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Nichols, morning report de sexta

Espaço dedicado a todo o tipo de troca de impressões sobre os mercados financeiros e ao que possa condicionar o desempenho dos mesmos.

Isto foi escrito 6a feira de manha e...

por bboniek99 » 29/3/2004 11:56

...o veredicto mais Negativo que Positivo. :oops:
bboniek99
 

Nichols, morning report de sexta

por Pata-Hari » 29/3/2004 10:37

Curiosamente o "sempre bear" nichols, está a apontar para um rebound.

Aqui fica o report.

Morning Briefing
FRIDAY a.m.
March 26, 2004

Reversal, or Exhaustion?
By David Nichols

Thursday's big up day has definitely complicated the picture, and put the market's next large directional move up for grabs. Such a big up day can be a sign of a meaningful reversal -- or it can be a sign of counter-trend exhaustion.

What we can see is that the hourly SPX chart had its customary 10 point run once the hourly trend was triggered, as I mentioned in yesterday's Briefing how the initial energy push in the morning was likely to produce just such a trend day. It turned out the chaotic energy push came to the upside.

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For reasons beyond my feeble mind to understand, I've noticed that the hourly SPX trends have a very marked tendency to stop when the Fractal dimension hits 35. Who knows why? Perhaps this amount of trend just feels like enough to short-term traders, as I've seen this chart stop at 35 so many times that it can't possibly be considered coincidental. And sure enough, yesterday's bounce took this hourly SPX chart right to 36, and just a bit more follow-through on Friday morning should take it right to 35.

That argues that yesterday was just a counter-trend bounce, and the bigger down move will soon reassert itself. Also agreeing with this assessment is Tom McClellan of the essential McClellan Market Report, available every evening to 21st Century Alert subscribers.

You may be familiar with the widely followed McClellan Oscillator, developed by Tom's parents Sherman and Marian McClellan in the 1960's. Tom brings up an important point about the current structure of the McClellan Oscillator that I want to bring to your attention now, in case you missed it:

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"An additional argument for continued downside price movement comes from the NYSE's McClellan A-D Oscillator. It is still chopping up and down below the zero line, forming a complex structure. The general theory on such structures is that a complex structure implies strength for the side of zero upon which it forms. A simple crossing of the zero line that reverses back across zero without such up and down complexity implies weakness for the side of zero upon which it forms. So the fact that we are seeing choppiness below zero tells us that the bears are still in control."

Another potentially bearish sign is the absolute collapse of implied volatility during yesterday's bounce. People were very quick to believe the worst is over, and that it's time to buy-the-dip. Usually such majority sentiment is not rewarded.

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The VXO dropped a whopping 13% yesterday. Such a huge move also argues that this was just a one-day wonder, as sustained upside pressure is usually built upon the wrong-way bets of excessive pessimism. We're not seeing evidence of a huge desire to short this downtrend, but rather a pre-conditioned idea to buy-the-dip here.

However, we should note that the VXO dropped under the important 18 level, and if there's now going to be a regime-change in implied volatility, then the market will grind higher while the VXO stays under 18. That's something to watch for.

Also in the interest of impartiality, it is worth nothing that the Nasdaq Comp traced out a monstrous 57 point up day. The Naz has led the way down recently, and perhaps now it's signaling that it's going to lead the way up. It also bounced off its 40-week exponential moving average, which has long been my target for a market pullback.

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The SPX should also still have a future rendezvous with its 40-week average, which currently sits at 1067.

Sentiment Dashboard
By Adam Oliensis
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SENTIMENT TANK: Drained 25 points to 46%.

HOURLY: Strong Advance.

MID-TERM: Progressed 2 points to 17% on the Advance side with Confidence moving in the bullish direction to a Neutral position at ZERO.

LONG-TERM: Regressed to 39% on the Decline side with Confidence regressing toward Neutral to a bearish -1. If this weekly gauge regresses "up" on Friday past 33% it will move onto the Advance side, negating the recent rollover onto the Decline side.

BOTTOM LINE: After a rushing in of negative sentiment we have seen the Tank drain down 40% from its high. On a "swing" basis (a few days) the window of opportunity to the buy side has opened up.

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So, while Thursday's intense buying pressure was impressive, and we have momentum buy signals (viz. our Inverse Vix Stochastic above), no important price or sentiment levels have been breached.

Indeed as I wrote about in this space on Tuesday, March 23, after the selling climax on Monday and the TRIN's closing above 3, we have now seen a less-than-average rally off that day's closing price (now up 14 on the SPX from the Monday close, where we've been expecting about 20 points). In line with that expectation, the VIX is now testing down and has almost nicked its broken line of declining tops. The key will be found in whether we get a genuine follow-through day, which is defined as an up day of at least 1-2% on rising, above average volume coming 4-7 days subsequent to Thursday's intense buying action. And in order for that to happen we'll have to see the VIX penetrate back down into its broken declining trend zone....Those are the signposts we'll be looking for. If we don't see them, then we'll continue to expect one more trip down toward lower targets by month-end.
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