Tuesday, September 1, 2015

Cumulative Tick Now Bearish (again)

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Today's action obviously hit prices hard.  Selling wasn't as strong as you may have thought, at least from the perspective of the cumulative tick indicator I use.  The slope of the lines is not very steep, but the chart is short-term bearish in every interpretation:

Right click on the image to open in a new tab or window.

The top trace shows that a number of stocks fell to their 52-week low -- 212 to be exact on the NYSE -- and this significantly outpaced the number that hit 52-week highs (25).  When we have this condition risk is terribly high and it generally does not make sense to enter the markets.

The middle trace indicates that we started with a selling bias and it was more/less in a downtrend all day.  No real panic sells here, so I'm not as paranoid about the day as the talking heads would have you believe.

The "tell" here is that in the bottom plot, which has the real-time cumulative tick (white) and the moving averages of the CT (all some color of red or purple) all starting to down-trend again.  This obviously is not good -- the markets are net selling, and hence, it simply does not make sense to enter the markets when this is occurring.

Risk is very high.  It's not worth entering, and I don't bottom fish.

Right click on the image to open in a new tab or window.

The LCR dropped with today's actions, and you can see on the left side of the table that we have red everywhere for today.  This means that all the moving averages of the long-cash ratio are now negative, and more stocks are moving to cash than the other way.  This simply confirms what we see in the Cumulative Tick chart.

The right side, which measures acceleration of the LCR in a given direction, is mixed.  I don't read too much into the mixed value -- we're right at thresholds.  The market could go either way, and cause the right side to turn more red or green depending on what it does.

The "so what" is simple -- without green on the right, you can't get green on the left, and I don't buy unless I see green on the left.


Take Wednesday off.  Go play golf, work, whatever.  Don't watch the markets, because it doesn't matter.

I'm not buying for the Dividend portfolio just yet, but I am getting my shopping list together.