Tag: Holystic Market Analysis

January 24, 2011 – 04:32 am EST

It has been a while since we last saw declines as sudden and sharp as they were over the last week.  But this is to be expected from a heavily overbought market and why we warned it was a dangerous time to initiate bullish positions.  A rather interesting divergence between the small caps and the big caps occurred during the selling and could be an indication that the smart money is retreating to safety, lets take a closer look…

***Thanks for continuing to spread the word about this newsletter.

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ETF % Change Comparison

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Above you can see that IWM slashed over 4% off its price while DIA managed to advance 0.77% and finished the week at a new high.  As the market risk increases a shift in performance tends to occur as the smart money moves out of the more economically sensitive areas like the small caps and semiconductors.  You will notice however that SMH held together relatively well which is a good sign.  If SMH can continue to maintain its strength this week then any profit taking is likely to be short lived.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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Both the RSI and volume flows have turned bearish on SPY, $130 is likely to stand as resistance.

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It would be healthy for QQQQ to test $54 or its 50 day SMA but below these levels things get more dangerous.

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SMH is very close to turning bearish.

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I will be keeping a close eye on IWM this week to see if the 50 day SMA will hold.

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IYT is looking weak and we have taken our profits.

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OM3 Weekly Indicator

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IWM and IYT recieved several weeks of bear alerts indicating internal weakens before being the big losers last week.  Still the buy signals remain active after over 20 weeks.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The TransDow locked in a profit of 9.01% after 105 days but has now moved into cash.  The Dow is now dominant over both the Transports and the NASDAQ, historically under these conditions the market has been extremely unproductive.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 continues to hold a position in QQQQ with a current profit of 16.24%.  Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

A number of excuses to sell have developed over the last week with bearish volume flows and RSI from SPY, IWM and IYT.  SMH is on the verge of turning bearish while the TransDow has moved to cash after locking in a 9% profit on the transports.  What we are yet to see however is the loss of any major support.  Keep an eye on the 50 day moving averages across the board and how SMH behaves.  The semis held together comparatively well over the last week and if they can continue to do so then any declines are likely to be short lived.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

“A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.” – Martin Luther King, Jr.

January 17, 2011 – 06:35 am EST

In our last newsletter we spoke of an imminent breakout stating that “A close by QQQQ above $55 and IYT above $93 would be very bullish and likely mark the start of another leg to this rally.”  Both of these resistance levels were broken that Monday and the market has strongly rallied ever since.  Lets take a closer look…

**Please excuse the absence of a newsletter last week, it is summer here in New Zealand and I had an unexpected extension to my holiday.  Also welcome to our new readers!  We grow by word of mouth so thanks for spreading the word.

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ETF % Change Comparison

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New highs almost across the board are a great sign.  Also you can see that SMH is back leading the market, this gives further validity to the recent leg of the rally.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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Volume is still not as strong as it should be but the price action from SPY remains strong.

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The close by QQQQ above $55 saw the start of the breakout and has been backed by strong volume.

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SMH is hugely overbought but its fantastic to see the Semis charging ahead so strongly.

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IWM needs to see OBV moving higher to confirm the price action.

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With weak volume and sluggish price action, IYT is unlikely to be a market leader.

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OM3 Weekly Indicator

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Strong Buy signals remain active after 20 weeks.  I can’t recall a time in the last 5 years that they have lasted so long.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The Transports remain dominant over the Dow which is a positive sign and the TransDow position in DJT remains active.  The NasDow remains in cash.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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The LTMF 80 is showing a profit of 19% and the position on QQQQ remains open.  Liquid Q is still in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

It is great fun when the market can do no wrong like this but don’t lose sight of the risks.  The danger comes to those who have been sitting on their hands and realize that they have missed out on an epic rally.  The rest of us are sitting on healthy profits but now is not the time to be jumping on the band wagon as the risks of a sudden pull back are very real.  For now however, let the good times roll.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

“The clock is running.  Make the most of today.  Time waits for no man.  Yesterday is history.  Tomorrow is a mystery.  Today is a gift.  That’s why it is called the present.” – Unknown

January 03, 2011 – 05:45 am EST

Welcome to twenty eleven and thanks for joining us for the ride.  I know I have really enjoyed connecting with many of you over the last year and hope that you all get value from the ideas that we share.  There is a heap of research to get through and I hope to put more time into ETF HQ this year.  Let us know if there are any particular areas that you would like us to focus on.

