Monday, December 04, 2006

Tuesday Blog Links and Market Stats

Note: The Trading Psychology Weblog will resume daily posting Tuesday night. Wednesday AM will be another Morning With the Doc session, in which we'll track the market in real time.

Market Ideas:

Trader Feed's three steps toward self-improvement in trading.

Divergent thinking, a key to the pros' success, from Trading Markets.

I like how Seeking Alpha parcels blog content into long ideas, short ideas, sector themes, etc. Here's an interesting perspective on lower dollar, higher stocks.

Excellent economic overview and perspective on Turkey from Yaser Anwar.

Kirk takes a look at the CNBC stock screener.

Trader Mike tracks new highs in the indices.

Trading the Charts, with a variety of market perspectives in its December newsletter.

Resilience and more from Adam Warner.

Sentiment and more from Abnormal Returns.

Very thoughtful post on buying bonds from Random Roger.

Market Expectations:

My measure of upside momentum (Demand) to downside momentum (Supply) rose on Monday to 149:27. Recall that this measure tracks the number of stocks closing above their volatility envelopes vs. those closing below. We're seeing the number of stocks with strong upside momentum outnumber those with weak momentum by more than 5:1. In general, we tend to be more likely to see upside follow through 1-5 days out following new highs with broad participation vs. new highs with weak participation.

The number of S&P 500 stocks making fresh 52-week highs rose nicely to 65 on Monday, although that remains below the 80 level recorded about two weeks ago. Among the S&P 600 small caps, new highs were 56, down from a little over 80 two weeks ago. As long as we make day over day highs and expand the number of stocks making new highs, the short-term trend has to be considered bullish.

Note that this rally has actually broadened. The Russell 2000 made a new high on Monday, but the Dow did not. In general, weakening markets don't broaden to the upside.