Nasdaq

Stocks within 0.5% of a Fibonacci Line

Stocks Pro is a powerful tool for your mobile device that automatically recognizes fibonacci retracement lines in real-time. The gallery below contains 5 stocks (APC, ABC, ADBE, ADI, AMAT) that are within 0.5% of a fibonacci line.

You can download Stocks Pro for the iTunes App Store.

Click a thumbnail for full-size charts:

 

Arbitrage Trader Note: Reiterate Buy S&P500 08/01/2012

RIDE LIKE THE WIND: REITERATING BUY FOR S&P500

As our clients have followed, on July 22nd, we signaled “buy” for the generic market when S&P500 index was trading at 1,339s. On July 25th, we also wrote that the upward trend may continue until August 2nd for which date our market model algorithm had indicated a sell-off. Parallel to our expectations, the market moved to 1,380, briefly hitting the key resistance level at 1,390. Now, however, our arbitrage model signals a continued upward trend for at least the coming 2-week period:

  • Statistical arbitrage continues to recommend “buy”. Our market model algorithm continues to indicate upwards move in the market direction for the coming at least 10 trading days. According to our models, there is about 77% probability of further upside movement.
  • Technically, we now see a potential re-test of the 2012-high, which was 1,422 for S&P500. This time we may actually see the break of this key level. For aggressive traders, our stop-loss level continues to be at 1,330.
  • FED & ECB? While the markets do not expect much surprise from the FED today, we think that we may see developments that were not priced in yet. Furthermore, the ECB’s move (especially after Mario Draghi’s speech last week) tomorrow will also play critical role in the overall market direction.

In short, we reiterate our bullish view on the generic market for the coming 2-weeks.

For instant access to the Arbitrage Model Short-Term Forecast check the MarketPulse screen of our apps or download one of our popular iPad/iPhone apps directly from the iTunes AppStore: Stock Arbitrage Trader, Daily Stocks, and Stock Signals.

Buy SPX 05-14-2012

TACTICAL SUPPORT IN PLACE: CHANGING OUR MARKET DIRECTION TO BUY

On May 11th, our statistical arbitrage model reiterated its sell signal for the S&P500 index. While the market behaved parallel to our expectations on Friday and so far today (Monday 14th), our most current statistical signals actually start to indicate a bounceback from current levels, mainly 1,340, for the S&P500 index:

  • Statistical arbitrage is now starting to signal buy. We are changing our recent view from further sell-off to buy as our mathematical model started to suggest that some major statistical indicators in our proprietery model do not show enough widening for further downwards moves. Additionally, our model currently does not signal enough dispersion in correlation matrixes, a typical behavior in times of panic and big sell-offs.
  • Technically, for the S&P500 index, levels around 1,340 seem to be holding pretty well as a key, interim support level. While we earlier predicted that 1,292 is a level we might likely see during the second half of May, current market behavior actually indicates an upwards move.

Given the critical and continuously updated news flow coming from the EU (e.g., Greece crisis) and increased volatility in markets fueled by sharp decreases in the EUR/USD exchange rate, our expectations for an upward bounce back may again be a short-lived. So, we recommend our clients to remain very cautious when entering the market.

Get this market direction change instantly through your iPhone or iPad with Stock Arbitrage Trader. Learn more about Stock Arbitrage Trader.

Entering An Interim Trading Range: New Signal For S&P500 Is Sell

In our April 27th forecast, our arbitrage model signaled an upward trend for the period through May 10th (and maybe even further). While relative strength remained high during this period (especially supported by the positive manufacturing numbers from the US economy) sudden changes in statistical measures indicate that we are entering a trading range with possible setbacks until May 9th:

  • Statistical arbitrage signals sell for the coming 5 trading days. Our statistical model recommends selling the S&P500 for the coming 5 trading days. While volatility may rise during this period, possible setbacks may create significant pressure on the index. For possible large-scale setbacks, we recommend that you keep checking our Market Pulse page for potential reversals in the market direction forecast.
  • Technically, we still do not see a major correction on the short-term horizon yet. However, potential selling pressure may push S&P500 index down to 1,350 and maybe further down to 1,292 levels. For longer-term investors (or more patient traders) who entered the market in Mid-April on the long-side, it may not be wise to close positions immediately, as we are not bearish beyond May, 9th as of today. For aggressive traders who choose to be short at this level, we recommend a stop-loss of 1,425.
  • “Employed or not employed?” For the coming week, the US unemployment data may negatively surprise the market. Apart from the economic data, the market may not want carry a lot of risk through the weekend, at which time France will choose its new President. These uncertainties will likely increase volatility, thus willingness to unwind some positions.

In summary, we change our view on the generic market to a bearish trend for the coming 5 trading days.

Get this market direction change instantly through your iPhone or iPad with Stock Arbitrage Trader. Learn more about Stock Arbitrage Trader.

