Game on
H.O. protocol initiated
Waiting for confirmation of second sign w/i 30-days span
Sounding right
The latest Daily U.S. Market Forecast Report, issue no. 4063 as of Wednesday, March 3rd, 2021, is now available at www.technicalindicatorindex.com To access this report, subscribers can simply log in and click on the U.S. Daily button.
For those of you with busy schedules, here is an executive summary (for a more intense detailed report, with charts, more statistics, trend analysis, and extraordinary developments, click on the U.S. Weekend and Daily Market Forecast Reports at the website).
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Today's Market Comments:
Stocks fell Wednesday, March 3rd. Volume rose on the decline. Techs fell the hardest, but the entire market showed weakness.
We did not see a second Hindenburg Omen observation from Wednesday's action. It was close, but New Highs came in more than twice the number of New Lows, and New Lows did not exceed the minimum threshold of 2.2 percent of total NYSE issues traded, coming in at 2.08 percent, both disqualifiers. So, at this point, we have one observation on the clock, and are looking for a confirming second observation to make it "official," meaning the probability of the outcome of a strong subsequent stock market decline would rise.
Stocks generated a first observation Hindenburg Omen on Tuesday, March 2nd. NYSE 52 Week New Lows rose to 89, with New Highs at 151. The lower of the two were 2.67 percent of NYSE issues traded, above the minimum threshold required of 2.20 percent. The McClellan Oscillator was negative, New Highs were not greater than twice New Lows, and the ten-week moving average of the NYSE is rising. All conditions were met.
It is not an official Hindenburg Omen until we see two within a 30-day period. Tuesday's is the first. Once we get a second, an official H.O. will be on the clock. An official H.O. means there is a far greater than random probability of a stock market crash over the coming 120 days. We wrote in the weekend newsletter that "The stock market could generate one over the coming days." This is the first Hindenburg Omen observation since January 2020, a year ago. These are infrequent events in the stock market.
The point of an H.O. is that we need to see a new Hindenburg Omen if a crash is on its way. Every crash since the 1980s has occurred when an H.O. was on the clock, and none occurred when there was no H.O. on the clock. This indicator could provide an important clue as to the timing of the next major decline. There was an Official H.O. on the clock when the stock market crashed 35 percent in March 2020.
Our small cap Russell 2000 Purchasing Power Indicator remains on a Sell signal. Our Blue Chip key trend-finder indicator moved to a Sell from Neutral, as the Purchasing Power Indicator flipped back to Sell. Our three-component NASDAQ 100 key trend-finder indicator remains Neutral. Our HUI Mining stocks key trend-finder indicator remains on a Sell signal.
The Blue Chip 10 day average Advance/Decline Line Indicator, the Blue Chip Demand Power / Supply Pressure Indicator, the NASDAQ 100 10 day average Advance/Decline Line Indicator, and the NDX Demand Power / Supply Pressure Indicator are on Sell signals.
As noted in Monday's newsletter, whenever we see frequent changes to our Purchasing Power Indicator, it often means prices are tracing out a Triangle, Expanding Wedge Megaphone, or a Contracting Wedge, patterns with many overlapping waves. In the chart on page 38 we show an alternate pattern, a Megaphone, for the Industrials that may be occurring now. The chart on page 37 remains a top probability, but the possibility of a Megaphone from February is growing. If so, it has another rising wave to finish, but it is in its fifth and final subwave.
The S&P 500 may have completed a Megaphone top pattern since January 1st, 2021, however the decline from its February 16th high is choppy, and its wave mapping remains unclear tonight.
The NASDAQ 100 is completing a Rising Bearish contracting Wedge from September 2020. It may have finished as shown in chart on page 44, with the top in. An alternate scenario is subwave d-down just completed and it is now inside the final subwave e-up for this pattern.
Of interest is that the NASDAQ 100 may have completed a Head & Shoulders top during 2021, with a downside price target of 11,800ish. We show this chart pattern on page 45.
Our intermediate term Secondary Trend Indicator generated a Buy signal Wednesday, May 20th, and remains there Wednesday, March 3rd, losing 3 points (out of a possible 9 points), to zero. It needs to fall below negative - 5 for a new Sell signal.
To confirm when the next major declining trend is starting, we want to see our Intermediate term Secondary Trend Indicator (which was originally named our Technical Indicator Index, but we changed it to reflect the intermediate term nature of the benefit of the signal, 3 months to a year typically) move to a new Sell signal. We show this in the chart on page 13. Our Secondary Trend Indicator, has been on a Buy signal since May 20th, 2020. Since that Buy signal, the Industrials have risen almost 7,000 points. Prior to that it generated a Sell signal on February 27th, 2020, catching the entire 2020 stock market crash.
The month of March tends to be volatile, with major trend turns starting or ending.
