www.robertwcolby.com
Technical Market Indicators
Dow Theory, W.D. Gann, MetaStock, system tester, indicator builder, custom formulas, momentum, overbought, oversold, buy, sell, signals, top, bottom, Bull, Bear, consolidation, sentiment, contrary opinion
December 9, 2019
Stock Market: remains sensitive to unpredictable U.S.-China trade deal talks.
Preview from my weekly report*
Our asset management clients have made significantly positive absolute and relative returns while taking much less risk. We offer complete transparency, anytime access to your funds, and low fees. You keep control over your money. See: ColbyAssetManagement.com
The October-November stock market rally stalled in December. The S&P 500 index lost 2.66% over 3 trading days, declining on 12/3/2019 to its lowest price since 11/6/2019 on reports of a possible delay in U.S.-China trade deal talks--but it recovered most of that loss on reports of progress in talks.
Technically, the S&P 500 index got overbought in November at more than 3.5% above its 50-day Simple Moving Average (SMA), the upper envelope in the chart above. An overbought condition like that can be followed by a downside shakeout to 3.5% below its 50-day SMA, the lower envelope shown.
RSI and MACD price momentum indicators got overbought in November, then broke down in December. Momentum doesn't rise forever--it oscillates.
Stock market swings often exhibit similarity. The S&P 500 index rose 10.45% over 55 calendar days from 10/3/2019 to 11/27/2019. That is a fairly close match to the 10.99% rally over 53 calendar days from 6/3/2019 to 7/26/2019, which was followed by a 6.80% downside correction.
Although the Dow Jones Industrial Average rose to a higher high 11/27/2019, the Dow Jones Transportation Average did not. Such a Dow Theory non-confirmation often indicates a split market. It means that the stock market is not in gear, with its key parts not pulling together in the same direction.
Stock market sentiment has been showing an extremely high degree of overbought bullish optimism, suggesting a significant probability of a price pull-back.
The bulls continue to hope that a trade deal between the U.S. and China will improve business confidence and reverse the global decline in economic growth. The details of any trade deal appear highly uncertain, since the two sides have fundamentally conflicting interests.
Despite continuing talk about a U.S.-China trade deal, the China Large-Cap ETF (FXI) has been notably weak since 11/7/2019. On 12/3/2019, FXI closed at its lowest closing price in 7 weeks, since 10/10/2019, suggesting doubts about reaching a workable trade deal. Even after a 3-day recovery attempt last week, FXI price remains systematically bearish, below its 50-day and 200-day Simple Moving Averages (SMAs), and the 50-day SMA remains below the 200-day SMA.
Historically, stock market seasonal tendencies have been moderately bullish for the second week of December. Keep in mind that seasonal tendencies easily can be overwhelmed by news headlines as well as technical factors.
The S&P 500 remains systematically bullish for the long term, because price remains above both the rising 50-day and the rising 200-day Simple Moving Averages (SMA), and the 50-day SMA remains above the 200-day SMA. Keep in mind that trend following using moving averages always lags at price turning points.
Easy monetary policies of the global central banks have been and remain bullish for the financial markets.
Long-term U.S. stock sector rotation now shows more of a mix of Defensive and Cyclical sectors, indicating increasing investor uncertainty about long-term economic prospects. The following best-performing sectors are demonstrating the greatest trend strength: Technology, Financial, Utilities, Consumer Staples, and Real Estate.
The following sectors are relatively weak for the long term: Energy, Consumer Discretionary, Materials, Health Care, and Communication Services. With the exception of Health Care, which normally is Defensive, these Cyclical sectors tend to rise and fall in anticipation of the ups and downs of the general business and economic cycle.
Foreign (EFA) and Emerging (EEM) stock markets have underperformed U.S. stock indexes since global stock markets peaked together on 1/26/2018. Nevertheless, both are systematically bullish, because prices are above rising 50-day and 200-day Simple Moving Averages (SMAs), and the 50-day SMAs are above the 200-day SMAs. Foreign markets are important because they have led the U.S. stock market at important price turning points in recent years.
The U.S. Dollar ETF (UUP) closed below its declining 50-day SMA, so UUP is systematically neutral. UUP has whipsawed up and down, crossing its 50-day SMA several times since price peaked on 10/1/2019, suggesting a choppy, medium-term consolidation phase.
Gold (GLD), Gold Miners (GDX), and Silver (SLV) are below their declining 50-day SMAs, so they remain systematically neutral. These ETFs peaked on 9/4/2019, and their medium-term correction/consolidation phase continues.
Copper (JJCTF) price remains systematically neutral for the short term, above its rising 50-day SMA but below its declining 200-day SMA. The price of Copper is sensitive to prospects for global economic growth.
