Checking in with the Last Hour Indicator
By
Rennie on Tuesday, August 9th, 2011 at 2:53 am
Good time to take a look at the Last Hour indicator, which is one of two indicators I track that’s been calling for a longer-term selloff to emerge at some point (the other being TICKscore). The timing with this indicator is always tricky given it tends to lead by years. I expected it would ultimately be proven right given its strong track record, but I didn’t expect it to happen this year. In a troubling sign, the Last Hour has not retraced any of the decline over the last two years. It would be a much more hopeful sign to see this indicator surging higher as the market falls, signaling accumulation beneath the surface. The fact that we’re not seeing that kind of movement suggests smart money is not yet buying into the selloff. That’s not very encouraging as it implies an expectation for better (lower) prices ahead. The last two years has represented a ‘distribution phase’ according to the Last Hour, and the accumulation phase should be starting into this steep drop. So far it has not.
On a monthly basis, the S&P500 has sliced through its 20-month average intramonth. We won’t know for another few weeks, but a close below the 20-month average would end the buy from late 2009 and put the monthly strategy on the sidelines until a monthly close back over the average.
On a daily basis, after a day like Monday the last thing you’d want to see is another selloff in excess of 2% but less than Monday’s 5.6% drop (for the Dow). That would trigger the ‘crash warning’ signal discussed in this June 2010 column.
Checking in with the Last Hour Indicator
By Rennie on Tuesday, August 9th, 2011 at 2:53 amGood time to take a look at the Last Hour indicator, which is one of two indicators I track that’s been calling for a longer-term selloff to emerge at some point (the other being TICKscore). The timing with this indicator is always tricky given it tends to lead by years. I expected it would ultimately be proven right given its strong track record, but I didn’t expect it to happen this year. In a troubling sign, the Last Hour has not retraced any of the decline over the last two years. It would be a much more hopeful sign to see this indicator surging higher as the market falls, signaling accumulation beneath the surface. The fact that we’re not seeing that kind of movement suggests smart money is not yet buying into the selloff. That’s not very encouraging as it implies an expectation for better (lower) prices ahead. The last two years has represented a ‘distribution phase’ according to the Last Hour, and the accumulation phase should be starting into this steep drop. So far it has not.
On a monthly basis, the S&P500 has sliced through its 20-month average intramonth. We won’t know for another few weeks, but a close below the 20-month average would end the buy from late 2009 and put the monthly strategy on the sidelines until a monthly close back over the average.
On a daily basis, after a day like Monday the last thing you’d want to see is another selloff in excess of 2% but less than Monday’s 5.6% drop (for the Dow). That would trigger the ‘crash warning’ signal discussed in this June 2010 column.