Over the past year, The VIX has formed a five wave Declining Wedge pattern, with a support shelf around 20ish. The VIX recently spiked above 35 to conclude the fourth wave (D) up and is now traveling in the fifth wave, (E ) down. It is again approaching the support shelf. Once (E ) bottoms, the VIX will be poised to rise sharply, which would coincide with a strong stock market sell-off. The VIX's Daily Full Stochastics have dropped to a level seen at past bottoms.
Bearish Divergences remain in place, that we have been showing for several weeks between prices for the major averages and their 10-day average Advance/Decline Line Indicators, as well as their Demand Power measures, telling us a top could be approaching that will lead to a declining trend. We also see a Bearish divergence between our Secondary Trend Indicator and the S&P 500. Divergences have excellent correlation with coming trend turns. This could provide an excellent opportunity for traders.
Gold fell 17.8 points Wednesday, closing at 1715.8, inside a corrective descending expanding triangle pattern we show on page 50. If it decides to drop to the bottom boundary of this pattern, Gold could settle for a bottom around the 1650 to 1675ish area. Silver rose 0.20 Tuesday and Mining stocks rose 10. Mining stocks look to be completing corrective wave iv down, with v-up to follow.
Our Blue Chip key trend-finder indicators generated a Sell signal March 3rd, 2021 and remain there Wednesday, March 3rd, 2021. The Purchasing Power Indicator component triggered a Sell signal Wednesday, March 3rd. The 14-day Stochastic Indicator generated a Sell on February 16th, 2021, and the 30 Day Stochastic Indicator generated a Sell on February 19th, 2021. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Demand Power Fell 4 to 449 Wednesday, while Supply Pressure rose 6 to 460, telling us Wednesday's Blue Chip decline was moderate. This DP/SP Indicator moved to an Enter Short Signal March 3rd, and remains there Wednesday, March 3rd, 2021. We see another early warning of a major top approaching from the Bearish divergence evident at this time. That decline may be starting.
The HUI key trend-finder indicator triggered a Sell signal February 25th, as the HUI 30 Day Stochastic triggered a Sell signal February 18th, 2021, and our HUI Purchasing Power Indicator triggered a Sell on February 25th. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Enter Short signal January 11th. On Wednesday, March 3rd, Demand Power was flat at 390 while Supply Pressure fell 1 to 423, telling us Wednesday's HUI decline was mild.
DJIA/SPY PPI Fell 6 to - 22.20, on a Sell
DJIA 30 Day Stochastic Fast 50.00 Slow 47.33 On a Sell
DJIA 14 Day Stochastic Fast 46.67 Slow 42.78 On a Sell
DJIA % Above 30 Day Average 50.00
DJIA % Above 10 Day Average 43.33
DJIA % Above 5 Day Average 50.00
Secondary Trend Indicator Fell 3 to Zero, On a Buy
Demand Power Fell 4 to 449, Supply Pressure Rose 6 to 460 Sell
McClellan Oscillator Fell to Negative - 97.90
McClellan Osc Summation Index -3008.10
Plunge Protection Team Indicator - 0.95, an "OFF" signal
DJIA 10 Day Advance/Decline Indicator -147.2 on a Sell
NYSE New Highs 276 New Lows 70
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated a Neutral signal Monday, March 1st, 2021, and remain there March 3rd, 2021. The NDX Purchasing Power Indicator generated a Sell on March 2nd, 2021, the NDX 14 Day Stochastic triggered a Buy on March 1st, and the 30 Day Stochastic triggered a Sell signal on February 22nd, 2021. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to an Enter Short positions signal Thursday, February 25th and remains there March 3rd. On Wednesday, March 3rd, Demand Power Fell 9 to 456, while Supply Pressure Rose 18 to 503, telling us Wednesday's decline was powerful with deep pockets intervention supporting prices.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal February 25th, 2021, and needs to fall below - 5.0 for a new Sell. It fell to negative - 23.4 on Wednesday, March 3rd.
NDX PPI Fell 19 to 228.90, On a Sell
NDX 30 Day Stochastic Fast 28.05 Slow 35.61 On a Sell
NDX 14 Day Stochastic Fast 20.24 Slow 24.76 On a Buy
NDX 10 Day Advance/Decline Line Indicator - 23.4 On a Sell
NDX Demand Power Fell 9 to 456, Supply Pressure Up 18 to 503 Sell
RUT PPI Fell 2 to 209.30, on a Sell
RUT 10 Day Advance/Decline Line Indicator -15.4, On a Buy
Today's Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Sell signal February 25th, 2021.
HUI PPI Fell 2 to + 235.24, on a Sell
HUI 30 Day Stochastic Fast 10.00, Slow 25.00 on a Sell
HUI Demand Power Flat at 390; Supply Pressure Fell 1 to 423 Sell
McHugh's Market Forecasting and Trading Report and this Executive Summary |
