Monday, November 21, 2011

We are Technically OK

Here I am on Monday November 21 about 1pm and the Dow is down 296 and the TSX Comp is down 185. Panic now as investors sell to raise cash. Business television as usual is loaded with doom and gloom.

Technically we are still OK. The NYSE advance / decline line at mid-day is still holding above the early September peak and the A/D line is also well above those early August – late September lows. For more bullish evidence look at the iShares Dow Jones US Regional Banks (IAT) $19.94 which seeks investment results that correspond generally to the price and yield performance of the Dow Jones U.S. Select Regional Banks Index

Top 5-holdings by weight

U.S. Bancorp Common Stock                        USB
PNC Financial Services Group                      PNC
BB&T Corporation Common Stock               BBT
Fifth Third Bancorp                                         FITB
SunTrust Banks, Inc                                       STI

The regional banks lead the SPDR Financial and so far there is no technical damage. Note the recent breakout on the relative spread. As of to-day the IAT at $19.35 is just down to support at the 50-day MA – now or never.


Trading Student said...

Hi Bill, in my last comment to an earlier blog, you corrected me by saying the current bull market ended in April, So I have to conclude we are in a bear market and perhaps the nasty one you spoke of following the grand daddy bear of 2008-2009. Is my understanding aligned with what you are saying now? Thanks again.

Shawn Severin said...

The XFN.TO made fresh lows today. At what point would you sell the major indicies (i.e. S&P 500, DOW and TSX)?

dh12 said...

But do we need a volume spike and jump in the VIX to signal a bottom to this latest drop? As long as we have weak volume does that not call for lower levels to come?

Shawn Severin said...

It appears that the CDN bank index is lagging the US bank index. Why do you think this is happening? said...

Hi Trading Student

The rebound bull that followed the granddaddy bear of 2007-2009 began Mar 2009 and ended April 2011. Our new bull began August 2011 and should run through 2014

Hi dh12

The VIX seems to spike at panic low reversals but otherwise the VIX and the S&P500 have no price correlation – volume is tricky to read because of all the ETF and derivative trades – I prefer the breadth which still reliable

Hi Shawn

The XFN made a technical false move due to the stress test news – but false moves must quickly reverse and I think we are back on side now. Owning the bank is a must in the first stage of a new bull

Thanks All

Bill Carrigan said...


What CDN and US bank indices are you looking at? We do need to own US & CDN banks - right now

Bill Carrigan

Shawn Severin said...


The XFN posted new 52-week lows while the XLF did not. XFN is leading over a longer time frame (i.e. months), however the XLF looks to be leading more recently (i.e. weeks). Regardless, my main concern was that the XFN made new lows vs. the TSX. Perhaps it was simply a false move as you indicated.

Thanks for your comments,