Saturday, September 21, 2013

SPX Daily / Weekly

SPX Daily

The S&P500 has pulled back to potential support here at 1710. I'm guessing the bulls will step up on Monday and start building again for a move towards 1800. This is based partly on my review of some short term indicators signaling we are oversold, and partly on the simple fact of where we are on the daily chart above. 

One thing I've learned (after a long battle, lol) is to stay flexible with my predictions. So... with that in mind, I'm thinking we've got 10 points below here to a more serious battle ground at 1700, and the high volume zones of 1690-1700 and 1650-1660 that could also come into play. If the bulls don't produce much of a bounce off this oversold reading in the short term, I will definitely be re-evaluating and looking at those areas as higher probability targets. 


"It's not about whether you are right or wrong, it's about what you accomplish when you're right, and the wisdom you gain when you're wrong". That's my rewrite of a famous qoute from you-know-who.


SPX Weekly

The S&P500 Weekly chart has pushed up into the upper Bollinger Band. Even though the bulls didn't close at the top of the range this week, I'm still willing to give them the benefit of the doubt until proven otherwise. 

Ok, Considering it's a Saturday, I thought I would make this post even longer than usual - lol - and put up the following chart:





I was reviewing some longer term indicators on Sentimentrader.com and came across this interesting one. This data is reported monthly, so we are talking long term here... but this is worth staring at for a bit. Here is Sentimentrader's explanation of the indicator: 


EXPLANATION:
Each month, the Investment Company Institute releases information related to the mutual fund industry.

Included in this data is the total amount of assets invested in mutual funds, ETFs and money market funds.

As a rough measure of investor sentiment, this indicator looks at the total assets invested in equity mutual funds and ETFs, and compares it to the total assets invested in the safety of money market funds.

The higher the ratio, the more comfortable investors have become holding stocks; the lower the ratio, the more uncertainty there is in the market.

GUIDELINES:
Since 1997, this ratio has traded in a fairly defined range.  When equity assets were three times greater than money market assets, stocks formed bull market peaks within the next several months.

When uncertainty was so high that money market assets nearly overcame equity assets (i.e. when the ratio dropped close to 1.0), then stocks were near their bear market bottoms.

There is not necessarily a ceiling on how high this ratio can go - it rose steadily during the 1990s.  So it's entirely possible that the 3.0 level will no longer act as a ceiling on this ratio if stocks are embarking on another long-term bull market cycle, it's just something to watch based on history over the past 15 years.

ADDITIONAL RESOURCES:
Investment Company Institute (www.icinet.net)

After staring at it for a bit, I'm definitely debating how much weight to put on this. I always appreciate the brilliant minds that gather here and would love to open this up for discussion. What do you guys (and gals) think?