Applying a Cycle Ruler to the SPY Daily Chart

The indicator calculations on the chart below uses the 13-Day SMA, ATR(13) with the nine Select SPY SPDRs; the Tradestation Easylanguage code follows after the chart (showing SPY only, with the nine SPDRs data2 - data10 hidden).

Since the November bear move, every (cycle) bear push lower has been on lower energy. The December rally had a cycle length (A) and the 2013 blast off had a cycle length (B).

 

These ruler lengths were overlaid on the next two bull rallies so that the chart reader can compare the time the bulls have had control.

 

My analysis:

If the bulls have a good day on Tuesday the odds go up of a consolidation and then another push higher, like the March - April rally.

 

If the bears win the day, the odds go up for a a pullback. Since the bear power on each pullback has been so pathetic, it is difficult for me to see a the bears showing an even weaker hand.

Taking into account the reversal day on Wednesday in this bull extended market, the lowest odds would go to the bulls quickly recapturing those high prints.

  

Code:

Value99 = average(close data2, 13);

Value12 = (C data2 - value99) / avgtruerange(13)[13] data2;

Value99 = average(close data3, 13);

Value13 = (C data3 - value99) / avgtruerange(13)[13] data3;

Value99 = average(close data4, 13);

Value14 = (C data4 - value99) / avgtruerange(13)[13] data4;

Value99 = average(close data5, 13);

Value15 = (C data5 - value99) / avgtruerange(13)[13] data5;

Value99 = average(close data6, 13);

Value16 = (C data6 - value99) / avgtruerange(13)[13] data6;

Value99 = average(close data7, 13);

Value17 = (C data7 - value99) / avgtruerange(13)[13] data7;

Value99 = average(close data8, 13);

Value18 = (C data8 - value99) / avgtruerange(13)[13] data8;

Value99 = average(close data9, 13);

Value19 = (C data9 - value99) / avgtruerange(13)[13] data9;

Value99 = average(close data10, 13);

Value20 = (C data10 - value99) / avgtruerange(13)[13] data10;

Value98 = (value12+value13+value14+value15+value16+value17+value18+value19+value20);

plot1(value98, "SIG", iff(value98>0,green,iff(value98<0,red,0)));

plot2(6);

plot3(-6);

Best advice? Check with Nigam Arora

The daily chart of SPY looks a bit bear broken while the weekly chart is still bullish.

In

May 23, 2013, 10:57 a.m. EDT

Market forms ominous technical pattern

Nigam Arora states

The plan is to continue select buying, select shorting, and select profit taking.

This seems like good advice to me. The bulls did not really prove much today, locking horns with bears. The readings for SPY 500 from my short term (based on 3-Day EMA) Participation Days for the past four days comes in with

Date	Bull Days	Bear Days	Net P-Days	Odds	SPY	50dNH	50dNL	VIX
23-May	1.37	-2.77	-1.40	2.02	165.45	12	3	14.07
22-May	0.97	-2.21	-1.24	2.29	165.93	167	0	13.83
21-May	3.73	-1.35	2.38	2.76	167.17	145	0	13.37
20-May	3.57	-1.07	2.50	3.34	166.93	182	0	13.02

Whenever the Odds come in better than two to one [ 2 : 1 ] for bulls or bears, then it should be respected. So today, 2.77/1.37 = 2.02 is above the 'just noise' level.

Also, just two SPDRs had intraday uptrends today (after Initial Balance), XLE and XLB. It is almost as if the bulls are shouting to the bears

equity risk-on (commodity) reflation not over

But the daily charts are not convincingly bullish, with XLE closing today below the high of four (trading) days ago and XLB closing below the high of seven days ago,

Sgt Schultz Responds to Monster Merck Programmed Buying

In the following 65-Min intraday chart, it looks like the HFT computers were programmed to create a beautiful day trend with the bars increasing in strength right into the close.

It is amazing bullish technical action considering there was no news.

Oops, just heard something after the bell!

Oh, I am sure the Sgt Schultz from the SEC will be able to figure out where this buying was coming from,



It would not be such a surprise if Merck was a $3 stock with a market cap of 100 million. If it came up on your radar today you most likely just watched the fireworks as it closed at 47.33, and up some afterhours. Here it is,

How To Stop Flash Crashes and HFT Nonsense?

I am not an expert in this field, but I have a simple idea.

Brokers with no HFT speed advantages get a legislated  'market making' rebate for all limit orders that execute; the order must be outside the inside bid/ask quote when entered .

Rationale: The idea is that retail limit orders commissions would come down across the board (through competition) and would support a more healthy market structure.

