Big time update... Peter Eliades' Stockmarket Cycles update for Monday, November 22, 1999.
Jim Miekka is a talented and creative market analyst whom we mentioned in
our introductory material because of his work with the McClellan Oscillator
and Summation Index. Miekka is the inventor of the so-called Hindenburg
signal, (most of you know that word, named after the Nazi, Germany airship
which crash landed in Lakehurst, New Jersey on May 6, 1937. The signal was
similar to the Market Logic, High Low Logic signal which is calculated on a
weekly basis by taking the lesser of 52 week highs or lows for the week and
dividing that number by the number of issues traded on the New York
Exchange for the week, and the Market Logic signal, once the ten week
exponential moving average of that number reaches 4.5%, a sell signal is
given. The Hindenburg works with daily data and the preliminary condition
looks for a day when the lesser of 52 week highs and lows divided by total
issues traded is greater than 2.4%. That condition was met on Tuesday,
Wednesday and Thursday of last week. The signal was then triggered when the
McClellan Oscillator moves below zero. That happened today as the McClellan
Oscillator moved from Friday's +26.4 to today's -34.0. The Hindenburg
signal has now been triggered. Does it work all the time? No, we know of no
technical signal that works all the time, but it has a pretty good record
of preceding very sharp declines in the market over fairly short periods of
time.
If we look further into the market's technical underpinnings, the
picture is as bad as we never remember seeing it in our 30 plus years of
following the market. The daily advance-decline line today closed a slim
809 units above the October 26 low where the Dow was 800 points lower and
the S&P Cash was almost 11% lower. We are tired of saying it, but it is an
amazing and stunning divergence. It is made all the more so, because the
XMI (the maxi index, those are 20 of the 30 original Dow stocks) went to a
new all time high today in the face of these divergences. So far, of
course, the divergence has continued and widened. Perhaps now that the
Hindenburg signal has been triggered, it will make a difference.
There has been another amazing technical sequence over the past week
or two. Over the past five market days the number of 52 week lows starting
last Tuesday, has registered 96, 135, 148, 179 and today 249. At the same
time, the number of 52 week highs on the New York Exchange since last
Wednesday, has registered 103, 91, 64 and today's 62. There has been a
continuous contraction of new highs, and a continuation expansion of new
lows and that has to be viewed as a bearish sign as several indices are at
or one day away from new all time highs.
Mutual fund switchers, Rydex switchers are in the Ursa fund. Fidelity
Select switchers are in cash. All mutual fund switchers should call after
3:20 p.m. ET each market day, and call each market evening.
Stock Index futures traders, keep your stops on our December S&P short
positions at 1440.70 until or unless there is a move below 1416. If that
should occur, then you may lower your stops to 1431.00.
December bonds gave a preliminary nominal 5 week downside projection to
111 and 17/32 +- 13/32, but the projection up to the 117 area remains in
effect. There are no new projections on the XAU. Have a great day. We'll
talk to you tomorrow. |
