Let’s post a charting event that you should keep in a notebook as a reference.   It is an event that happened a little less than a year ago on July 27, 2011.

It was a day where 5 out of 5 indicators on our Multi-Model went to a negative trending condition.  Eight trading days later, the NYA Index had fallen -14.32% and 1,167 points from the July 27 point from where it started.

I will go through this chart briefly explaining what happened to each indicator on that day:

1. The Accelerator had a negative cross-over with the red trend line falling below the blue trend line.  That meant that market Deceleration was about to happen.

2.  At the same time, the Inverted data on the Institutional Selling Action had a negative, down trending cross over.  This meant that Institutional Investors were starting a new short term trend of Selling.

3. Our MACD-C indicator had a tick that fell under the blue trend line.

4. The Inverted NYSE Declining Volume was negative and trending lower.  That meant that the daily Declining Volume was starting a trend that was to grow larger and larger in its daily amounts.

5. Our short term C-RSI (zero based Relative Strength) went negative and below the 30 CRSI level.  Both were negative and trending lower.  That meant that two different strength periods had gone negative, and between the two, a negative trend was starting.

That is what happened on July 27th. of last year … all 5 indicators showed a down condition at the same time.   Eight days later, the NYA Index was 14.32% lower.

Note: The red vertical line marks July 27th. where all 5 indicators had a negative condition.  Do note what happened after that in August.  If you look at the blue lines under each indicator, you will see that they were going up while the NYA Index was still heading lower.   That represented a condition where 5 positive divergences were building at the same time.    After October 4th, the positive divergences kicked in and the market started a nice upside rally. (This chart is updated daily in Section 2, Chart 4 of the Standard subscriber page.)

In this chart (see below), we plot the amount of daily Institutional Buying as a blue line, and we plot the daily amount of Institutional Selling as a red mountain chart.  By doing so, investors can quickly see if there was more buying or selling on any given day.

The important events happen when the lines have cross-over’s.  When the Buying is higher than the Selling, it tell’s you that Institutional Investors were in Accumulation and that is Bullish for the market.

When the Selling is higher than the Buying, then Institutional Investors are in Distribution and that is Bearish for the market as you can see on the chart.

The market will be excited today after the Apple news, however … as you can see, Institutional Investors were still in Distribution yesterday.  Unless the good Apple news convinces Institutional Investors to move back into Accumulation, any up movement will fizzle to the downside.

]]> http://www.stocktiming.net/daily-amount-of-institutional-buying-and-selling-activity/feed/ 0 http://www.stocktiming.net/institutional-core-holding-stocks/ http://www.stocktiming.net/institutional-core-holding-stocks/#comments Wed, 11 Apr 2012 23:46:48 +0000 Marty Chenard http://www.stocktiming.net/?p=865 Today, let’s take another look at the Institutional “core holding stocks” held by Institutional Investors again.

Since they control over 50% of the stock market, what they do is relevant to all of us.

Today, we will show two charts one long term, and the other a close up as of 10 AM today.

The first chart show’s the long term picture of the core holdings held by the large Institutional Investors.  Note that the peak was made in early 2000, after which the core holdings descended and went into a down trend.

The big question in debate now, is whether the Institutional Index has started a new long term Bull market up trend or not?

The question is raised because the Institutional Index of core holdings has broken above its 12 year resistance line.  Now, see the next chart …

This next chart is simply a close up of the above chart as of 10 AM this morning.   d

Note that the Institutional Index was still above its long term resistance in spite of yesterday’s market action.

Is there anything special about 2012?    There could be … it turns out that, for decades, election years have shown stock market up moves with an average increase of 7.3%.    Already, as of March 19th, we say an 8.33% rise, so arguably it was getting ahead of itself.

So, this is still a bullish profile that won’t be undone unless we see our daily Inflowing Liquidity levels move down to Contraction territory.  Right now, Inflowing Liquidity dropped again yesterday, but at the same time Inflowing Liquidity was still in our high Expansion Quadrant 1 territory.

Bottom line … While we could see more down movement in the next few days, this battle is not over yet.

*** Please click on the link below this chart if you would like to send a page link of today’s update to a friend or colleague.

The pendulum extremes are like being above or below the upper and lower Bollinger Band levels. The Center line in middle of a Bollinger Band is like the normality level over time.

