Rendimento das famílias trava a fundo no início do ano

[Pata-Hari]

FRIDAY a.m.
August 15, 2003



Watching the Grass Grow
by David Nichols

I don't need to drone on about how the market has been stuck in a narrow range. You know it too, as you've also been "watching the grass grow."

The fractal dimension of the daily chart -- a terrific trend/congestion indicator -- is showing in a more concrete way that indeed the daily market is directionless. This daily drift is not-so-rewarding.



One thing that measuring the fractal dimension shows us is that the market has a strong tendency to oscillate between periods of trend, and periods of congestion. That's why this fractal dimension measurement moves like a jagged sine wave, constantly moving up (towards congestion) and back down (in a trend). By the way, like anything that is fractal, it moves this way in all time-frames ("self-similarity").

So we'll be looking for a solid move that trips this daily fractal dimension indicator below 55, showing the commencement of a possible major trend. Until we get that, the market will remain noisy.

In the meantime, there are some interesting developments with sentiment on the Nasdaq 100 (NDX). Sentiment in this more speculative market is both constructive and not-so-constructive, all at the same time. How's that for wishy-washy? I definitely need to explain that a little better.

Since May, the NDX has been able to advance while sentiment -- as measured by the VXN, the Volatility Index on Nasdaq 100 options -- has stayed bullish. That's quite a feat, and something we never saw previously during the bear market. Here's how that looks on the chart:



The VXN hit a low in May, and the NDX has been able to generally rise in spite of sentiment hitting a momentum low right there. In other words, the little bouts of selling encountered during the uptrend sparked enough fear to keep prices moving higher. That's undeniably bullish.

But there's one small problem. Lately this hasn't been working in the same bullish way. With the big recent drop in the VXN, the NDX has not made a higher high as it was before. So now we have a weaker rally that's creating higher amounts of complacency and bullishness.



That's not what you want to see, if you're bullish for a break out here. In fact, that's the classic hall-of-fame sentiment pattern that made you money hand-over-fist throughout the bear market. Whenever the crowd was getting more bullish -- with the VIX and VXN dropping -- while prices didn't reach new highs, then the market cratered soon after.

Obviously it's not impossible for the market to climb significantly higher from here, but it's going to have to reverse this sentiment pattern to get that job done. The VXN is going to have to climb back up while the NDX makes forward progress -- and that goes double for the VIX as well. We need to see some fear come in on the drops to give a breakout above the highs a chance for success. Otherwise, it's much-more-likely that the market will drop down to stoke up this needed "sentiment fuel".

Sentiment Dashboard
by Adam Oliensis



SENTIMENT TANK: Drained 2 points to 8% full of negative sentiment.

SHORT-TERM: Is now in a neutral posture with a bullish bias

MID-TERM: Progressed 4 points to 42% on the advance side with Confidence rising to 1 (out of 7). Could this be the start of the next major advance phase? COULD be, but with the gauge locked inside the middling yellow square, there's no compelling evidence to that effect yet.

LONG-TERM: Weekly gauge regressed back to neutral at 93/7 with neutral (0) Confidence.

BOTTOM LINE: From the Merriam-Webster Dictionary:

Main Entry: dol•drums Pronunciation: 'dOl-dr&mz, 'däl-, 'dol- Function: noun plural Etymology: probably akin to Old English dol foolish Date: 1811 1 : a spell of listlessness or despondency 2 : often capitalized : a part of the ocean near the equator abounding in calms, squalls, and light shifting winds 3 : a state or period of inactivity, stagnation, or slump

Main Entry: dog days Function: noun plural Etymology: from their being reckoned from the heliacal rising of the Dog Star (Sirius) Date: 1538 1 : the period between early July and early September when the hot sultry weather of summer usually occurs in the northern hemisphere 2 : a period of stagnation or inactivity

Main Entry: Options Expiration (not actually from Merriam-Webster) The Saturday following the 3rd Friday of each month when options expire. Notable for its bi-polar personality. The stock market normally goes catatonic. However if roused from its state of inert dynamic tension the market may express a manic tendency to shoot stocks almost precisely one strike either up or down as highly leveraged players caught on the wrong side of their trades hedge their gamma pain. Gamma pain is not precisely the same as a gamma ray, which makes the Hulk turn green, but if you've ever watched or personally endured gamm pain you'll note it's not that different either.