Sample Trend Reversal Scan with Market Scan for the iPad

Market Scan is a very powerful yet complex app and it can be a daunting experience for the novice stock trader to create your own customized scans. Below we have a short step-by-step process to creating your own trend reversal scan and the thought process behind each parameter that is added.

Filter 1: Average Directional Index (ADX) breaking above 20

The Average Directional Index (ADX) is an oscillator that fluctuates between 0 and 100. Even though the scale is from 0 to 100, readings above 60 are relatively rare. Low readings, below 20, indicate a weak trend and high readings, above 40, indicate a strong trend.

The indicator does not grade the trend as bullish or bearish, but merely assesses the strength of the current trend. A reading above 40 can indicate a strong downtrend as well as a strong uptrend.

ADX can also be used to identify the potential start of a new trend in the market. Very simply, traders will look from below the 20 line to above the 20 line as a signal that the market may be beginning a new trend. The longer the market has been ranging, the greater the weight that most traders will give this signal.

See the yellow highlighted section on the screen below.

A Couple of reminders
- The text color of the button will turn green to show that there is a selection made with that indicator (see button “ADX”).
- Date selection is “1”, meaning we’re filtering the previous trading day or one day back.

Filter 2: ADX pointing up

This is to make sure that yesterday’s break is still valid.
As seen from the screenshot, Market Scan gave us 6 less stocks by eliminating the false signals.

Date selection is “0”, meaning we’re filtering the last trading day, or zero days back.

Filter 3: Williams %R values above -20

(If you want to search for Oversold stocks use “below -80” instead of “above -20”)
The Williams %R indicator is a momentum oscillator used to measure overbought and oversold levels. It’s very similar to the Stochastic Oscillator except that the %R is plotted on a negative scale from 0 to -100 and has no internal smoothing. The %R defines the relationship of the close price relative to the High-Low range over n-Periods. The nearer the close price is to the highest high of the range the closer to zero the reading will be. Alternatively, the nearer the close price is to the lowest low of the range the closer to -100 the reading will be. If the close price equals the highest high of the range the reading will be 0; if the close price equals the lowest low of the range to reading will be -100.
As an overbought/oversold indicator, Williams %R values from 0 to -20 are considered overbought while values from -80 to -100 are considered oversold.

Here is the list of stocks that meet the three criteria listed above


Does this mean that these stocks will go up or down the next trading day? Of course not. This is just a scanning tool for you to filter the stock market so you can save time and find profitable investment opportunities.

Important Note:
If you would like to scan the market with the same criteria going forward, you need to save your scan. Saved scans are automatically updated with End of Day data. You can view it anytime by going to “My Scans” from the menu bar. Saved scans also help you check your watchlist against your scans. This information is listed under “Alerts” tab.

If you have any questions, please feel free to email us or leave a comment below.

Market Scan is stock market scanning tool for the iPad, you can learn more about it and purchase it from the iTunes App Store by clicking here.

Is it too late to buy into S&P500?

Since our last buy recommendation on the generic market on January 12th, 2012, the S&P500 index rallied about +2.5%, reaching 1,316.33 as of Friday 27th. As a lot of our clients are asking whether they have missed this upward trend, we would like to share our current view on the market:

  • Statistical arbitrage still recommends “buy” – Our market model algorithm still indicates upward moves in the market direction. While volatility may rise (as measured by VIX), the model predicts bullish trends to continue for the coming 1-2 weeks.
  • Technically speaking, we may easily see 1,347 in the S&P500 in the next 8-9 trading days - While temporary setbacks are possible, we believe that they should be used to enter the market on the long side. 1,292 can be seen as an interim support (or stop for aggressive traders).
  • Fundamental developments are positive, too - While some investors in the market were hoping for a quantitative easing #3 (QE3) from the FED last week, Bernanke’s extension of exceptionally low interest rates until Q4 2014 can easily be seen as a QE2.5, thus positive news for all risky assets.

So, our short answer is no, it is not too late to buy into S&P500 as we reiterate our bullish view on the generic trend.

Stock Arbitrage Trader will help you take advantage of the bullish trend.

Market Direction Change

As our Stock Arbitrage Trader customers may have already noticed that on November 30th, our Arbitrage model has changed its short-term market direction forecast to “buy” after almost 4 weeks of “sell” recommendation. This means that generic market movement will be upwards and overall risk apetite will increase in the coming 5-7 days.

Market Direction Change 3

For the S&P500, our arbitrage model is forecasting a retest of the October high of 1292 (about +4% gain) in the coming week. The positive drivers from the market will be expectations from the EU leader meetings that are going to be held on 8th and 9th of December as well as positive economic data. Investors/traders who use tight stop-losses might want to watch 1220 as an interim support level.

“If you don’t already own” Stock Arbitrage Trader take advantage of this positive movement by downloading the app for your iPhone or iPad here!

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