Tell me you aren't impressed by this. Above is a chart showing the market timing signals issued by Ken Tower. If you are interested in his comments, he is often interviewed by MarketWatch.
As for HeadlineCharts, I am now net short the market, but ready to cover the shorts as the market probes for the lows. As you know, not all indexes have had equal participation to the downside. Market weakness is in the financials, particularly the regional banks, and the dow industrials. The NASDAQ, tech and utility indexes have held up well along with commodities and commodity related stocks.
I will be cautious about shorting the financials because the selling has already been so intense and the bottom for these stocks may be near... and maybe the dow industrials as well as it gets near its prior lows. Regarding the indexes that remain healthy, the question is will they be drawn down too and test their prior lows, or is their strength a bull divergence where pullbacks are a buying opportunity? When you figure it out, let me know.
Well you have to like this chart too, if you are a bull. The leading ECRI indicator stopped declining in March and started pushing higher in April. It continues to look decent.
In May, it looks like the lagging ECRI indicators started to follow the leaders higher. Looks like the bullish worldwide growth, healthy businesses, low US interest rates and stimulus checks are offsetting the bearish impact of oil, housing and tapped out consumers.
Also, the ECRI leading inflation indicator remains contained.
There has been a lot of buzz about these Hindenburg signals via Robert McHugh, who is an excellent analyst but unfortunately has a very negative bias. Some people don't think these signals are worthy, and I honestly have no idea. I just think they are worth noting and adding to the pool of technical evidence.
I think there is some mis-communication in analyzing the signals because there are different ways to calculate them, but I think McHugh is fairly rigorous in applying strict rules. Also, he admits that one Hindenburg doesn't mean much, but thinks a cluster of them is significant.
I do know for sure that a spike in new lows, particularly on the NYSE is important technical evidence. I also know that getting these spikes at the
top of rally is a lot more bearish then getting them after the market has been declining for some time... like now. Sometimes getting this number of new NYSE new lows indicates a degree of capitulation building up in the decline, and that points to a bottom forming. So you have to take the context of the spike in new lows into account when you studying them.
