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.

]]> http://www.stocktiming.net/lower-peaks-on-nyse-new-highs-what-does-it-mean/feed/ 0 http://www.stocktiming.net/this-is-an-important-time-to-watch-the-down-volume/ http://www.stocktiming.net/this-is-an-important-time-to-watch-the-down-volume/#comments Tue, 07 Feb 2012 14:48:01 +0000 Marty Chenard http://www.stocktiming.net/?p=834 Today, we will share a chart that you may not have seen before.    It is a chart of an indicator that is often ignored, but its actions often signal very important turning points.

What is the indicator?

It is the New York Stock Exchange’s daily Down Volume … symbol: $DVOL.

As an example of this indicator’s relationship to the market we plotted the past 7 month’s of the DVOL against the action of the NYA Index.  Also note, that there is a series of numbered labels ranging from 1 through 4 on the chart … so let’s start discussing them below.

#1 – Support line breaks:   Label one shows a support line for the red trend line of the DVOL.  Note the vertical line marking where the trend line was broken to the downside while falling in negative territory.  Now look down and notice that the NYA Index took a sharp, corrective drop at that time.

#2. Positive Divergences:   Next, look at the Positive Divergence shown at label 2.   The upside divergence move was huge during a time that the NYA was showing opposite movement by making a lower/low.   Note:  When the market is selling off, down volume increases as investors panic and sell more.   If Institutional Investors (or others) start buying then the down volume will recede because selling volume is being offset by buying volume.  That huge positive divergence was an indication that the NYA Index had reached an oversold condition.

#3.  Trading Ranges:  Now look at the rectangular box at label 3.   It depicts a trading range that has oscillated above and below the zero line of the Inverted Declining Volume.  As you may have guessed by now, we “invert” the action of the Down Volume so it can track with the action of the market.   (By itself, the Down Volume moves in the opposite direction of the market.)

#4.  The current pattern:   Now look at label 4 where you can see the current action and pattern of the DVOL.   I drew a support and resistance line as a frame of reference.

What can we say by looking at these lines?   Well first, we can notice that there were two up moves (one at the beginning of December and one at the end of December).    What is significant, is that the second one was higher, so the indicator made a higher/high.

Now let’s look at the red dotted support line.   It has made a higher low, so with the higher/high, one could say that the inverse action of the DVOL has been in an up trend which is market positive.

What now?  There are two obvious possibilities to watch for now.

a. Since the inverted DVOL just bounced off of its support and is trending positive, it should move up toward’s its resistance line.  As that occurs, the NYA Index (and market) would move higher.

b.  But being so close to the zero line, what if the indicator failed to the downside and fell below the red support line instead?   That’s why the indicator should be watched, because if it does fall below the support line then the possibility for a market correction would be high.

]]> http://www.stocktiming.net/this-is-an-important-time-to-watch-the-down-volume/feed/ 0 http://www.stocktiming.net/spy-resistance-level/ http://www.stocktiming.net/spy-resistance-level/#comments Mon, 06 Feb 2012 15:37:34 +0000 Marty Chenard http://www.stocktiming.net/?p=831 Will the SPY make it past this 44 Week Resistance Level?

That will be “THE question” within the next 10 trading days.

Specifically, here is the real question: Will the SPY be able to rise above its 2008 to 2012 resistance line seen on its weekly chart (posted daily on www.StockTiming.com’s Standard Update)?

That chart is shown below, and it is now obvious how close we are.  Since each bar represents 1 week on this chart, we are “within” 10 trading days of testing that multi-year resistance.   In fact, the odds are very high that this week could be the week that this resistance level is tested.

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FYI … Below is the beginning portion of the “How-To analyze the TICK” posting above.   If you like it, click on the  link and it will take you to the original page: Convert Market Noise to Profit

How to convert “market noise” into profitable trading data that can make you money …

This chart shows the 1 minute $TICK with large up and down gray bars.  Most investors ignore this chart and data because it looks like nothing but noise.  But it isn’t … it can be magical data if you do the right thing with the data.

If you look below at the second and third chart, you will see what we mean, and how you can convert this data into powerful trading data …

Click on this link to go to the original study …
http://www.stocktiming.com/Stock_Investing_Course/convert-market-noise-to-profit.html

]]> http://www.stocktiming.net/profitable-trading-data-2/feed/ 0 http://www.stocktiming.net/market-trouble/ http://www.stocktiming.net/market-trouble/#comments Mon, 30 Jan 2012 14:28:45 +0000 Marty Chenard http://www.stocktiming.net/?p=822 Will the market stay safe or get into trouble this week?

One of the daily research data sets we calculate every night is from a computer run on every stock on the S&P 500 index.

During that analysis, we measure the Strength levels of each stock and do a count of how many had positive strength that day, and how many had negative strength.

Sounds simple, but the story it tells is very important to investors.  Here is why …

Think about it for a moment … since there are 500 stocks on the S&P 500, then 250 stocks is the half way point.    Therefore, if over 250 stocks are positive, then the strength of the overall index is positive.  And if that continues to trend higher, then the market has to also trend higher.   Upside trending movement can be seen by looking at the blue trend line on today’s chart.  (The opposite condition can be seen by looking at the red trend line that depicts how many S&P stocks have negative strength on the chart.)

