The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

Secular Shenanigans

by admin October 28, 2024
October 28, 2024
Secular Shenanigans

The secular bull market in stocks has been epic both in duration and extent. The NASDAQ 100 Index illustrates this bull run best of all. Using Wyckoff Method classic trendline construction techniques, the chart below illuminates this secular bull phenomena. The stride of the bull market run is set with three points in 2010 and 2011. Drawing a Demand Trendline on the two reaction points and an OverBought (Supply Line) on the intervening high price, the Stride of the advance is defined for the next 14 years (and the bull run is still going strong). The upward trend has ebbed and flowed during the long advance, swinging between the Overbought and OverSold Trendline extremes. And at times throwing over and under these Trendline boundaries. These throwovers typically are long term overbought and oversold conditions. Presently the NASDAQ 100 is above the OverBought threshold of the upward channel, creating the classic Wyckoff throwover. Is this index vulnerable to a reaction back into the channel?  

NASDAQ 100 Index 2008-Present

Extremes in sentiment can be characterized by the classic equity put to call volume ratio. In the lower panel the Put/Call Ratio for CBOE equity option volume is plotted. An extremely low reading for this ratio indicates high call option volume in relation to put option activity. High call activity characterizes broad bullishness by option traders. Conversely, a high reading by this oscillator reflects extreme put volume and reflects intense bearishness. What makes this particular view of the Put/Call indicator noteworthy is the 10 Week Moving Average time frame. The long term construction of this indicator moves slowly and deliberately from Bullish to Bearish extreme and back again. This coincides well with the secular view of the upward striding NDX 100. Note the correlation of the OverBought and OverSold extremes around the edges of the trend channel and how well it syncs up with trading sentiment as defined by the 10 WMA Put/Call ratio.

Two notable conditions on the chart have recently occurred. In the third quarter (July) the NDX­-100 jumped above the Supply Trendline and became classically OverBought. Now, as the fourth quarter gets underway a Test of the July high is underway. Second, during the current Test of the July high the 10 WMA of the Put/Call Ratio has suddenly tumbled down into extreme call volume readings signaling that sentiment has become bullish and frothy, on a longer term 10 week basis!

Sentiment indicators are best evaluated as environmental in nature. Thus signaling that the upward trend of the stock market has suddenly become crowded with bullish speculators and investors. Sentiment indicators tell us when the rewards relative to the risks are high or low. The long term Put/Call Ratio now signals that bullish reward potential is diminished, and the risks are high. 

Wyckoffians would be watching the relationship between the NDX-100 index and the Overbought trendline. Often a decline back into the trend channel from an OverBought condition leads to volatility and a decline toward the Demand Line and an OverSold condition. Note also the position of the 39-week moving average (red dotted line) which is poised at the same level as the upper trend channel line. A drop of the NDX-100 into the channel would breach both of these noteworthy lines. 

All the Best,

Bruce

@rdwyckoff

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. 

Video Appearance:

I recently joined Dale ‘Coach’ Pinkert at ForexAnalytix for this discussion of the present position of the stock market and interest rates. To view it (Click here).

Workshop Announcement:

Mastering Long Term Campaign Investing. Join Roman Bogomazov and Bruce Fraser for this Wyckoff Method workshop for developing skills and mental discipline to successfully campaign long term stock trends. To Learn More (Click Here)

0
FacebookTwitterGoogle +Pinterest
previous post
Lindsey Graham strikes back at John Kelly’s ‘fascist’ comment about Trump: ‘Desperate’
next post
Delta sues CrowdStrike after widespread IT outage that caused thousands of cancellations

Related Posts

4 MACD Patterns That Will Give You an...

August 29, 2024

The SCTR Report: Carvana’s Gain Makes It Worth...

September 20, 2024

Stocks Plunge with Key Earnings on Tap

May 1, 2024

Technology Stocks Back In the Lead: Are Inflation...

May 4, 2024

S&P 500 Now in Weakest Seasonal Period…Or Is...

May 17, 2025

Sector Rotation & Seasonality: What’s Driving the Market...

March 3, 2025

The BEST Simple Moving Average Trading Strategy

February 6, 2025

The Bullish Case for Small Caps vs. Large...

January 15, 2025

When Will the Stock Market’s Bullish Momentum Snap?...

July 11, 2024

Tesla Stock’s Shocking Comeback: What You Need to...

July 5, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Apple reveals complex system of App Store fees to avoid E.U. fine of 500 million euros

      June 30, 2025
    • Breakdown of NVDA’s Stock Price and S&P 500: Actionable Technical Insights

      June 30, 2025
    • Thom Tillis announces retirement from Senate after clash with Trump

      June 30, 2025
    • SCOOP: House Republican eyes bid for Thom Tillis Senate seat after Trump attack

      June 30, 2025
    • Dem delay tactic ends, debate begins on Trump’s ‘big, beautiful bill’

      June 30, 2025
    • GOP, Dem senators remain divided over Medicaid after Trump’s ‘big, beautiful bill’ vote

      June 30, 2025

    Categories

    • Business (1,272)
    • Politics (3,873)
    • Stocks (1,477)
    • Uncategorized (45)
    • World News (1,265)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved