How things can and do change in a flash. Yesterday I thought the S&P 500 was in danger of a nasty technical situation by diving under both its 50 and 200-day moving averages. Today it's looking like it simply went through a normal retest. Perhaps the thing I'm most surprised about today though is the trend table (below). I think this is the first time since December 2007 that all nine trends have been up at the same time. It's been so long that I'm having a hard time believing it. Like I discussed a couple of weeks ago, I could have flipped the S&P and Russell's long-term trends to up at the beginning of June. I decided to wait until they pulled a little farther away from their 200-day moving averages. (Remember, for consistency's sake I chose to use the 200 DMA to define the long-term trend.) I just can't justify keeping them at 'lateral' any more. Despite what the trend table says it's tough for me to get too excited about the market when I pull up a monthly chart going back to 1996.
It's been a long time since I posted any index charts with Guppy Multiple Moving Averages (MMAs). The MMAs on the indices show bullish long-term groups (investors) providing support to a selloff attempt by the short term groups (traders). Here's the S&P 500's MMA chart.
The MMAs on the Russell 2000 and Nasdaq look even stronger than the S&P's. Those charts make it easier for me to believe that the market has some hope of holding up.
Here are the S&P and Nasdaq with the more typical 50 and 200-day moving averages.
Everything is up for the first time since December 2007 (I think).
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up(+) | Up(+) |
| Intermediate | Up | Up(+) | Up(+) |
| Short-term | Up(+) | Up(+) | Up(+) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
It could be window dressing as the end of 2nd quarter approaches.
Did you pull up the monthly chart just to give yourself a reason to be skeptical? :)
Thursday's bounce was the (slightly belated) relief from the Fed meeting. I will of course be watching to see whether we sell-off the week or two into the next Fed meeting as part of that old school pattern of the market pressuring the Fed to act (or not to act as may be the case here).
I just think it was too oversold for it to not have some kind of bounce.
You nailed it Duru.
I agree that it could have just been an oversold bounce and/or month-end window dressing. As always, we'll just have to see how things develop.
Mike (or others)
In my constant attempts to get a swing trading system which will be right more often than wrong, I've been looking at using 2 and 5 day emas to spot short-term trends, and then tagging on MACD and RSI as confirmers, or at least checking that they don't flatly contradict. No system is perfect, and this one will give some false starts, but it seems to me that this is not a bad one. See link for example. Any thoughts?
http://finance.yahoo.com/echarts?s=GDX#chart4:symbol=gdx;range=20090325,20090626;indicator=ema(2,5)+macd+rsi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
What is the efficacy of the Guppy indicator over a longer period of time?
Thanks, Mike!
Damien
You might check to see how Daryl Guppy is seeing the current GMMA set up.
He is bearish as of 6/19. Too great
a penetration of the lower bands to be
bullish.
GMMAs are primarly used for long term trend idicators so yes they work good
for long term trend investing.