To the markets – it was yet another uneventful week that basically finished where it started.  However periods of consolidation are nearly always followed by sudden breakouts and such a breakout now appears imminent.

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*****Happy New Year!!  Thanks for keeping this service growing my spreading the word.

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ETF % Change Comparison

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It is positive to see the transports (IYT) closing the week at a new high but the market has been mostly flat as you can see.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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SPY made no ground over the last week but volume flows continue to improve.

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Support from the Nov high and resistance at $55, expect a breakout very soon.

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A close below $32 would weigh heavily on the broad market.

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No indications of a rally over the short term from IWM.

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Volume on IYT is improving, the stop at $93 is likely to be hit this week if this trade fails.

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OM3 Weekly Indicator

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Buy signals remain active across the board while the ‘Bear Alerts’ continue to show that the weekly cycle is weakening.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The Transports remain dominant over the Dow and the TransDow trade is showing a profit of 10.34% after 84 days.  The NasDow remains in cash as the Dow remains dominant over the NASDAQ.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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The LTMF 80 continues to hold a position in QQQQ that is currently showing a profit of 13.70%.  Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

The consolidation over the last month has been within a tight range that has created support underfoot and resistance overhead.  There appears to be little indication that the breakout will be bullish but we are also lacking many sell signals at this point.  A close by QQQQ above $55 and IYT above $93 would be very bullish and likely mark the start of another leg to this rally.  Until then the risk remains to the downside.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

“Millions saw the apple fall, but Newton was the one who asked why.” – Bernard M. Baruch

December 27, 2010 – 07:35 am EST

‘Twas the week before Christmas, and somewhere in the market
A lonely bear was stirring, eying his pessimistic target.
While the bulls they were waiting by the ticker with care,
In hopes that St. Nicholas would keep prices rising up there.

As luck would have it neither the bulls nor the bears had much to be excited about and Christmas came and went rather quietly.  Lets take a closer look at the action (or lack of it)…

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*****Welcome to all our new readers this week.  A Merry Christmas to everyone and thanks for spreading the word!

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ETF % Change Comparison

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Once again over the last week we saw SMH, QQQQ and IYT lagging the market.  This is a distinct change from the behavior that has characterized the last few months and is an indication that profit taking is highly likely as traders appertite for the more economically sensitive areas is diminishing.  On a positive note however the small caps (IWM) continue to perform very strongly.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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SPY had a good week and continues to look fine (if tired) but no sell signals.

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QQQQ is drifting but no sell signals at this stage.

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SMH has very weak volume flows, is off its highs and is under performing the broad market.  Not a good sign.

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The small caps offer confidence to the bulls with their continued strength.

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IYT is the only influential ETF on an active sell signal.  Will this prove premature?  Time will tell.

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OM3 Weekly Indicator

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While the buy signals remain active the widespread ‘Bear Alerts’ show that the market cycle is losing strength.

Learn more – The OM3 Indicator

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TransDow & NasDow

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Despite our discretionary trading system having the Transports on a sell signal the TransDow continues to maintain an active position in them that is showing a profit of 9.14% after 70 days.  The NasDow on the other hand remains in cash as the Dow is still dominant over the NASDAQ.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 continues to hold a position in QQQQ that is showing a profit of 13.82% after 91 days.  Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

It was a quiet week and little has changed.  What has stayed the same however is the under performance of SMH, QQQQ and IYT which indicates that there is still a good probability of profit taking and that the upside over the short term is likely to be limited.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Merry Christmas and enjoy the holidays!!

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Carol of the Day:

These are the carols that I grew up with.  I know that Christmas has been and gone but this is just too cheesy and awesome not to share:

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December 20, 2010 – 07:15 am EST

It turned out to be a good week to take off as there was little movement in either direction which was rather what we expected as mentioned in our last newsletter – the market lacked the fuel for a major advance.  I had a great time however rafting off a 23 foot waterfall in Rotorua, picnicking at a secret location in Taupo and relaxing in Kerosene Creek where the water is naturally about 110 degrees Fahrenheit.  At ETF HQ we all hope that you are also enjoying the holiday season.  Now lets take a closer look at this market…

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Hey, do you enjoy this newsletter?  Please remember to spread the word, thanks.

