (content).

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• It’s been a fairly steady, unspectacular start to the trading week with no major movement throughout the Monday Asian session. In Libya, the rebellion appears to be getting closer to deposing Gaddafi, though the leader still shows no signs of stepping down gracefully.

• The US dollar is slightly weaker in early trading with commodity heavy USD/CAD pushing to its lowest level since Feb 28th 2008.

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• The yen is also showing signs of slight weakness as investors ease their demand for safe havens. The EUR/JPY appears to be holding above support at 112.00

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• Gold is higher this morning but has retreated from its morning peak of $1416.40.

Forex trading ideas:

• It’s been a quiet start to the trading week for the Japanese yen with the USD/JPY unchanged through the Asian session. The trading calendar offers few highlights, but the geopolitical situation is still fluid so there may still be some significant activity to come today.

A good way to play this might be an IN/OUT trade predicting that the USD/JPY will close outside of 81.25 or 82.00 in 1 days time (March 1st). If successful, this could return 103%.

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