So, looking at today’s chart, the trend of positive stocks is good.   What you see is an up trend because it has been making higher/lows and higher/highs.

That brings us to the challenge we have in front of us this week.  If you look at the chart, you can see a rose colored support line under the positive stock line.  That is the challenge test for this week.   For the trend to continue up, the number of positive stocks must hold above that support and higher than the previous low set on January 13th. of this year.   Otherwise, we will see a rocky market with profit taking and down movement.

FYI … there are a number of other daily studies on the S&P that we post daily relative to this study on the Standard subscriber site.  One of the other studies show’s the number of Very Strong stocks each day.   The importance of this number is that these are rally “feeder stocks”.    We call them that, because if their numbers are rising, then they pull the broad market higher.   If their numbers are dropping, then they will pull the market lower.

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You all know how it works … Institutional Investors move the markets with more power than individual investors.   The reason is obvious because they contribute to over 50% of the daily volume relative to longer term buy and hold purchases.

So today, we will share a chart that looks at their Net Accumulation/Distribution after their daily buying and selling activity.

As you can see on today’s chart, since mid-December they have been in Net Accumulation.    It is pretty hard to find a flaw with that … except the negative divergence that is showing up.   Did the NYA Index get ahead of itself, or are the Institutional Accumulation levels pointing to a problem down the road (longer term)?   Note the large decrease in Net Accumulation relative to the increase in up movements on the NYA Index.

What about a shorter term picture? … as that typically fits the horizon of smaller investors.  The key for the shorter term movement is the red and blue trend lines on the Net Institutional Buying and Selling chart seen below.

Last July, September, and November are good examples of that.  Note how, as red/blue trend lines went down, the NYA Index went down.   And when the NYA Index touched or broke through its lower Bollinger Band, the Net Net Institutional Buying and Selling levels were in negative (Distribution) territory.   In fact, if you look at  this chart, every instance of the NYA being below its lower Bollinger Band also showed that it was a time when Institutions were in Distribution territory.   (This chart is update daily on our StockTiming.com Standard subscriber site.)

]]> http://www.stocktiming.net/the-link-between-lower-bollinger-band-levels-and-distribution/feed/ 0 http://www.stocktiming.net/market-risk-levels/ http://www.stocktiming.net/market-risk-levels/#comments Tue, 24 Jan 2012 16:30:57 +0000 Marty Chenard http://www.stocktiming.net/?p=815

Inflowing Liquidity levels increased yesterday, so the market went up.  But, something wasn’t quite right at the same time.

What was it?

The level of the Volatility Index.  Since it moves in the opposite direction of the market, it should have gone down yesterday when the market went up.

Below are two snapshots showing that action yesterday.    The first snapshot was taken at 11:58 AM, and the second one at 4 PM yesterday.

What did they show?

They showed the S&P up 0.85% at 11:58 AM with the VIX also up +0.19% … the VIX should have been down.

And at 4 PM, the data showed the S&P up +0.36% with the VIX up +6.17% … again, the VIX should have been down.

Since the VIX is an option related view of market expectations two to four weeks out, it had a negative outlook on a day where the market showed a positive outlook … something’s not quite right with that picture.

This snapshot was taken at 11:58 AM yesterday …

This snapshot was taken at 4 PM yesterday …

We wrote about this last week, ( StockTiming.com Standard Update) but it is important enough to do an “Update” on Liquidity Inflow levels in the market and where they stood last Friday.

Jesse Livermore stated a very simple concept back in the 1930′s.    He said that the market was all about money flows.   If the money flowing into the market was net positive, then the market would move higher … and, if the money flowing out of the market was net negative, then the market would move lower.

So, let’s look at out Long Term Liquidity chart again today.  As of the close last Friday, the Inflowing Liquidity levels were in low Expansion territory and just beginning to show a break above its resistance line.

Bottom line: The Inflowing Liquidity levels were positive, in lower Expansion territory, and just broke above its resistance line.

However, there is a cautionary negative to the indicator action that occurred last week.   Liquidity inflows brokeabove the resistance line last Tuesday, however the indicator struggled and didn’t go up very much during the week.

At the close on Friday, the Inflowing Liquidity levels dropped to a level that was slightly below Wednesday’s level which was the previous low for last week.   It was so slight that we will call it a  tie which will make this week a very important week.

What should one conclude?

… That there was a positive bias to the market because Inflowing Liquidity levels were positive and above the resistance line.

However, the same time, Inflowing Liquidity stalled after the breakout, so Thursday’s high level for the week will now have to be tested.  A rise above it would indicate the continuation of an up trend for Inflowing Liquidity which would be market positive.

If Inflowing Liquidity were to fall below January 6′s level during the week, then the current up trend will be in jeopardy of moving to a Liquidity Out-flowing condition which would be market negative.

So, this will be an important week because investors will be voting with their Dollars relative to the market’s next direction.   (FYI: Daily Inflowing Liquidity levels can be found in Section 4, Charts 8-1, 8-2, and 8-3 of the Standard subscriber website.)

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