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ETF % Change Comparison

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SMH and IYT were the two under-performers over the last week while DIA stole the show.  This indicates that people are becoming reluctant to invest in the more economically sensitive semiconductors and transports while they are seeking out the relative security of the mega caps found in the Dow.  Now, it is a bit premature to read too deeply into this but we can definitely see a change in the behavior we have witnessed over the last few months and that makes profit taking all the more likely.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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No sell signals for SPY yet but there is unlikely to be much upside potential over the short term.

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If the RSI turns bearish then a test of the 50 day SMA is likely to be the best case scenario for QQQQ.

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Keep a close eye on the semis – if the RSI drops below 50 and the OBV trend turns bearish then expect a test of the April high.

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IWM has recently found some volume to back its bullish move so some profit taking to test the April high would be really healthy.

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Suddenly the Transports offer the the strongest bearish argument with a fresh sell signal.  A close above $93 would reverse the signal.

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OM3 Weekly Indicator

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While the buy signals remain active the multiple bear alerts warn that this run is getting long in the tooth.

Learn more – The OM3 Indicator

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TransDow & NasDow

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Despite the sell signal from our discretionary trading the Transports remain dominant over the Dow and the TransDow continues to maintain its position which currently shows a profit of 9.14%.

The NasDow remains in Cash as the Dow is dominant over the NASDAQ and historically the market has been very unproductive under these conditions.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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The LTMF 80 continues to hold a position in QQQQ and is showing a profit of 13.82% while Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

This rally is looking rather tired and there are few signs of fuel to cause any major advances before the end of the year.  There are also few sell signals at this point apart from the Transports that have recently produced a fresh sell.  Keep an eye on the relative performance of SMH, IWM and IYT compared to SPY and DIA; if they can outperform this will be a sign of strength and any profit taking should be seen as a buying opportunity.  If SMH, IWM and IYT under-perform then this will indicate a rising risk level and more substantial profit taking will be likely.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Thought of the Day:

At this time of year we must remember to take time out and focus on what is important.  Here is a great post from a fellow systems trader Michael Stokes on Wasting a Good Life Trading.  Be sure to subscribe to his blog for some high quality ideas on quantitative analysis as well as other topics of interest to traders.

December 13, 2010 – 07:45 am EST

The market continued its advance over the last week and the best news is that much of it was backed by strong volume.  Over the last month the advances have been nonstop and over the last 3+ months they have been huge.  Now the question is whether we are due for some profit taking.  Lets take a closer look…

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****Thanks to all those who referred people to this newsletter over the last week. The more readers we have the more services we can provide you.

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ETF % Change Comparison

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For the first time in a while SMH wasn’t one of the top performing ETFs and finished the week off its highs, this is no cause for concern but is interesting to note.  IWM on the other hand had a very strong week and it is always positive to see the small caps leading.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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New highs and improving volume, you can’t complain about that!

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There looks to be little to sustain the rally on QQQQ so continued strength from SMH is particularly important.

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After a huge run SMH is very much due for some profit taking, hopefully volume flows remain positive.

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Strong volume and strong price action – great to see from the small caps.  They are overbought though.

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The transports look good but currently lack a catalyst for a big move higher over the short term.

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OM3 Weekly Indicator

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‘Strong Buy’ signals remain active across the board.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The TransDow maintains its position in the Transports as they remain dominant over the Dow.  The NasDow on the other hand has just shifted out of the NASDAQ after two weeks for a 4.06% profit as the Dow has become dominant over the NASDAQ.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 continues to hold QQQQ and is now showing a profit of 13.55%.  Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

Everything continues to look good and volume is improving in most areas.  Over the short term however profit taking is a real possibility simply due to the fact that the market (particularly SMH) has become overbought and currently lacks the fuel for a major advance.

Hope you all have a good week, I will be away for most of it on holiday but will be back for Friday’s close.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

“I’m going to buy hamburgers for the rest of my life.  When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household.  When hamburgers go up, we weep.  For most people, it’s the same way with everything in life they will be buying – except stocks.  When stocks go down, you can get more for your money, but people don’t like them anymore.  That sort of behavior is especially puzzling.” – Warren Buffett

December 06, 2010 – 05:15 am EST

It was an exceptional week for the market with massive advances made across the board.  Our long positions were a lot of fun (our largest short in EWJ was not).  Last week we said that if IWM and IYT can break through to new highs then there is still plenty of life left in this bull run.  New highs are exactly what we saw and apart from a continued theme of light volume from some areas there is little bad that can be said.

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****Thanks to all those who referred people to this newsletter over the last week.  The more readers we have the more services we can provide you.

