The tale of two rallies

Monday, October 11th, 2010 | Vance Harwood
 

SPY’s 2010 price path for the 8th of October is about 3 points higher that the 2004 trend top line, but that is consistent with 2010′s considerably higher volatility. Recently there have been articles noting relatively low trading volumes, but compared to the normalized volume in 2004 (which at an absolute level was about 3.5x lower) volumes don’t look out of line.

SPY 2004 vs 2010, click to enlarge

The rally that we are currently in started around the 31st of August.    To me it has felt similar to the long rally we had starting in February 2010.   No wonder.  Both rallies started with SPY in the 105 to 106 range, and have tracked closely since then on a day by day basis–see below.

SPY rallies: Feb 2010 vs Aug 2010, click to enlarge.

If these rallies stay in sync then we would expect the next bear cycle to start right before Thanksgiving.

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Betting on a downswing

Tuesday, September 14th, 2010 | Vance Harwood
 

I’m betting that the market is due for a downswing.  If you are a sixfigure contrarian, now is the time to go long…    I sold SPY short at 112.99 and bought Oct S114 calls at 1.64 for insurance.   Worst case loss $2.65/share.



Testing the bottom 2010 trendline

Thursday, August 26th, 2010 | Vance Harwood
 

The closing  value of SPY is within about a dollar of the 2010 bottom trendline in the chart below.  There is lots of talk about a double dip recession, but I’m betting on a bounce.

 

SPY 2003/2004 vs SPY 2009/2010, click to enlarge

 

 



2010 — overachieving compared to 2004

Monday, March 12th, 2012 | Vance Harwood
 

The S&P 500 has already reached levels this year that weren’t reached until December 2004 in the tech stock crash recovery.   The volume levels are underwhelming, but on almost every other front the bulls are celebrating.  It doesn’t hurt that business continue to report very good numbers.   It is hard to get a good doom and gloom mood going with folks like Intel and IBM beating  analyst’s  numbers.  Malaise in the financials could spread if Goldman gets taken down a few notches, but after a weekend to think about it investors evidently decided that it wasn’t enough to derail the whole recovery.

My tendency is to react too quickly to the market’s moves—so I’m trying to be patient.    I wouldn’t be surprised to see this correction last a bit longer, the market seldom jumps back up immediately after a blow-off day like last Friday.    The VXX continues to build popularity on down days—it traded over 22 million shares on Friday—which looks to be 7 million over their previous record.

SPY 2004 vs 2010,  click to enlarge

SPY 2004 vs 2010, click to enlarge



Time for divergence from 2004?

Tuesday, March 30th, 2010 | Vance Harwood
 

Looking a the chart below you can imagine this year’s stock market getting back on the 2009 trend line,  leaving the 2003/2004 correlation behind.  But I’m still betting that the market is in a sideways mode, rather than a continuing raging bull.

The most notable change in the curves since my last update on the 18th of March  is the big drop in normalized volume–something we didn’t have till the Summer of  2004.    Volumes have been low recently, so this drop-off isn’t surprising.  If the 2004 pattern holds true, the 30 day moving average of volume will drop during rising prices, and start increasing a couple weeks before rallies occur.

SPY-30Mar-comp