Oil (USO) remains systematically neutral, above its 50-day SMA and 200-day SMA, but with the 50-day SMA below the 200-day SMA. USO has been consolidating in a wide trading range between 7.67 and 16.27 since bottoming on 2/11/2016.
U.S. Treasury bonds (TLT) price whipsawed below its declining 50-day SMAs last week, thereby turning systematically neutral again. TLT price peaked at 148.90 on 8/28/2019, and its medium-term correction/consolidation phase continues.
U.S. Treasury notes (IEF and SHY) prices closed below their declining 50-day SMAs but above their rising 200-day SMAs, so they are systematically neutral for the medium term. Their medium-term correction/consolidation phase has continued after prices peaked more than 3 months ago, from 8/28/2019 to 9/3/2019.
$VIX Volatility Index fell to an overbought 13.62 on Friday, down from 17.99 on Tuesday 12/3/2019. $VIX Volatility Index fell to 11.42 on 11/26/2019, which was the most extreme overbought level since 4/17/2019, which was followed a -7.63% downside price correction 9 trading days later.
The AAII investor sentiment survey shows some moderation in bullish complacency, now with 31.72% Bullish, 39.16% Neutral, and 29.13% Bearish. The Bullish plus Neutral percentage exceeded 76% in November, which was among the highest levels of overbought bullish complacency in 13 years.
The Equity Put/Call Ratio is overbought at 0.53. It fell to 0.47 in November, which was one of the most extreme overbought levels in history. Options speculators typically react to the price action: when stock prices go up they trade more calls, and when stock prices go down they trade more puts. The Art of Contrary Thinking would suggest becoming more bullish as this P/C ratio rises toward extremely high levels and more bearish as it falls to extremely low levels.
The CNN Money Fear & Greed Index, now at 70, indicates overbought greed. It jumped to an extremely overbought 91 in November, its highest level in more than 2 years. For details, see http://money.cnn.com/data/fear-and-greed/
Corporate insiders (officers, directors, and major stockholders) have been selling stocks of their own companies at the fastest pace in two decades. This suggests that the 2019 stock market is the most overbought since the dotcom bubble top in year 2000, and that the long bull market in equities is reaching its final stages, according to Smart Insider.
It may be a good time to recall what happened the last 3 times the S&P 500 index rose to a new high.
1. On 9/21/2018, the S&P 500 index made a new intraday high at 2940.91, but 96 days later it had fallen to 2346.58, down 20.21%.
2. On 5/1/2019, the S&P 500 index made a new intraday high at 2954.13, but 33 days later it had fallen to 2728.81, down 7.63%.
3. On 7/26/2019, the S&P 500 index made a new intraday high at 3027.98, but just 10 days later it had fallen to 2822.12, down 6.80%.
The full report offers clear and unbiased guidance on the following each week:
Global stock markets
The Defensive stock sectors
The Health Care sector
The Cyclical sectors
The Technology sector
The Financials sector
U.S. bonds and notes
Commodities (Oil, Metals, Agriculture)
Objective Quantitative Rankings for hundreds of Exchange Traded Funds
Now is the time to take action. Preserve your capital by placing your assets under our careful management--before the next major bear market of -20% to -50% devastates most portfolios.
Make no mistake, the ongoing global economic and financial crisis has not been fixed by any sound or lasting solution. History shows that the authorities will not protect you or give you any advance warning--but we will.
If you agree that making money while staying safe is better than taking big risks in the stock market and exposing your nest egg to potentially ruinous losses, we would be very happy to implement our time-tested strategies for all of your assets. It makes good sense to choose protection--especially at this time when the financial world is stretched out of proportion.
We are always happy to discuss your goals and concerns and answer all your questions.
Call us now for a free consultation.
Please contact
Bill Anderson
by phone: 646-652-6879
or by email: anderson@colbyassetmanagement.com
*For extensive coverage of major global markets with illustrative charts, take a free trial for my weekly report --
click here.
This Technical Analysis is made possible by use of MetaStock software. Try it at no risk. (Check out the great new version XVI released May, 2018) Click this link to save 9%-10% on MetaStock® software.
11-Year Outperformance by the
Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
Please note that my ETF rankings are available by subscription--NOW WITH A NO-RISK FREE TRIAL.
See The Colby Global Markets Report (click here).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
My latest book was named one of the top investment books by Stock Trader's Almanac 2005. This book also received an excellent review in the November 2003 issue of Futures.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MetaStock® PC Software for Technical Analysis
MetaStock® is a powerful technical analysis software program for your personal computer. It offers more than 200 built-in indicators and line studies to enable you to explore a wide variety of methods. And it empowers you to build, back test, and optimize custom trading systems to suit your own particular requirements.
