S&P 500 – Page 2 – Andrew Thrasher

Can Buyers Keep The Stock Party Going?

Posted on May 6, 2013 by Andrew Thrasher, CMT

I hope you all had a good weekend. I had my first professional BBQ competition of the year, and while it rained most of the time we had a good time and were pleased with the results.

The equity market has not been laying off the gas pedal lately and we find ourselves back at a level of possible resistance. On April 12th I tweeted about this level of resistance, which held up for a quick 55+ point drop in the S&P 500 ($SPX) before the up trend continued. This is the topic of my TraderPlanet piece for this week.

Here’s a blurb:

The S&P 500 has been enjoying a nice uptrend for the last six months, with small healthy pullbacks.

There are various ways for us to monitor trend, I recently wrote on my blog about simple trend lines and support levels – discussing that technical analysis doesn’t have to be difficult.

A great tool for monitoring support and resistance in a trending market is Andrews’ Pitchfork. This tool looks at the channel of a trend, built around three price points that create the ‘pitchfork.’

Now go read the rest.

Source: Can Buyers Keep The Stock Party Going? (TraderPlanet)

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Stocks and Bonds Appear to Be Best Friends

Posted on May 2, 2013 by Andrew Thrasher, CMT

It’s interesting the way different markets relate to one another. Typically Treasury bonds aren’t the best friends of stocks, moving in opposite directions most of the time. There have of course been periods of time where the two have worked out their differences and advanced or declined with one another. When this happens we begin to notice a divergence that takes place between yield and equities. Since mid-March yields have been falling while stocks continue to head higher. Bonds are often considered the ‘smarter asset’ compared to stocks and when yield isn’t mirroring the move in risky asset classes it typically raises a red flag for stocks. However, this hasn’t been the case so far this year.

Even though stocks have been hitting new highs, it has been bond prices that have been the outperformer over the last couple of months. One note regarding this couple is the momentum between the relationship of the S&P 500 ($SPX) and 30-Year Treasury Bonds seems to be waning. The RSI indicator is just about down right depressing as it makes lower highs. This type of momentum divergence has been present during just about every intermediate equity top. But none of this matters until price confirms. While it’s concerning to see the S&P overshadowed by bonds during this rally, it only becomes important when the Mr. Market says so.

Yields continue to fall and the correlation between bonds and stocks continue to rise. Over the last 10 years the 60-day correlation between the S&P 500 ($SPX) and 30-year bonds has only been this high nine previous times. So what does this all mean? It means investors have not been shifting out of bonds and the ‘Great Rotation’ is not necessary underway. Whether you chose to blame Bernanke, Japan, or your Uncle Bubba – stocks and bonds are now best friends. It’s unlikely this courtship will last forever, normally it’s the bond boys that win out, we’ll see if this time is any different.

Using Sine Waves With Trend Analysis

Posted on April 25, 2013 by Andrew Thrasher, CMT

I do most of my charting at Stockcharts.com, but I spend most of my day using thinkorswim to monitor markets intraday. Thinkorswim is a great platform and is an excellent charting tool. One of my favorite thinkorswim studies is the Mesa Sine Wave indicator. We can use the sine wave to determine if the market is trending and it can help identify possible shifts in trend.

The Mesa Sine Wave indicator uses two sine waves, one ‘normal’ sine wave as well as a wave that’s advanced by a 45 degree angle, called the “lead wave.” We can see that when the sine wave crosses the lead wave, the security may be changing trend. I’ve put green and red arrows to show examples of crosses on the S&P 500 chart below. The sine wave has been above the lead wave since Dec. 3rd of last year, staying with the up trend in $SPX. Using the Mesa Sine Wave indicator is not going to provide perfect trending signals, nothing will. However it can be a great tool to help see trends on various time frames.

I’ve also noted the trend line that I discussed a few weeks ago in my Technical Analysis Doesn’t Have to be Difficult post. I identified the possible levels of support if we saw a trend line break in the large cap equity index. Sure enough, we saw weakness and tested the previous short-term low and bounced. We are now back above the rising trend line and it appears bulls are going to try to make a run for 1600.

U.S. Equities Continue to Trounce Emerging Markets

Posted on April 15, 2013 by Andrew Thrasher, CMT

No, I’m not writing about gold today, there will surely be enough digital ink spilled on that topic by other bloggers. Last Monday we identified the support in silver, and the metal has made it it’s b*tch today. Speaking of outperformance….

The S&P 500 ($SPY has been taking emerging markets ($EEM) to the woodshed during 2013. And this is the topic of my TraderPlanet piece for this week.

Here’s a piece:

For the last several months we can see the clear downtrend in the green line, indicating that SPY is rising more or falling less than its EEM counterpart. What’s interesting about this domestic outperformance is what’s been happening in momentum.

Go read the rest: Domestic Stocks Outperform Emerging Markets (TraderPlanet)

Technical Analysis Doesn’t Have to be Difficult

Posted on April 10, 2013 by Andrew Thrasher, CMT

It’s so easy to get bogged down by the numerous indicators, waves, and cycles that can be applied to a market. There are tons of different momentum indicators, breadth indicators, and volume indicators. Each tell essentially the same story as it’s brethren. I’ve spent a great deal of time posting and tweeting various charts on differing time frames that look at the equity market from different angles.

We’ve discussed sentiment, we’ve looked at narrowing breadth, and all the charts that I think could end the rally. But sometimes we need to just look at price. Okay price and RSI.

We don’t need to make this difficult. What price is currently telling us is that the S&P 500 ($SPX) is in an uptrend – making higher lows and higher highs since November ’12. The green trend line shows us where support is likely to be on any drops and helps identify the trend. We also have the previous lows that will could be support if the trend breaks and we begin to correct.

If we look at a simple momentum indicator like the Relative Strength Index, we can see it’s diverging from price – making lower highs while price is making higher highs. I’ve talked about this nearly at nauseam for the last few weeks. When we have seen drops in price the RSI indicator has been able to stay above 40, a positive sign for equity bulls. All the negative divergence is telling us is that the car tires are losing a little air. This doesn’t mean the car drives off into a ditch, it’s just a warning that the driver needs to be aware of.

Price will let us know when things are looking bearish. Until we get a break of the uptrend all of the other charts we’ve looked at don’t matter! So why do I write about them? Because they are warnings. They let us know something is happening ‘below ground’ so to speak. Understanding sentiment, knowing about retracements and breadth are important. It’s shouldn’t be thrown out the window as various indicators and charts do have their place. We are in an uptrend, the trend could take us to 1700 in a month for all we know or it could begin to correct tomorrow. Technical analysis doesn’t have to be difficult and we shouldn’t stress over every tick.