Wednesday, November 29, 2006

Wednesday's Blog Links and Market Wrap Up

Due to server problems, I was not able to post my update to the Trading Psychology Weblog. Here's the material for Thursday AM:

Market Ideas:

TraderFeed finds an investment strategy based on disgust.

Euro:USD, plus other technical analysis from Many thanks to Jesus Perez for translating TraderFeed posts to that excellent site. (Babel Fish translation).

Massively cool: brain fitness for basketball players. I'll put the biofeedback topic on my list for upcoming posts.

David Gaffen on frantic efforts to ignore the yield curve.

The Big Picture offers bloggers' takes on retail sales.

Wide ranging reading list from Victor Niederhoffer and Laurel Kenner.

Great post on the persuasive personality and his corrosive effects from Trader Gordo.

Lowell Christie shows how he trades what he sees.

Lots of links from Charles Kirk, including a great quote on buying dreck from Altucher.

Yaser Anwar analyzes Alcoa and aluminum.

Boogster on using flexible moving averages.

Interesting to see people's methods. Estocastica tracks a couple of day trades. Here are related trades from Trader X.

Humble Money, with some good questions about fair value.

Trader Mike notes a large number of high NYSE TICK readings during the day, rightly attributing it to program trading. It would be interesting to take a historical look at what markets tend to do the day following a high program trading day...

Mr. Paul's blog list.

Great way to keep up with the news.

Market Expectations:

Divergences? With Wednesday's rise, the S&P 500 retraced its Monday drop and is within 10 points of a closing bull market high. Just the same, only 29 S&P 500 stocks made 52 week highs on Wednesday and only 26 S&P 600 small cap issues made annual highs. That's about a third of the level of new highs seen during the past couple of weeks. My best estimate is that near term strength will bring multiple divergences, which will have me questioning the market's upside potential. Across the entire market thus far, 20-day highs peaked at 2052 on 10/26 and then again at 1951 on 11/15. Current 20-day highs are 1168.

Market Summary:

The market moved steadily higher Wednesday morning, dipped midday, and then finished strong. We closed above the day's average price of ES 1398.25, initiating a short-term uptrend. The Power Measure closed strong on the heels of late buying. Buying was once again evident in the broad market, with the Adjusted TICK at +465, and in the large caps, with the Institutional Composite ending at +246. Demand soared to 180--quite a turnaround from Monday's weakness--and supply fell to 22. New 20 day highs rose to 1168 (see above); new 20 day lows fell to 390. Institutional Momentum rose to a tepid -140, with 5 stocks trading in intermediate-term uptrends, 9 in downtrends, and 3 unchanged. It appears that we are attempting to test the recent highs, setting up a potential wide trading range. I will be careful about buying strength near those highs if the rally does not remain broadly based.