MomentumCycles

Cycle comments for Monday, November 10 open:

The next important turn is most probably November 18, where cycles coincide for the OEX and silver.If the 18th is a high or low for either OEX or silver, expect a short term turn in that time frame to the opposite direction.We expect that physical gold will have made made a short term low by Monday November 10.We use longer and shorter term RSI and Stochastic{ among other things} to look for cycle rhythm lows.If the double bottom of 308 is broken{which it hasn't yet} we could see as low as 296 print.Oil is holding up due to Mideast tensions ,as we predicted on last weekend's update and has a reversal rhythm within 2 or 3 days. It would spike up into the first day of military action. CODI is still in the high risk area for long entries into U.S. equities short term.Longer to intermediate term traders should check our weekly updated risk - reward measurement of multi-month cycle money flow on the ergotic chart on this button. CMR, the one Toronto equity we are monitoring as an example of how to do fundamental and technical analysis,is showing over 95% probability of smart money accumulation. On Friday, relative strength of CMR versus other mining equities and the general market as a whole was very impressive .Offers to sell seem very thin in the price range it is trading in, which is narrowing.The chart action suggests something good is about to happen.Note, as technicians, we have been waiting for price phase and on balance volume to confirm the fundamentals.The fundamentals suggest an eventual 10 for 1 return, due to severe undervaluation.The lower the price falls in the downchannel, the higher the eventual return.To read our detailed CMR analysis, go here.

Breadth:

The market spoke on Friday with poor breadth and net negative volume as evidenced by the roll over in the issue and volume Mcosc. This rollover is actually going to make a much more symmetrical complex bottom that we had previous to Friday. It looks like the right shoulder is now beginning to form and if it is to be perfectly symmetrical we need to go through additional selling. It doesn't have to have perfect symmetry, in fact it probably won't. The point of interest is the relationship of the right shoulder low with respect to the left shoulder and the head. Price closed on the red center line of the downward sloping regression channel. NYA is now two days into a declining trendline with declines overwhelming advances on Friday. CODI came out of the Sell Alert area with a Sell Pivot. It will remain on a sell until it changes direction.

Volatility:

MVIs are a long ways from being oversold. MVIadaptive has been leading the MVI regular. AMOSS Zone Timer is still on a sell pivot trend that started in the neutral area. This is characteristic of bearish action when the 20 and 90 rise from zone 1 and turn back down again within zones 1,2, or 3. This description of a Bear mkt was provided about a week ago. Actually it was believed that the 90 day would track in zone 1 with the 5 and 20 cycling up and down for a truly bearish personality.

RSI & SMI:

Bearishness is reinforced when RSI SPX turns down from the center line as it did. Yield RSI is still not strong enough to rise. A declining yield RSI and SPX RSI means stocks and bonds have decoupled. This is another indication of a change in the personality of the market. GOLD stock RSI is not showing signs yet of recovery. Gold equity stochastic momentum is really dropping. Sometimes these stocks will rally ahead of mining conferences that are promoted by the mining industry and propagandized by the world gold council. One such conference is occurring at the end of November in San Francisco.

Of Special Interest:

NDX actually performed well on Friday with a nice recovery and ended with a positive RSI oscillator and increasing stochastic momentum.

>Momentum Cycles Update prior to the open on Tuesday, November 11, 1997:

Breadth:

Early morning gains gave way to profit taking once again. Sharp rallies and drifting declines are characteristic of bearish sentiment, just as sharp dips and gradual inclines are representative of bullishness. This is what should be expected when the monthly and weekly trends are down. Flow rate for the entire day was below strong trending levels. Near the end of the day there was a double pump sell on the net flow rate as traders gave up. Issue and volume oscillators are constructing the right shoulder of the complex bottom. It most likely will be completed this week or early next in time to celebrate Thanksgiving in two weeks. We have seen numerous occasions where mid-November and, again, mid-December, mark cyclical lows due to tax loss selling. We do have the period of November 18, plus or minus one day, as a short term turn point. There were narrow ranges on both of the oscillators meaning Tuesday is likely to have a bigger move than Monday. NYA advances led declines early on but were zeroed out by a constantly increasing decline number until near parity was reached on the close. CODI is still on the sell pivot from the middle of last week, and is still close to the Sell Alert zone. That does not preclude a further rally up into the sell zone, which would be followed by another sell. Presently, 7600 seems to be short term resistance.

Volatility:

Both MVIs remain on sell trends. AMOSS Zone Timer remains on a sell in a high zone suggesting that the sell will not last very long.

RSI & SMI:

Again, not much change with these indicators. Gold stocks trying for a second bottom in the RSI and looking for downward momentum to taper off. Yields making a low, stocks working on a low.

