So Far So Good – July 22, 2011

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The daily stages structure has clearly entered a strong mark-up stage after the growing accumulation stages groups from end of June have orderly rolled over into an emerging uptrend and away from the risk of falling back into decline stages.

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Overall, major indices remain in the same multi-month trading range but now, technically, they have a good chance to move out of range. QQQ and SPY are already breaking their Yearly first resistances (59.02 and 134.26 respectively). Breakouts off old highs and off long lasting trading ranges are the most powerful of all. The IWM robot is ready for the ride with its existing long position and so should you.

The only negative yesterday was the very minor 20 DMF progress. But under the hood, there may be rotation into more aggressive stocks off their bottoms. Volume was quite strong into the leading Financials, Energy and Transports sectors. This is a highly capital-weighted trio that can only help a breakout to new highs for the overall market.

IWM was still unable to conquer back last week’s highs and is lagging the other indices. This happened at the start of almost each earnings season since March 2009, so there is nothing new. Large players are delaying the buy programs of their small cap buy lists until positive report days to avoid bad surprises. As more and more small cap stocks will report earnings, expect heavier buying of the leading reporting stocks and an accelerating catch up by IWM over the other indices. A short term weakness of the dollar is also negatively impacting small caps compared to multinational blue chips with currency-diversified cash flows.

The first resistance cluster is three time stronger than the first support cluster. But notice that most of the weight is located in the high range of the cluster at the confluence of WR2 (85.61) and YR1 (85.68) or 2% above yesterday’s close. The minor resistance from WR1 (84.21) is already surpassed in the pre-market as I write.

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For the 7th day in a row, GDX remained stuck in consolidation between the first support and resistance clusters. Secondary long entry limits have not been hit for whole of last week. The buy limit of 58.95 is now looking like a great dip buying opportunity in anticipation of an initial run to QR1 and SR1 ( 62.12). The 200-day moving average (57.89) should provide plenty of support in case of an emotional sell off. Billy

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Billy; I always appreciate your stages commentary with the detailed look under the hood. What are your criteria for Accumulation, Mark Up, Distribution and Decline and their various subsets? Are you applying these criteria to all securities or are there price, volume, earnings or other selection criteria for the database?

Thank you in advance.
Best regards,
Robert

[QUOTE=brrim;14991]Billy; I always appreciate your stages commentary with the detailed look under the hood. What are your criteria for Accumulation, Mark Up, Distribution and Decline and their various subsets? Are you applying these criteria to all securities or are there price, volume, earnings or other selection criteria for the database?

Thank you in advance.
Best regards,
Robert[/QUOTE]

Robert,
I use the stages algorithms from [url]www.alphascanner.com[/url] where I am also the official blogger.
The stages parameters have been fine-tuned by Brian Shannon is his book :
[url]http://technicalanalysisbook.com/[/url]

The stages characteristics for each timeframe are based on multiple moving averages alignments and slopes. The initial system was defined by Stan Weinstein in his 1988 book and later updated and refined by Brian Shannon.
[url]http://www.amazon.com/Stan-Weinsteins-Secrets-Profiting-Markets/dp/1556236832#_[/url]

The sub-stages parameters are kept proprietary to alphascanner. Some webinars introducing the concepts are available at [url]http://alphascanner.com/Home/Webinars[/url]

Each morning, I scan the alphascanner database (+/- 5,000 stocks) for the percentage of stocks in each sub-stage in the weekly, daily and intraday timeframes. This allows me to monitor easily and quickly the evolution of the technical structure of the overall market in various timeframes from a trend-following cycle perspective.
Billy

Billy; Thank you. You have provided me with a lot to study.

Robert