Get Long? Yes, You Read That Right.
March 4, 2008 – 7:25 pm
I may not be the first to say it, but I certainly won’t be the last… it may be time to get long. Reference the image below:
While at first glance this chart looks intimidating, its not. The red and black area indicator is the NYSE Summation Index (A popular (or not so much?) market breadth indicator that is ultimately derived from the number of advancing and declining stocks in a given market. Many people regard it as an excellent indicator of the overall “health” of the market and the market’s current trend). Above we have a weekly chart displaying the index of choice, the SPY. On top, we have a weekly VIX measurement. Moving on…
A cross of the Summation Index into positive territory is usually indicative of the beginning of a bullish trend, while a dip into the negative is usually indicative of a bearish trend to come. As you can see on the chart, we are once again flirting with a break into positive territory. If it breaches into positive territory, in combination with a falling VIX (remember the previous post, also see descending triangle pattern lines on chart above), we may have the makings of a bullish lift in the coming weeks. Not to mention the extreme CBOE Put/Call Equity readings of late. See chart below:
Please comment with your thoughts below!
Sphere: Related Content
One Response to “Get Long? Yes, You Read That Right.”
Hi,
Nice post and in most part I do agree with you. There will be a rally, a short one though in my opinion. The reasons being is that there is incredible resistance around 135-136.4 in the SPYs. The summation is great, and looks like it works well, but then again, you would get faked out in a small spike through the even line. I think a better indicator use in conjunction with that is the new highs/lows. Along with the problems that we are still having in the credit markets, China, gold/oil, if that doesn’t change and the S&P starts to slide, i think you know what will happen. There is more that I would like to say, but I will keep it short.
By Anon on Mar 5, 2008