If you are a placing limit orders you certainly want to be on a level playing field. If a retail trading platform, e.g. Tradestation, had a $0.85 or $1.00 commission on 200 share limit order, my guess is that order books would be better able to absorb market orders.

Twelve in a Row Higher Lows on $SPY Daily

Bulls buying the market and putting a stop at the prior day's low sure have had it easy the past twelve days. Only in December of 2003 has this signal triggered.

Here is the chart (the 'dot' signal is div adj):

I guess we can thank David Tepper for helping the bulls out this week.

For more, see

John Kicklighter ‏@JohnKicklighter

and

iBC Backtester ‏@WoodshedderMay 16 Tweet

$SPY Closes More than 3.5% Above its 20 Day Moving Average. Are you Bullish or Bearish? http://ibankcoin.com/woodshedderblog/2013/05/16/spy-closes-more-than-3-5-above-the-20-day-average-bullish-or-bearish/ …

The POTUS (Obamacare) Calling the Kettle (IRS) Black (Ambiguous) | Spaghetti Code

Please read

President Obama’s statement on IRS targeting scandal

and note the following excerpt:

And we’re going to have to make sure that the laws are clear so that we can have confidence that they are enforced in a fair and impartial way, and that there’s not too much ambiguity surrounding these laws.

This is an amazing statement and is actually an argument as to why Obamacare will be a disaster; recall,
 

Pelosi: "We Have to Pass the Bill So That You Can Find Out What Is In It"

Of course this gets almost humorous when you think that the IRS will be enforcing parts of the Obamacare Kludge. Then, we have this,

NYT: OBAMACARE 'AMBIGUITY' COULD MAKE HEALTH CARE TOO COSTLY FOR MILLIONS

by DR. SUSAN BERRY

Oh, what a mess.
 

I used the word 'kludge' above because the writing of legislative code is somewhat like software design, and DC is doing a great job these days in coming out with spaghetti code.

 

Finally, it is interesting to think about Conway's Law,

Any organization that designs a system (defined broadly) will produce a design whose structure is a copy of the organization's communication structure.

If you believe this idea has some merit, then much of the inscrutable and bureaucratic DC maze of corruption will be reflected in how you go about getting health care. Better make time for taking plenty of individual initiative to staying healthy!

So Much Daily SPY Power Getting Even More Obvious (Wed Update)

Wednesday Update: Well, we got that weakness this morning but it sure was transient. I had hedged more on Tuesday afterhours and then brought my $SDS hedge down more this morning.

Things are getting even more obvious that nothing can go wrong for the bulls. Here is the chart now looking for

 five in a row 'nice' bull bars in a bull market

Now you have only six dates to look at. I am not adding to my SDS, but will not chase after the bulls here. A pullback, no matter how slight, seems to be in the cards either this week or next, and we will see SPY at below 163.34, today's closing price.

=================================================================
Initial Tuesday Blog

Here is the code (ex div adjusted):

If adjLow > adjLow[1] and adjHigh > adjHigh[1]
And adjClose > adjClose[1]
And adjClose > adjOpen
And adjClose > average(adjClose, 200)
And adjClose > average(adjClose, 50)
And adjClose > average(adjClose, 20)
And average(adjClose, 20) > average(adjClose, 50)
And average(adjClose, 50) > average(adjClose, 200)
then 
bullBarcnt = bullBarcnt + 1
Else
bullBarcnt = 0;
If bullBarcnt > 3 then begin
Print( FormatDate( "MMM dd yyyy ddd", ElDateToDateTime(Date)));  
plot1(1);
end;

The 1-signal dot means four in a row 'nice' bull bars in a bull market. The green/red 1/2 bars show unfilled gaps up/down. Notice that the 1-signal today occurs in conjunction with three bullish unfilled up gaps in the prior days. With so much bullish energy on the daily, perhaps some intraday weakness on Wednesday can manifest itself. It would be a surprise to see another large unfilled gap up tomorrow.

Here is the chart:

Here are the dates:

Sep 05 1995 Tue
Sep 16 1996 Mon
Nov 08 1996 Fri
Jun 10 1997 Tue
Mar 19 1998 Thu
Mar 20 1998 Fri
Nov 16 1999 Tue
Dec 15 2004 Wed
Nov 22 2005 Tue
Nov 23 2005 Wed
Jan 06 2006 Fri
Jan 09 2006 Mon
Oct 25 2006 Wed
Oct 26 2006 Thu
Feb 02 2007 Fri
May 07 2007 Mon
Apr 29 2011 Fri
Jan 23 2013 Wed
Jan 24 2013 Thu
Jan 25 2013 Fri
Apr 11 2013 Thu
May 07 2013 Tue