Of Special Interest:

CMR on the Toronto continues to have improving on balance volume percent. This was the first day above zero in some time. If the internal strength can continue to push price above the channel lines, there might be some nice gains in price. It remains to be seen if the tax loss selling is over in this issue. WE have a new trading tool called the Virtual Mirror. This indicator is in the last stages of backtesting and seems as accurate as CODI, if not more so. We are working on mechanical buy and sell rules for subscribers that will give a "black box" approach to trading these two indicators. Before these mechanical buy and sell rules are posted, we are trying to tweak the indicators to give the largest possible annual return. This proprietary Virtual Mirror pulled ten points out of the OEX and remains short for the open on Tuesday. NDX is approaching critical support and is oversold.

Momentum Cycles Update prior to the open on November 12, 1997:

Anticipation of FED actions often causes selling that is temporarily exhausted by the time the decision day arrives.CODI is presently supporting the feel of the drying up of selling.7600 is presently resistance.It was a very important support number before the October breakdown took place,and a strong close above that number would give heart to the bulls.

Wednesday morning update 8:17 am:

The foreign markets are very weak again, almost universally across the board. It may be wise to wait a little longer before entering heavily into long positions. Recently, over the past month, our market has come more in sync with the global search for liquidity. It is very possible, therefore, that we may get a spike deeper into the buy zone. As I said before, 7600 seems to be a strong and important psychological resistance.Some of our charts are heavily dependent on bond RSI and therefore miscues may have been generated in stock trading, since bonds were on holiday Tuesday.Let's wait a bit to see how this shakes out.

Breadth:

Issue and volume oscillators are forming the right shoulder in preparation for another advance on the zero line. OEX price held tight to the center regression line for another day. Wednesday should see it move off the line. NYA is completed the third day along a downtrendline. Advances and declines were fairly balanced. Near the close the flowrate had a double pump buy thrust that pulled the tick from a negative level up to the zero line. The feel here is for a positive day on Wednesday.

Volatility:

Both the AMOSS and the MVIs both have made minor buy pivots supporting the conclusion for a good day on Wednesday. CODI also tagged the Buy Alert line on Monday and made a buy pivot today again agreeing with the other indicators.

RSI & SMI:

Bonds were on vacation today leaving stocks to do their own thing. This could have given false signals from the stock camp.

Of Special Interest:

T-CMR finally broke up through the center band and confirmed with the price phase and on balance volume indicators. NDX is searching for support at the long term horizontal line.

Have you noticed how accurately we have called the rallies and declines in the U.S. equity market?Our CODI and AMOSS indicators predicted accurately the cycle high August 7, the cycle low and rally October 27-28, the quick rally into Monday November 3 where traders exited with a 200 Dow point profit, the weakness and loss of momentum for the rest of last week , the rising risk for longs into the sell alert area Wednesday and Thursday, and the statistical probability of a selloff by Friday's close at the latest.Ask yourself if having a "virtual roadmap" of these momentum cycles is worth having long term.Do you think its just luck?It represents decades of research by traders that use these tools every day.A subscription to OEXTRADER will enable you to access this page to time short and long term trades with unparalleled accuracy.We are always working on new indicators and trading systems.Backtesting is done thoroughly over a 25 year market history.The charts shown here cannot be reproduced without similar research on your part over at least 10 years.Think of all the money you have spent on newsletters and hotlines and market faxes.Did you get DAILY measurement of risk and reward for short term long and short positions that could also be used for fund switching?Sometimes our "parent site" OEXTRADER has taken a short position after our long position close out during the same week and we've BOTH made money for you ! The traders on this page use timing tools that make a steady income for them.Don't you want those same tools?

Momentum Cycles Update prior to the open of Thursday,November 13, 1997:

We posited a return to global synchronicity 8 AM Wednesday before the open, seeing the uniformly bearish trend of all world markets early in the morning .For that reason , we advised holding off accumulating long positions, regardless of the oversold CODI and AMOSS charts. CODI looks like a deeper spike into the buy zone is in the works before a tradeable pivot will be achieved.The previously mentioned turn date in the November 18th area might therefore be a low.

Breadth:

Issue and volume oscillators are still constructing the right shoulder of the complex bottom that began in October and is likely to end in November. The significance of such a formation should not be underestimated as it builds the base from which year end rallies germinate. With the lack of confidence in the market today, it looks like the critical support is going to be broken on Thursday and a test of the lower regression line is on the menu. Tax loss selling and profit-taking are not over yet. This sort of thing feeds on itself. Declines overwhelmed advances on the NYA chart which completes the fifth day of a downtrend. Probabilities are in favor of a rally when the trend is 6 to 9 days in duration. CODI is still on a Sell Trend within the Buy Alert zone. Monthly and weekly trends are still down and most likely this single fact is dictating the selling into rallies. One of these days the daily trend will change and then the weekly will change. Until then there will be intraday rallies that start and fail until one finally grabs hold and carries the day.

