S&P Index Versus NDR Supply and Demand with Spread

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Looking at brief dips where supply dominates demand after a long stretch of positive net demand. Occurred in 2007 2010 2012, last October and now in July. Need to look at this daily, but unless it making new lows quickly, this is setup for a new high. Continued action below zero dictates a defensive position and only a flip back to overweight net exposure on a turn back to positive territory.

 

 

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Detail:

Fist highlight occurred after the August selloff in 2007 right before the final run up to October 07 high.

Then next highlighted area actually had two brief dips before reversing positive was following the 2010 selloff that was kicked off by the flash crash. The second occurrence in 2010 was actually deeper. The 2010 drops really are not similar to the 07 or the 2014 drops but I included because the S&P did not drop as deep but the net supply reading did, offering a positive divergence.

In 2012, I highlighted only one of the two brief dips. The first one came a little while after the lows in mid 2012, and net demand didn’t rise enough before going negative. The second, near the end of the year, is highlighted, because net demand was sufficiently high then dipped negative. Helped identify a great long entry.

 

 

Peter Cory

Research & Prospectives

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