Netflix - Done

Last Oct. 14 I posted here my entry, "Netflix - A Few More Months to Run".   You should go back and look at that posting.  Now let's look at its present status.  Here's the chart updated.  The only change I've made is to add the upper pane to show the cum vol since the beginning of the uptrend.

 

 Cum vol is now 3 billion shares, which is D, so this TopFinder is done.  This means we expect that the characteristic accelerated uptrend that's been going on since last summer has ended, and as the Monty Python folks used to say, "Now for something completely different".  

As I keep repeating here, the TopFinder is not predictive.  It doesn't tell us what's going to happen next, only what's happening right now.  And right now this uptrend has ended.

Has GE Bottomed?

That iconic blue chip stock GE sure has been beaten up recently.  In general, the market tends to lead the fundamentals by six to nine months, so, has the market already incorporated all the recent and expected bad news, and are we at a buyable bottom?  There's one indication that it may have, and that's insider buying.  Four days ago the new CEO bought $1.1 million dollars worth, after buying $2.6 million in August. 

One can easily find a boatload of info and speculation about GE's fundamentals, so I'm not going into that.  Instead, let's see what insight can be gained by applying Midas technical analysis to GE on several different time frames. 

First, the very long term view, the quarterly bars chart back to 1985...

 

This, and all the charts in this post, are equivolume, making the horizontal axis linear in cumulative volume, not time.  The orange dashed vertical lines are equispaced and identify major bottoms, starting with the crash of 1987.  This is an analysis technique developed by Richard W. Arms Jr in his book, "Volume Cycles in the Stock Market" (Equis International, 1994),  and which I explain in our book, "Midas Technical Analysis" (Coles & Hawkins, Wiley, 2011).  It shows that major bottoms tend to cyclically repeat, not in time but in cumulative volume.  And here with GE, we see it's now at a major volume periodic bottom.  This is very bullish.  [For equal spacing, that 2009 vertical line really should be placed in the middle of the previous large black candle, but the charting software won't let me put it there.]

The green curve S1 is the Midas support curve launched from the 2009 low, and we see that price is now right at that support, also very bullish.

Now let's go up to the next time frame, the monthly bars chart...

 

Lots going on here.  The BottomFinder is more than 90% complete, looking like it will finish within a month.  The Money Flow Index oscillator in the upper pane shows that GE is severely oversold now.  The blue bars illustrate another analysis technique developed by Arms which he calls Price Projection, which I also explain in our book.  Basically, it says that the cumulative volume going across a top will be expended in the subsequent downtrend.  This implies here that downward pressure on the stock may continue beyond the end of the BottomFinder, a somewhat bearish indication.  

Moving up the time frames again, the weekly bars chart doesn't show anything significant, so I'll omit it here and go directly to the daily bars chart...

 

 This is a significant downtrend since mid September, but it's not an accelerated downtrend because the peaks are not close to their previous red resistance curves, thus we cannot apply a BottomFinder to this trend.  But, look at the last five days; this could very well be a washout bottom - heavy volume on strong downward movement, halting and reversing at a major support level.  

In summary from all these charts, the preponderance of all these indications is bullish for GE being at a major bottom right now.  No guarantees, of course, but enough for me to prepare to enter the stock.  The green dashed curve is located above the near-in resistance curve by 3/4 of the average height of the last dozen price bars; that's my buy-stop curve.  I'll enter when price hits that curve.  And the red dashed curve is similarly located below the bottom, and is where I'll place my stop loss order once I get in. 

S&P 500 Up Trend At or Near Its End

And now, for my final post of today, let's apply the same analysis to the S&P 500 as I did in my last few posts here.  Here's the weekly bars chart of SPY, the etf tracking the S&P 500...

Here I did the compromise fit of the TB-F to those two major pullbacks, which reveals that this accelerated up trend that began a year ago is 95% complete in terms of cumulative volume.  If average weekly trading volume continues as it has been for the last several weeks, this will get to 100% complete in about 2 or 3 weeks.  But, as I've said before, because of typical end of trend volatility, if a TB-F is at least 95% complete, the actual price up trend may already be done.  So, we can conclude that the S&P 500's up trend is either done now or will be in the next few weeks.