Volatility:

AMOSS and MVI buy pivots in higher zones were aborted quickly with the round the world panic that occurred after the US markets closed. Any end of day comments here are subject to change overnight as we truly live in a global market. That is why we sometimes make AM pre-opening posts, as we did this Wednesday. Tuesday's action did give false clues for Wednesday as was suspected in this commentary yesterday. The MVIs are testing support at a center channel line and a lower first support level. VIX is running at such high levels that trading OEX options requires some special consideration. Either quick intraday directional trades by nimble traders with a live feed or spreads that can benefit from the time decay and are somewhat desensitized by volatility are recommended.

RSI & SMI:

Gold stocks are still unloved. Bonds are tolerated and there is a love hate relationship with stocks reflected on these charts.

Of Special Interest:

CMR. Below market bids are the best kind during "tax" season.Someone sold some CMR during today's "mini-panic" at 1.45 Canadian that was snapped up instantly by smart money buyers who then moved price up to 1.65 at 3:57 pm to clean up the remaining supply.Recent drill results quite possibly support fundamental revaluation of Canmine's Masqua property ,and big smart money buyers seem to be willing to accumulate positions on weakness. Six to eight weeks of basing is a good rule to follow when looking for a year end bounce candidate. Here are commentary A and commentary B for CMR. Flow rate picked up in the afternoon to the level that supported a strong downtrend. Shares per minute were strongly negative and formed a divergence with the NYSE TICK which might represent a washout of sorts. At least for Wednesday it represents a peak in transactions. As the right shoulder on the McOsc is formed these types of sell offs should diminish. NDX broke Upper support(formerly critical support) and is now flirting with the pre-panic support in October.

Momentum Cycles update prior to the open on Friday November 14, 1997:

Gold has just broken the spike low of 308 mentioned here weeks ago.On that call, we were early.Silver has shown signs of life, and military action against Iraq is gathering steam, supporting oil.hong Kong is up, but Japan is down.Early trading in Europe was generally up.European trading ends about 1130 am eastern.

Breadth:

There was a significant tug of war going on between the bulls and bears in U.S. equities today. Take a look at the NYA advances that had an early morning thrust, a pull back and a second thrust. Both declines and advances were above 1200 level which puts a blemish on the price movement. The issue and volume oscillators are trying valiently to complete the right shoulder of the complex bottom just as price probes critical support for a takeoff rally point. MVIs and ratios, including the put/call ratio, suggest more than just today's upside here. Flow rate was above the 1.5 level which is the threshold for sustained trend and the net flow rate was positive for the last three hours of the day. This kind of action would lead one to believe that Friday would see some follow through on the upside. There is a certain degree of synchronicity here. Momentum cycles related to expiration week are beginning to have an influence on prices. CODI made a buy pivot in the buy alert zone after a near call earlier in mid-week. Normally there would be more than just today's up action. With a little support from the global markets, we could possibly have a retest of the 7600 area. In our opinion, we need 3 days above 7600, which was the major breakdown point, in order to feel comfortable with a longer bullish scenario.

RSI & SMI:

Gold stock RSI appears to be curling up from what felt like a bottomless mineshaft.When RSI's are THAT oversold in ANY market, it pays to look for a bounce. Yields are flat. Stocks are working out the residual sellers. In the coming weeks and months as tax loss selling and profit taking subside the Stochastic Momentum chart should see some reversals in trend. Two additional seasonal factors could very well provide an explosive impetus to price. Stats say that if the trend has been down in week(s) prior to expiration, then E week will have a net positive flavor. Following E week we have the time honored investing cliche, "In before Thanksgiving, Out by Easter". The upcoming rally might take off like a Tomahawk missle...hopefully it doesn't land like one.Seasonals suggest there may be some more downside volatility left yet,but year ends have a general up bias.

Of Special Interest:

T-CMR, Canmine on the Toronto Exchange is shaping up technically. The 95+ Expert Ratings are gaining price phase and volume confirmations. This isn't without fundamental reasons. Drilling results have added to the investment community's calculation that reserves may possibly be significantly understated. Our personal calculation is that the price multiple of earnings based on 1999 scope only estimates is very low.It is possible that the disfavor currently of all mining issues has forced unwanted selling of this issue as well, since investors often buy multiple issues in the same area.In that case, BRE-EX may be having a final revenge on its much abused investors. The NASDAQ 100 survived its drop through the 1000 level with a move above upper support and above a downtrendline stretching back seven days. Probabilities are high in favor of a rally after a downtrend of that length.

