Charting Stocks

After dropping 376 points yesterday, the Dow Jones Industrial Average is set to open down 95 points which would put it below the psychologically important 10,000 level. In my previous post, I mentioned that the ‘flash trade’ prices were real and we were heading for a retest of those lows. Currently, the major averages are [...]

Both the Dow Jones Industrial Average and S&P 500 Index are trading below their 200-day moving average.  NASDAQ bucked the trend bouncing back above it 200-day MA.
Many analysts in the technical community were unsure if the ‘flash trade’ lows were actual prices which should be included in their analysis, or merely a ‘machine’ blip which [...]

Chart of the Dow Jones Industrial Average priced in ounces of gold since 1968. The data set used divides the DJIA annual closing price by that years average gold price. Because this is annual data, some of the extreme monthly readings are smoothed out.
The bottom, in our example, occurred in 1980 when the ratio was [...]

There have been a few bright spots in the current selloff. Short (Inverse) ETF’s, which move in the opposite direction of the underlying index, bottomed in April and have been rising since. Volatility, Treasuries and the US Dollar have also been moving higher. The Dollar, however, is overbought as discussed in this previous post.
Proshares Short [...]

An unusual dynamic has taken shape over the last few months – Both the US Dollar and Gold have been rising together. Normally, such a movement would seem counter intuitive as Gold is a commodity and commodities tend to move in the opposite direction of the US dollar. There is a slight caveat, however, to [...]

The Put/Call Ratio is widely used as a contrary indicator. Often times, during periods of rapid price change, the market reaches levels of extreme optimism and pessimism. One way of measuring the prevailing sentiment is by following the ratio of put to call options.
Investors buy put options when the believe a stock, or index, will [...]

The Volatility Index (VIX), also referred to as the “Fear indicator,” experienced its sharpest jump since the great crash of 2008. The move was enough to push this fear gauge above its 15-month downtrend (which is now broken). The VIX has an inverse relationship to stocks and so its no surprise to see a slight [...]

Chart of the Trade Weighted US dollar from 1973-2009.

The yield on 3 month treasury bills remain at lows not seen since the great depression.

We’ve written about the relationship between US equities and the US dollar. Stocks bottomed in March and began to move up as the US Dollar topped during the same time and began to move down. Todays market selloff came as an oversold dollar (short term) found buyers.
If the dollar continues this advance, US equities should [...]