Also, Billy, could you put up the chart and a brief analysis of SPY. I know you and Pascal don't wish to do this daily but with the macro environment being what it is, an update would be much appreciated.
Thanks.
Also, Billy, could you put up the chart and a brief analysis of SPY. I know you and Pascal don't wish to do this daily but with the macro environment being what it is, an update would be much appreciated.
Thanks.
Adam,Originally Posted by adam ali
SPY is by far the weakest setup currently. The only encouraging development so far today is its ability to hold the MPP (131.03), likely helped by the proximity of WS3 (130.52) on the last day of the week, suggesting that bearishness is exhausted for this week. A close today below MPP would be very ominous for next week because of the lack of support before the 200-day moving average (127.74).
But this weak SPY setup may actually hide a rampant growing risk-appetite for relatively cheap small-cap (IWM) and growth (QQQ) stocks as these more aggressive indices have a much stronger multi-pivot setups. Money flowing out of SPY, as detected by the 20 DMF, may actually be funneled back into IWM and QQQ stocks, which would be a precursor of very bullish developments for the overall market.
Billy
Thanks for this, Billy.
In one of your previous posts, some time ago, you described yourself as the "idea man" in the Billy/Fred team while Pascal is the mathematician...! Again today you come up with a very interesting concept of money moving out of large to small /&Tech caps. Of course that happens, but its something I have taken for granted. However, the idea is that (more work for Pascal who is already looking at a long list of ideas) if one could measure a 20DMF for technology and small caps universes, we could visualize the money flow in and out of markets as far as volume is concerned. I know that probably many non S&P stock may not provide the minimum liquidity required for such an estimation, but perhaps with your experience you could find a liquid short cut that would approximate the real value of such 20 DMFs. Maybe a modified sectorial analysis might do the trick.
Just a thought
Pierre Brodeur
Pierre,
You don't do fair justice to Pascal by thinking that he has not a plethora of genius ideas on his own! He also has the patience and open mind to listen carefully to my mathematically illiterate experience and to magically transform it into optimal backtested algorithms!
It reminds me of my Professor Peter F. Drucker at Claremont University who once told us the following true story about World War II:
The US army had all the best war jets except for one major detail: their gun sights were incredibly unreliable. They discovered that all the best gunsights had been assembled by the same factory worker. Instantly they sent a flock of engineers to study what he was doing that the other workers didn’t do right. In fact, he was not following one of the assembly procedures because he found another way more convenient. The engineers changed the procedure manual accordingly and all the new gunsights were suddenly aiming correctly at target!
That being said, the small cap universe of stocks is indeed much too illiquid for any use of EV tools, except for a small sample of stocks that could hardly be a proxy of IWM.
There’s a much more reliable and easier way to proceed and that’s the use of relative strength vs. SPY.
Billy
For the record, it is a given that what Pascal has accomplished on his own, EV concept, the book, the web site are a life accomplishment that is far above what I have accomplished in my 30 years as a pro. A genius he is.
Pierre Brodeur
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