6-29 close comments

[Mike]

Volume surged into the close and all indices ended up trading higher volume than yesterday. This means that we met the requirements of a follow-through day on all indices. I use eSignal for intraday market volume and usually wait when the volume is close to see what the IBD volume says but the volume was so brisk into the close I am guessing the outcome. The Market School buy switch never went off so today is a B2 buy signal (Additional Follow Through) and a B3 (Lows above the 21-day ema) buy signal for a +2 exposure (55% invested).

Additional FTDs (B2) can only occur within the first 25 days of a rally counting back to the rally day June 4, today was day 20.

I still remember however that no significant rally has ever started in the month of June looking back 40 years. All market correlations will eventually be broken I guess, will this be it? Don't know, somehow I doubt it but that would be an opinion.

[mnoel]

Hi Mike,

Here are the stats for the 3 criteria.

1) Coppock. We had a Coppock signal on the DOW. Waiting for a potential Coppock signal on the others.

2) %E from the IBD (this is the data I have available, sorry). %E = 11.27% (7.4% <= %E <= 16%) OK

3) Eureka. The last Eureka was 13 sessions ago. We should therefore wait for a valid Eureka in the next 10 days to confirm this FTD.

Conclusion : We have no advanced indications that the FTD will be valid since 2 out of 3 criteria will be confirmed in the future. Therefore, as Oscar Carboni would , "Stops are in, emotions are out"

[Mike]

Hi Mike,

Here are the stats for the 3 criteria.

1) Coppock. We had a Coppock signal on the DOW. Waiting for a potential Coppock signal on the others.

2) %E from the IBD (this is the data I have available, sorry). %E = 11.27% (7.4% <= %E <= 16%) OK

3) Eureka. The last Eureka was 13 sessions ago. We should therefore wait for a valid Eureka in the next 10 days to confirm this FTD.

Conclusion : We have no advanced indications that the FTD will be valid since 2 out of 3 criteria will be confirmed in the future. Therefore, as Oscar Carboni would , "Stops are in, emotions are out"

Martin,

I usually wait for the Coppock to turn up by at least one point before declaring a buy signal. This prevents some false signals created by a wiggle in the chart. Essentially if the market rallies all of the Coppock curves will signal next week. I thought the volume was a little suspect yesterday, essentially the quarter end options expiration came in in the last 20 minutes. I wish we had not had that kind of noise to deal with.

The other thing I have been tracking is cumulative volume. The chart below shows an equivolume daily chart of the NASDAQ. The orange line is my construction of the volume associated with the head and shoulders top formation. The blue line is a projection of the exact same volume as the orange line. Richard Arms wrote in 1971 that the volume in a topping formation will be the same volume as in the decline. That volume expired on Thursday. Arms does not say what will happen as the market can take a new unknown direction from here. What he does suggest however is that the sideways direction is likely over. So right on schedule we got a market pop. I am still dealing with the statistic that nothing really big starts in June. I would be happy to be wrong, the market gods are going to have to decide what they are going to do. I don't believe for a second that Europe has done anything more than kick the can down the road to a very messy end and the USA is on the same road.

14928

[mnoel]

I agree with you Mike that nothing was solved in Europe but it seems to give hope for further liquidity. Down the road, reality will prevail... but when? In the mean time, I am trying to trade with the market direction. I will establish long position on strength with stops along the way. This is the best I can do since I don't know where the market is going.

Thanks for your work!

Martin