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ETF % Change Comparison

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New highs for everyone but DIA with the biggest advances coming from IYT and SMH.  Only bullish signs here.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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Further advances are likely, the only concern is the continued lack of volume.

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Where SMH leads, QQQQ will follow.  Now please, some volume!

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The price action from SMH is exceptional and an indication of the strength of this bull.  Still, volume is a concern.

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We said last week it was time for IWM to make a new high and it is very positive to see the small caps leading again.

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Transports at a new high backed by volume = healthy market.

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OM3 Weekly Indicator

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14 weeks on a strong buy is statistically very rare but is has also been very profitable.

Learn more – The OM3 Indicator

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TransDow & NasDow

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Both the Transports and the NASDAQ remain dominant over the Dow which is a positive sign.  The position in the Transports is now showing a profit of 9.52%.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 continues to have an active position in QQQQ and is showing a profit of 12.25%.  Liquid Q remains in CASH.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

We have complained about a lack of volume like a broken record for months now and this continues to be an issue.  Other than that everything looks particularly bullish; the economically sensitive areas of the market are leading and they continue to find new highs.  I expect Transportation to continue to be a leader as it is one area that has good volume to back up its price action.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

Don’t let the fear of striking out hold you back. – Babe Ruth

November 29, 2010 – 07:38 am EST

News of a real tragedy came through this week.  Any hope of the 29 trapped miners returning alive was lost after another massive explosion ripped through the Pike Rive Mine.  Times like this really put our own problems into perspective and remind us not to take life for granted.  My thoughts go out to the families who have lost their, fathers, brothers, husbands and sons.  Happy Thanks Giving America, it is a great holiday that you guys celebrate and I know I have so much to be thankful for.

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There have been some further signs of strength in the market over the last week; most notably SMH powering onto a fresh high while SPY declined.  This is exceedingly positive as it shows that investors are not shying away from this more risky and economically sensitive industry despite all the uncertainty across the global landscape at present.

Having said that I find myself torn in writing this weeks report as we currently have a mixed portfolio with the recent addition of some short positions.  Our major short position is in EWJ (Japan) and our major long positions are in QQQQ and IYT.  So while there are many positive signs we are not blindly bullish.

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****Thanks to all those who referred people to this newsletter over the last week. The more readers we have the more services we can provide you.

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ETF % Change Comparison

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Notice how the four more economically sensitive ETFs (SMH, QQQQ, IWM & IYT) are up more over the last week, fortnight, month and from their lows than the comparitively economically stable SPY and DIA?  If times were as bad as the financial media would lead us to believe then we simply would not see this kind of behavior.

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Learn more – ETF % Change Comparison

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A Look at the Charts

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SPY has weak volume flows (still), a break of $117.50 would weigh heavily in the market.

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This coming week will be important for QQQQ, there are no reasons to sell at present but if it stalls here then a test of $50 is likely.

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SMH offers the #1 bullish argument.  New highs from this market leading ETF are always a good sign.

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It is time for IWM to make a higher high because without it the broad market will fail to get much higher.

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IYT has great volume flows and is very near its recent high.  A higher high confirmed by IWM would be exceptionally bullish.

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OM3 Weekly Indicator

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Buy signals remain active across the board.  The bull alert from SMH is a very positive sign.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The transportation index remains dominant over the Dow and the TransDow continues to show a small profit from that trade.  The NasDow has just opened a new position in the NASDAQ as it has again become dominant over the Dow.  Historically the market has been most productive under these conditions.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 continues to hold a position in QQQQ while Liquid Q remains in cash.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

The market continues to display great signs of strength but as a recurring theme there is a lack of volume.  While that is to be expected over the Thanks Giving Week, we really need to see volume return to back the bulls.  The time has also come for IWM to make a higher high.  If this occurs and is confirmed by IYT then there is still plenty of life left in this bull run.  If not then we are due for some more substantial profit taking.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

P.S Like ETFHQ on Facebook – HERE

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Quote of the Day:

The grateful mind is constantly fixed upon the best. Therefore, it tends to become the best; it takes the form or character of the best and will receive the best. – Wallace Wattles

November 22, 2010 – 02:42 am EST

A special thought goes out to the 29 trapped miners in Greymouth NZ.  Come home safe boys!!

There were some really healthy signs from the market over the last week.  First of all there was a bit of profit taking which has eased the overbought situation.  Secondly we saw strength from the Semiconductors (SMH) and the Transports (IYT) which both made their way higher while the broad market finished relatively flat.  This is a great sign and indicates that there is nothing sinister behind the recent profit taking.