So, like a pendulum extreme, when a tick falls well below a lower Bollinger Band like yesterday, it is an extreme level where it comes under pressure to move back into the Bollinger Band area.   Sometimes, it takes a couple of ticks below the lower Bollinger Band to find its true extreme level, but the fear index (the VIX) often gives you a clue about when the extreme has been reached.

In any case, this morning’s gap up opening was a normal reaction to an overextended tick on the lower Bollinger Band.    At 10:07, the $NYBR (New York Stock Exchange Breadth) was at 2131 … a strong positive level.  If it falls below 700 today, it could get into trouble … but for now, it is nice and strong. Chart from www.StockTiming.com

It could happen, as you will see on today’s weekly chart of the 10 year yields …. symbol: $TNX.

The good news is that today’s 10 year yield chart shows a five down trend.  The bad news is that the one year weekly trend line is breaking out to the upside.

Actually, the bad news might be a little worse because the TNX has had a 4 month sideways pattern.  From a technical standpoint, the longer a sideways trading range, the larger the breakout can be.    So, we have a sideways trading range breaking above a 4 month resistance line.  Unless Bernanke can contain this move within the next few days, he will lose control.

Such an event would be bad for the economy because higher yields means higher interest rates for borrowers.    Yes, higher interest rates are good for banks … that is unless they get too high and choke off consumer borrowing and spending.   Bottom line:  It is now time to keep an eye on interest rates in the near term.

And while you are at it … keep an eye on the 30 year yields … symbol: $TYX.    The TYX (which also relates to mortgage rates) is jumping higher and 34.62 and 34.75 are important numbers to watch.
Why?   Because if the 30 year yields continue to rise after that level, they can go a lot higher with Bernanke losing control.

Many investors say they do that by looking at the strong and weak Sectors and then playing them accordingly

But, few investors take the next step and ask the following question:  ”Does one price level have a decided advantage over another price level?”

It sounds like a simple question, but it really isn’t.   What the question is really asking, is about whether it is the larger or smaller investor that is bullish at a given point in time.

Let me explain … Imagine that you took a count at the close yesterday, of how many stocks reached a 1 month high and a 1 month low.   Let’s take that another step further and split the counts by how many stocks were above $10 and how many stocks were below $10.

If you ran the data last night, you would have had these counts:

Sometimes the counts like those above are a little harder to interpret, so we recalculated the above data in terms of the percentages for each group and came out with this chart:

Now, it becomes clearer what is going on … The stocks above $10 were making New Highs by a factor of 62.9% versus 37.1%.   The stocks below $10 were making New Lows 56.6% of the time.

So, the majority of the stocks above $10 were making new monthly highs, while the majority of the stocks below $10 were doing the opposite … making new monthly lows.

The message here, is that the investing advantage is for stocks that are over $10 in value now, and there is a clear disadvantage to investing in stocks that are below $10 in value.

Since larger investors such a Institutional Investors, mutual funds, and hedge funds prefer the higher priced stocks, this suggests that the bigger players are more bullish than the smaller players are … who focus on cheaper stocks.

When fear nudges its way into the market, panic selling often appears.

But what if there is a rash of selling, and the level of daily New Lows on the New York Stock Exchange barely budges?

That is pretty much what happened yesterday when the New Lows went from 21 on Monday to only 30 on Tuesday.

-  Strong rallies have New Lows below 28, with 10 or below being particularly strong.

-  Slightly above 28 needs to be watched, and a level of 40 to 50 can be associated with a market weakness condition where the potential for further deterioration can occur very fast.

-  Above 50 is trouble and you should be prepared for a dropping market.

Many investors would have guessed that the New Lows were above 50 yesterday, but they weren’t. 

In fact, they were only at a level of 30 at the close.    Being only 2 points above our 28 level essentially comes in at a Neutral level.

It is 12:30 PM as I write this … so what about today?    Well, at  12:30 PM, the New Lows were at a healthy 11.  So, the sky wasn’t falling either yesterday or today.

]]> http://www.stocktiming.net/nyse-new-lows/feed/ 0 http://www.stocktiming.net/institutional-investor-and-vix/ http://www.stocktiming.net/institutional-investor-and-vix/#comments Mon, 27 Feb 2012 18:35:45 +0000 Marty Chenard http://www.stocktiming.net/?p=845 Why do people have smoke alarms in their house?