Small Caps Not Peaking Yet

Let's apply the same kind of analysis to the small caps as I've done in my last few posts here.  Looking at the charts of IWM, the etf tracking the Russell 2000, I see different behaviors compared to the NASDAQ and the DOW.  The weekly bars chart of IWM doesn't show an accelerated up trend, but the monthly bars chart does, and here it is...

We see an accelerated up trend that started in early 2016.  I did the compromise fit of the TB-F curve at those two major pullbacks which shows that this up trend is about 86% complete in terms of cumulative volume.  If average monthly trading volume continues as it has been for the last several months, this trend will end in about four or five months.  My usual caveats apply.

NASDAQ's Uptrend Is Over

Let's look at the weekly bars chart of ONEQ, the etf that tracks the NASDAQ Composite Index.  What we find is behavior very similar to that of the Dow which I posted about earlier today. 

Just as with the DIA, this is an accelerated up trend that started a year ago and is 98% complete, essentially over.  This TB-F curve is fitted in a compromise at several pullbacks, so I feel good about it.  And just as with DIA, my usual caveats apply.

The Dow Re-visited

My October 18th post here analyzed DIA, the etf following the Dow Jones Industrial Average.  I fitted the TB-F to the April 21st price pullback.  That indicated that this uptrend was about 84% done w.r.t. cumulative volume, and if average weekly trading volume continues as it has been for the last several months, then we expect this uptrend to end in about two months from now.

Fitting a TB-F curve to a price trend is not always cut-and-dried.  Some up trends leave choices to the discretion of the user, and there are several rules of thumb for this.  One rule is to fit to the largest, most significant pullback, which is what I did in the Oct. 18th post.  However, as I look at this now, I'm having second thoughts about this choice.  There are two other rules, each of which is probably more significant than what I used.  The first of those two says to fit to the latest pullback, in this case Aug 25th.  And the second of these two says that when there are two or more pullbacks which all look significant, we should try to adjust the fitting parameter D so that we get a compromise fit, some pullbacks being above and others below the TB-F curve.  It is this latter rule I'm going to apply now.

Here is the DIA weekly bars chart with D adjusted so that we get a pretty good fit to all three of the pullbacks marked by the purple arrows.  For that, D has to be 825 million shares of cumulative volume...

 

We see that this works quite well, so I now feel this is the right way to do it for DIA.  

Since the current cum vol is 800.5 million shares, this means this uptrend is 97% complete, with the end most likely happening during this coming week.  This means that the Dow's uptrend that started about a year ago is essentially over now.  My usual caveat:  The end of a TB-F does not necessarily signal the beginning of a downtrend. What it does mean is that DIA's behavior from now on will be distinctly different from what it has been for the last 12 months.

In the upper pane of this chart I've included the so-called Money Flow Index (MFI), which is actually the volume weighted RSI oscillator.  As illustrated by the red trend lines, we see that since early August the MFI has been in a strong bearish divergence from the price.  This implies that the internals of the DIA's up trend have significantly weakened, consistent with the TB-F having ended. 

Google At or Near Its End

Now let's look at the last of the FANG stocks, Google (Alphabet, ticker GOOGL).  I found that the quarterly bars chart and the monthly bars chart each sports a well fit TopFinder that is at or near its end.  Here's the quarterly bars chart...

 

This strongly accelerated up trend started in early 2011 and is currently about 98% complete.  Due to typical end of trend volatility, we consider anything greater than 95% to be essentially complete.  So, on this timeframe, this up trend has ended.

Now here's the monthly bars chart...

 

In this chart, there's some question as to which pullback(s) to fit the TopFinder to.  In my experience, fitting to the latest pullback works best.  Doing that here also captures an earlier pullback.  These fitting points are indicated by the small arrows.  So, I think this is a good fit.  

This TopFinder is almost 95% done, and we consider anything above 95% to be essentially done.  At the current rate of monthly trading volume it would take 3 or 4 more months to get to exactly 100%.  

So, my conclusion for Google is that its long term up trend is either done now or will end sometime between now and 3 or 4 months from now, assuming average monthly trading volume stays as it has been for the last several months.

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This ends my review of the FANG stocks and the Dow.  If we can generalize from these five to the whole market, the current long term market up trend will end sometime within the next 3 to 4 months, sooner if trading volume significantly increases.