TraderFeed: Are We Significantly Oversold In The Stock Market?

Above is a useful short-term measure of whether we are trading in an “overbought” versus “oversold” mode in the U.S. stock market. The blue line is the cash SPX; the red line is a five-day moving average of the following:(5-day new highs minus 5-day new lows) + (20-day new highs minus 20-day new lows) + (100-day new highs minus 100-day […]

TraderFeed: Three Views of the Breadth of Stock Market Strength

Here are updated charts for what we might call the breadth of market strength and weakness. (Raw data from the excellent Stock Charts site.) Any individual stock can give a buy or sell signal according to rules from a technical trading system. The top chart reflects Wilder’s Parabolic Stop-and-Reverse (SAR) system; the middle chart tracks a system based on Bollinger […]

TraderFeed: The U.S. Stock Market is Hostage to Macro Themes

Has the U.S. stock market been strong or weak so far in 2015? As the above three charts from the excellent FinViz site indicate, the answer very much depends on the segment of the market you’ve been following and trading.With respect to stock sectors, consumer discretionary and healthcare shares have performed well. Note the strength in housing stocks (XHB) and […]

TraderFeed: How the U.S. Dollar Rise is Impacting the Stock Market

We have the unusual situation in which many central banks–most notably in Japan and Europe–are pursuing monetary policies of quantitative easing, while the U.S. has been in the mode of exiting its program. The result is that interest rate differential trends across the world–as well as relative economic growth–increasingly support the U.S. dollar. Indeed, as we can see from the […]

TraderFeed: Measuring Stock Market Sentiment With the Index Put …

The recent post took a look at the Equity Put/Call Ratio (the ratio of put volume to call volume for all listed options of individual stocks across all exchanges) and what it tells us about the market. Above we see a five-day moving average of the Index Put/Call Ratio (the ratio of put volume to call volume for all listed […]

Understanding Options-Based Sentiment in the Stock Market

I’m currently working on creating better indicators of stock market sentiment. Above is a five-day moving average of the equity put/call ratio: the ratio of put volume traded for all listed individual stocks divided by their call volume (no index volume included; raw data from e-Signal). You can see that spikes in the ratio have corresponded pretty well with buying […]

TraderFeed: A Fresh Look at Stock Market Sentiment

I recently took a look at changes in the number of shares outstanding of the SPY ETF as a sentiment measure. When traders are bullish, shares are created in the ETF; when they are bearish, shares are redeemed. This is a useful sentiment gauge, because it reflects what traders are actually doing in the market, not just their stated sentiment.What […]

What are the Factors That Drive Short Term Returns in the Stock …

What are the factors that drive short-term returns in the stock market?It’s an important question for short-term traders obviously, but also for longer-term market participants, as the execution of one’s positions ultimately has a significant role in determining profitability. This is especially true in situations where longer-term participants face a mandate to keep losses at a minimum. The demands of […]

Relative Equity Put/Call Ratio: What We Can Learn From Stock …

One of the psychological curiosities of the stock market is that we tend to see euphoria when shares are their most overvalued and despondency when they are trading at greatest value. It’s for that reason that sentiment gauges can be useful in tracking market cycles. One of my favorite measures is the ratio of put options traded to call options […]

TraderFeed: U.S. TICK: Tracking the Stock Market by Tracking the …

Yesterday’s trading session was interesting in that we started with early weakness, experienced a selloff that failed to break last week’s lows for most stocks, and then rallied back to the open before breaking out and moving steadily higher. Yesterday’s post illustrated how we can track such shifts in strength by identifying the number of stocks making fresh intraday highs […]