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****Thanks to all those who referred people to this newsletter over the last week. The more readers we have the more services we can provide you.

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ETF % Change Comparison

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As you can see SMH and IYT are very close to the highs that they set two weeks ago.  Were the market about to reach a major top, in most cases we would see these more economically sensitive areas suffering.

Learn more – ETF % Change Comparison

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A Look at the Charts

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Volume remains a concern but the price action is healthy.

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Plenty of room for more profit taking from QQQQ but the action from SMH suggests that another breakout is a good possibility.

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The action from SMH is great to see.  If the price breaks out then we really need to see some strong volume.

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IWM has good support around $70, if it can make a new high without seeing lower prices first then this market really is strong.

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The volume behind the transports offers real confidence and suggests that higher prices are on the way, if not immediately then soon.

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OM3 Weekly Indicator

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Buy signals remain active across the board but the bear alerts warn that the weekly cycle continues to weaken.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The position in the Transportation index remains active and is now showing a profit of 5.29%.  The NasDow on the other hand has just closed its position in the NASDAQ for a tiny profit as the Dow is now dominant.  This is a sign of weakness as historically most of the markets major declines have occurred while the Dow has been dominant over the NASDAQ.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 maintains its position in QQQQ with a current profit of 9.34%.  Liquid Q has shifted to cash after 21 days and a small profit.

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Historical Stats:

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

It was a rather uneventful week in the market.  We saw a touch of healthy profit taking and some buying around support.  The good news thought is that we are seeing strength from the more economically sensitive areas of the market.  They fact that they are holding together so well makes it highly unlikely that we are about to see a major market reversal.

Keep an eye on OBV, if we see a breakout it really needs the backing of solid volume this time.  Also if IWM can breakout to a new high then this will be a further indication of market strength.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

P.S Like ETFHQ on Facebook – HERE

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A Prayer for the Tapped Kiwi Miners:

Almighty and eternal God,
Protect them with the shield of your strength
and keep them safe from all evil and harm.
May the power of your love enable them to return home
in safety, that with all who love them,
they may ever praise you for your loving care.
We ask this through Christ our Lord.

Amen

November 15, 2010 – 06:55 am EST

After a two and a half month relentless drive higher, finally, the market has experienced some tangible profit taking.  This is both healthy and well over due.  So far the pull back has been small and controlled but it is important that it remains this way and hopefully with relatively light volume.  Lets take a closer look…  But first, a hilarious and regrettably accurate explanation of Quantitative Easing:

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****Thanks to all those who referred people to this newsletter over the last week. The more readers we have the more services we can provide you.

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ETF % Change Comparison

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All of the influential ETFs finished the week down about 2% although SMH saw the smallest declines and is still up a huge 7.65% over the last month.  If we continue to see profit taking and SMH remains comparatively strong then this would be an extremely bullish sign.

Learn more – ETF % Change Comparison

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A Look at the Charts

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A test of $117 is highly likely but a loss of support is not a concern as long as QQQQ holds strong.

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A test of $50 would be fine as long as SMH holds onto $29.

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With this rally built on weak volume SMH must hold onto $29 or we will enter the danger zone (again).

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IWM has so far failed at resistance and has very poor volume flows.  Keep in eye on the small caps as a break down here could spook the broad market.

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With strong volume behind the Transports they offer real backing to the long term bullish argument.

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OM3 Weekly Indicator

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The buy signals remain active although they are statistically old.  The bear alerts warn that the weekly cycle is in decline.

Learn more – The OM3 Indicator

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TransDow & NasDow

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The Transportation index and NASDAQ remain dominant over the Dow which is a positive sign.  Small profits remain on both trades but those profits could quickly disappear with a little more profit taking.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

.

.

LTMF 80 & Liquid Q

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Both LTMF 80 and Liquid Q maintain active positions in QQQQ.

.

Historical Stats:

.

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

.

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Summary

The profit taking we have seen so far is healthy and there is room for plenty more before causing any damage.  The key moving forward will be to observe the nature of any further declines.  If we see light volume plus SMH and QQQQ holding onto support then we will soon have another great buying opportunity.  If not then we must be ready to lock in what is left of the profits from the recent rally.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

P.S Like ETFHQ on Facebook – HERE

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Quote of the Day:

“Identify your highest skill and devote your time to performing it.  Delegate all other skills.” – Ronald Brown