The Bearish Aftermath of Quad Witching

By Rob Hanna

A Twitter follower ( @SonnyRico ) asked me about weeks following Quad-witching, which occurs in March, June, September, and December. As I have shown in the past, the 2nd half of December has shown bullish tendencies historically (ignore 2018), but those other 3 have NOT been good weeks for the market. In fact, back in September I discussed the “Weakest Week”, which is the week after September opex. In the Quantifiable Edges subscriber letter that same week (free trial here) I showed a table with the best and worst weeks of the year since 1988. Below is an updated version of that table, showing just the bottom 8 weeks. (Note I did not include weeks after the 5th Friday of the month, since instances for those were greatly reduced.)

2019-03-15

Continue reading The Bearish Aftermath of Quad Witching

Hurdles for Gold Stocks

By NFTRH

One problem for the gold stock sector was highlighted here and here evidently a little too obnoxiously for the liking of some bugs. The problem was the aggressive bullhorn sounds emanating from every orifice of the gold community the minute the charts broke upward into an obviously bullish technical state.

But while the HUI/Gold ratio has been a distinctly positive technical indicator and many bullish gold stock charts populated the sector, we had noted back in December that gold’s hysterically overbought performance vs. broad stocks was due to pull back, hopefully in an orderly consolidation. Well, the relief has dragged on and the ratio of gold to SPX and its global fellows has been consolidating alright.

Continue reading Hurdles for Gold Stocks

Options Expiration Week Performance By Month – 2019 Update

By Rob Hanna

Next week is monthly options expiration week. I’ve noted several times over the years that Op-ex week in general is pretty bullish. March, April, October, and December it has been especially so. S&P 500 options began trading in mid-1983. The table below is one I have showed in March each of the last several years. It goes back to 1984 and shows op-ex week performance broken down by month. All statistics are updated.

2019-03-08

While October and December have been more reliable, March op-ex week has seen the most in total gains. Perhaps the upcoming bullish seasonality can help to market to bounce next week.

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3-day Pullbacks from 50-day High to 10-day Lows

By Rob Hanna

The decline in SPX meant it was the 3rd day in a row in which it closed lower. 3-day pullbacks will often suggest an upside edge. I also found it notable that 1) the pullback originated from a 50-day high, and 2) it left SPX at a 10-day low. So I examined other times we saw such drops, and found some interesting results.

2019-03-07

Historically we see that 3-day drops from 50-day highs to 10-day lows have often by followed by a bounce in the next few days. Traders may want to keep this in mind as they determine their trading bias.

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Or better yet, subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas to get much more bang for your buck. Also keep up to date with actionable public content at NFTRH.com. Follow NFTRH & Biiwii via Twitter @BiiwiiNFTRH, StockTwits.

It’s Not Over

By Charlie Bilello

“Time flies over us, but leaves its shadow behind.” – Nathaniel Hawthorne

For now, I’m unconvinced that stocks are out of the woods yet.

Last week, markets rallied strongly, and the unrelenting streak of consecutive up weeks following the December lows continues.  At this pace, we’ll hit new all-time highs in March.  My problem with the move is that Utilities and Treasuries are not breaking down.  Utilities historically show near-term strength when conditions favor higher volatility.  While weaker last week, performance has not been as weak as one might otherwise expect.

On the longer end of the Treasury curve, long duration Treasuries are still holding against intermediate.

Continue reading It’s Not Over

Historical Performance Following State of the Union Addresses

By Rob Hanna

With tonight being the State of the Union Address I decided to take another look at an old study that examined SPX performance following past speeches. The data table below looks back to 1982. There were a few instances, such as 2001 and 2009 where the speech was not an official “State of the Union”, but was delivered under a different name. I have included those speeches in the results as well.

2019-02-05-1

The stats do not suggest much of an edge. But the profit curves seem to tell a more interesting story. Here is the 5-day curve.

Continue reading Historical Performance Following State of the Union Addresses

As Goes January…? Really?

By Tom McClellan

Annual Seasonal Pattern

The stock market’s relationship to its normal seasonality has gotten wacky lately.  October to December is supposed to be an up period for stock prices, and instead we saw a very sharp correction.  In recent years, January has typically seen a meaningful decline, but the stock market instead powered higher.  In fact, the DJIA’s 7.2% gain in January 2019 was the strongest January since 1989.

Continue reading As Goes January…? Really?

Well That Would Be Surprising

By Charlie Bilello

“I’ve been around a long time, and life still has a whole lot of surprises for me.” – Loretta Lynn

If you were told at the Christmas Eve lows for stocks that equities would have a monster move into 2019, and that we would go through the longest government shut down in history, what would you say?

Recent history is a great reminder that the future always seems to make less sense in outcome than in story.  The future is always full of surprises, and no amount of intelligence or data can ever fully prepare you for the unknown.  Asset classes once thought dead live again.  Bull markets once thought over, resume.  Strategies once thought broken, come right back.  We can never know the exact reason why except with hindsight, making those surprises seem like they never were.  The reality is that big money tends to be made betting on areas no one else thinks can surprise.

Continue reading Well That Would Be Surprising

Junk Bond Strength is Bullish for Stocks

By Tom McClellan

Junk Bond A-D Line

High-yield bonds, or “junk” bonds, are corporate bonds, but they trade a lot more like the stock market than they do like T-Bonds.  What’s more, they are much more liquidity sensitive than most stocks, and so when liquidity turns bad (or good), it often shows up first in the behavior of junk bonds.

FINRA publishes each day the Advance-Decline (A-D) data for corporate bonds, breaking them down into different categories.  This week’s chart features a cumulative Daily A-D Line for FINRA’s “high yield” category.  I don’t know how they make their determinations of which bonds fit into which groups; that’s up to FINRA, and is not something I can control so I don’t worry about it.  But I really do appreciate them making these data available, because of what a great indicator this A-D Line is.

Continue reading Junk Bond Strength is Bullish for Stocks

Tops Before the Drops

By Tim Knight

Over the past couple of days, I have tiptoed back from battered bear to somewhat more aggressively short. I began the week about 115% committed and now am at about 170%. Not full-blown snarling and blood dripping from teeth, but at least not rocking back and forth in a corner.

One warning sign that merits at least a little caution is the clear bullish breakout from the emerging markets:

Emerging Markets

Setting this aside, just about every important ETF I am tracking is shrieking “Short Me.” Regardez Vous:

Continue reading Tops Before the Drops