Obviously, it is to warn them that there could be a fire, a fire developing, or sometimes it just means you burnt the toast.

In any case, you at least check it out and find the culprit.  If it is burnt toast, you fix the problem and move on.   If turns out to be a “potential” fire situation, you take a cautious stance.

This is courtesy day … a day where we share one of our paid subscriber charts for free members.

Today’s chart intvolves the analysis of what is happening between the VIX and what Institutional Investors have been doing since February 13h.

First, you understand how the VIX works … a higher VIX signifies higher fear levels and the market typically moves down.   A lower VIX signifies higher confidence (or sometimes complacency), and the market moves up.

So what has happened to the VIX since February 13th?  Today’s chart provides the answer.  The  VIX (volatility index) moved down and the market moved higher.

But, a smoke alarm may be going off?   Why?   Because of what the Institutional Investors have been doing relative to buying and selling since then.   As this chart show’s, the Institutional Buying went down,and the Institutional Selling went up.

That is the opposite of what you would expect for a market moving up.  Apparently Institutional Investors are getting nervous and reducing their exposure.   They are still in Accumulation so things are still okay at this moment … but a smoke alarm is going off in the background.

What’s the chart?   It is a chart that shows the Net of Institutional Investor Buying and Selling activity on a daily basis.  If there is more Institutional buying than selling, then they are in Accumulation and seeing that they are the biggest players in the market, then the market will go up.  The opposite holds true when they are selling more than they are buying.

On November 25th, the Institutional Investors showed a bottom on their Distribution.   Note how Institutional Accumulation has shown a good positive level of Accumulation since December.

A good philosophy might revolve around the following … Institutional Investors spend “millions and millions” of Dollars on research, computer trading programs,and expert traders.   They own over 50% of all the market Dollars invested, so they are a formidable force in the market.

Also note that while the Institutional Accumulation is positive, its trend lines show its second “lower/low” since January 31st.    What does that mean?  It means that there is a down trend in Accumulation, and that means that as the market moves higher and higher,  Institutions have been slowly taking some profits and lowering their exposure.

Anyway’s, what’s the Philosophy?

Since Institutional Investors spend a LOT more money on research … a lot more than most anyone else can afford, why not follow what they do?    “What they do” is a conscious decision after they have analyzed all their expensive research and data.   Following what they do is akin to knowing what they know for a very small price.

For instance, take the New York Stock Exchanges daily New Highs … symbol: YHIN (on some data feeds).

Since the middle of 2009, the NYSE’s New Daily Highs has had a good correlation with the stock market.   For instance, take today’s two and a half year chart that we posted below.

First note that we have two horizontal lines in red.  One is at a value of 100, and the other is at a value of 50.   When you see the daily number of New Highs close below 100, start to pay attention.  When it drops below 50, the market corrects … see the two areas with the red circle.   And then … back above 100 is typically associated with market rallies again.

Now, take a look at something else that is going on in this chart …

Take a quick look at labels 1, 2, and 3.   What do you notice when you compare the level of New Highs with the levels of the S&P 500?

What is obvious, is that the New Highs are attaining lower peaks as the S&P is reaching higher peaks.   From this chart, one cannot say when label 3 will finally hit its peak, but one can say that it is a lower peak so far and that its daily closes have been holding above that  important 100 level.

What does this say?

That as time goes on, fewer and fewer stocks are bargains?  Or, that investors are having trouble finding stocks that have a high probability of having a great run up?    Actually, both are correct.   As the peaks become lower and lower over time, there will obviously be a point where there are just not enough good potential stocks to buy that could power up a sustainable rally.  And then … the odds are that we shift back to a Bear Market.

Is there a time when the NYSE’s New Highs is not a good indicator?

One of the times that it does not work well, is just before the market is transitions from a Bear to a Bull market.   During such times, stocks can’t make New Highs yet because sellers still have stocks in a bottoming process.  However, it is at such times that the Institutions typically come in, see the bargains, and move to Accumulation on select stocks ahead of the crowd.  FYI … they only move to Accumulation after they see a high odds probability of an economic pick up in the near future.

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