Click this link to save 9%-10% on MetaStock® software.
Or, click the banner below for a one-month free trial.
My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.
Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.
According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Trading and investing involve risk of significant loss. Your use of this site means that you have read, understood, and accepted my Disclaimer.
Syndicate content on these pages
Email Colby about his Custom Research, Analysis, Trading Systems Development, and Investment Strategy
Consulting Services.
Subscribe to The Colby Global Markets Report
MetaStock® technical analysis software
powers this technical analysis. SAVE 7%-9% by ordering here.
Great new version just released May, 2018.
Preview Colby's Latest Book:
The Encyclopedia of Technical Market Indicators, Second Edition, 2003.
Dow Theory Analysis
Gann Angles Analysis
Update on EMA Crossover Signals
Money Management Rules
How To Become A Top Trader.
Ranking Indicator Performance to Maximize Profit by using
"Annual Relative Advantage".
Ranking Indicator Performance by the "Profit/Loss Index".
Robert W. Colby, CMT,
is a consultant to institutional and private investors and traders, providing regular analytical reports, custom research services, and trading systems tailored to clients' objectives. Clients include the most successful traders and investors in the world. Robert is the author of The Encyclopedia of Technical Market Indicators, Second Edition, McGraw-Hill, 2003, which has become the standard reference for indicator and trading systems design. Previously, at several large Wall Street firms, Robert worked as a proprietary trader, technical analyst, and fundamental analyst. He also was adjunct professor at New York University and New York Institute of Finance, where he developed new courses on technical analysis and market timing.
Robert W. Colby is a Chartered Market Technician (CMT), an accreditation granted to members by the CMT Association (https://cmtassociation.org/) after demonstrating professional competence and ethics over a period of many years. Robert has been a member since 1980, and he strongly supports the CMT Association's high standards. He also supports the The Technical Analysis Educational Foundation (https://www.taeducation.org/about/), which works to have technical analysis included in the curriculum of major business schools.
--Bill Meridian, top-ranked investment analyst and international fund manager, www.billmeridian.com
Please click here to contact Colby directly.
Privacy Policy: Your privacy is important to us. It is strictly against the policy of this website to employ spam, popups, ad ware, or spy ware.
Copyright © 2000-2019
by www.robertwcolby.com.
All rights reserved.
Except as permitted under the
United States Copyright act of 1976,
no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of the publisher.
However, quotations are permitted, provided that full attribution is given to: www.robertwcolby.com
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ranking ETFs
"Robert Colby has evolved a system that, while hardly foolproof, is pretty clever," wrote Daniel Fisher, "Surfin' ETFs",
Forbes, Investment Guide, Special Issue, June 4, 2007.
Please click here to view this article.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTERVIEW of Robert W. Colby in Technical Analysis of STOCKS & COMMODITIES magazine, December 2006 issue.
Please click here to view this article.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"Gold's next move: History, logic, and intermarket relationships.
See if testing gold's relationship to different markets over a 32-year period provides possible trade signals for the yellow metal."
by Robert W. Colby, CMT.
Please click here to view this article.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"Which gold indicators are best? Divining gold's next move."
by Robert W. Colby, CMT.
Please click here to view this free article.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"Applying the Relative Strength strategy to ETFs."
by Robert W. Colby, CMT.
Please click here to view this free article..
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
"PUTTING CANDLES TO THE TEST, How Profitable Are They Really?"
by Robert W. Colby, CMT. Published in SFO, STOCKS, FUTURES AND OPTIONS MAGAZINE, Volume 5. No. 8. August 2006, pages 91-94. Please click here to buy this article. (Scroll to bottom of linked page.)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TradingMarkets.com interviewed
Robert W. Colby, CMT.
View the entire interview online.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Active Trader magazine September 2004 interviewed Robert W. Colby. 4 pages. "Robert W. Colby: Technical collector. A discussion with Robert W. Colby about technical trading and his revised Encyclopedia of Technical Market Indicators, Second Edition. By Active Trader Staff."
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For information about
methods
that would have performed substantially better than systematic trend-following in back-testing simulation dating back 32 years, email me by clicking on the following link:
Please click here to contact Colby directly.
Click here for a simulated performance graph of one of my trading systems applied to a stock price index.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MetaStock® PC Software for Technical Analysis
MetaStock® is a powerful technical analysis software program for your personal computer. It offers more than 200 built-in indicators and line studies to enable you to explore a wide variety of methods. And it empowers you to build, back test, and optimize custom trading systems to suit your own particular requirements.
Great new version just released May, 2018.
Click this link to save 7%-9% on MetaStock®
software.
Or, click the banner below for a one-month free trial.