Momentum Cycles update prior to the open on November 17, 1997:

Short term traders who entered on the CODI buy pivot in the buy zone achieved at least 7 OEX points on 15 invested from the post opening selloff to Friday's close.They would have exited on Friday's close knowing that premium often deteriorates on the weekend, or at the very latest near Monday's open knowing previous resistance has been found repeatedly near DOW 7600, which we predicted ahead of time as the upside target near term on the THURSDAY p.m. update.We need 3 days strongly above 7600 to confirm that this rally is not merely the vacuum effect that markets have of being sucked up into resistance before falling to test support.Five things are in counterplay currently, the first being expiration week's general upside bias , second the weakness that often occurs somewhat before Thanksgiving which often marks a good buying opportunity for the traditional end of year rally, third the remaining tax selling that is still occuring,fourth the worldwide instability caused by a perceived threat to reliable oil supplies, and fifth, the cyclical weakness of two of next week's trading days.CODI is presently in the indeterminate zone where neither a low risk buy or short occurs.Remember this indicator signals a tradeable rally within one or two days of crossing the extremes of the buy or sell zones and is acted upon at the pivot on the chart.Exits for short term traders are made into strength during the initial parts of the move when the slow acting public takes the index option off your hands with a gratifying increase in your premium, due to a lessening of disbelief in the direction of the move.We leave money on the table with a moving stop{see chart} to propitiate the market gods { remember bulls make money, bears make money, pigs get slaughtered?}.We are still working on the mechanical"black box" trading rules for index options and end of day fund traders using CODI.They will be available to subscribers after further backtesting and % return optimization.

Breadth:

Pre expiration week Friday pattern came through with a plurality of positive breadth in issues and volume. Both the McOsc and NYA charts illustrate this in context of the intermediate and short term trends. CODI buy signal yesterday came through with pocketable profits on the OEXKO November 875 call option which was entered after the expected early morning pullback. Since it only has five trading days left until expiration it was exited at two points using a parabolic stop and a trending stop. Net flow rate was very supportive of the strong trends seen today.

Volatility:

MVIs were sitting on support lines yesterday and participated in the buying that occurred today. They give the feel that higher prices are ahead since the MVI has another standard deviation to reach overbought and the MVIadaptive is coming off of -2 std dev. The AMOSS Zone timer is on a buy signal while the OEX P/C ratio has slipped onto the sell line. If the market continues to rally strongly the P/C ratio could slip further below the sell line. One day is insufficient to act on this indicator.

RSI & SMI:

Sounds like a broken record here. Gold RSI experienced some contract expiration jitters the last few days. Now that they are out of the way we might just see the XAU RSI improve over the coming weeks. The major gold mining company presentation is in two weeks. Even if the bullion does not move up, it is very possible for the gold stocks to do so. Yields are still hovering on their lows. Stock RSI and SMI are coming out of that momentum cycle low alluded to earlier in the month.

Of Special Interest:

Canmine Resources, the equity we're using to study fundamental and technical analysis, CMR, traded at 1.85c. As each day passes more of the indicators are confirming a turn here with the low at 1.45/1.50c. NDX achieved resurrection today with a disbelief rally. The very short term oscillators rolled over but if the NDX enters an uptrend then the oscillators won't turn down immediately. Have to wait and see. The daily Rainbow oscillators have turned up and the weekly Rainbow oscillator has reduced FEAR as the oversold bars shorten. The weekly may turn up by next Friday given a week of advancing prices.

This site, along with our "parent site" Oextrader, gives daily measurement of risk and reward for short term index option trades, end of day fund switchers, and intermediate and long term asset allocators.Our last trade entered long on the CODI buy pivot on the Thursday p.m. update,{or Friday near the open} made 7 OEX points on 15 invested if exited on Friday's close, or a double{15 on 15 invested} if exited near Monday's open.We consistently provide cycle lows and highs ahead of time, such as the high at DOW 8259 on August 7, and the low on Monday and Tuesday October 27-28, followed by the predicted rally.The CODI pivot signals alone are worth the price of a subscription.More tools are constantly added, such as our recent addition of Fib resistance and support levels.All charts are accompanied with explanations.You get access to the thoughts of traders that make their living trading- not from selling newsletters! Please subscribe and allow this site to continue- the next year will likely be very volatile- ideal for short term traders and fund switchers!