Hertler Market Signal Update #810 11/5/2017 1
Hertler Market Signal Update
#810 November 5, 2017
The SMI is bullish. EMC is bullish. LMC is less bullish. Sentiment
indicators are mostly extremely bearish.
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S&P 500
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Smart Money Index (SMI)
___SMI 50-DMA
___SMI 200-DMA
S&P 500 vs Smart Money Index
The Smart Money Index over the long term displays an inverse relationship with the S&P
500. The SMI made another new low last week. The 200-day moving average continues down,
and the 50-DMA is well below the 200-DMA. That is bullish. The SMI rose slightly last week.
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S&P 500
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LMC (Cumulative Late Market Component of SMI)
S&P 500 vs LMC
___LMC50-DMA
___LMC 200-DMA
The late market component (LMC) of the Smart Money Index rose a bit last week. The
LMC had not correlated reliably with stock prices for a long time. But, for about two years the
LMC has more or less correlated with the S&P 500. The LMC is in a short term rising (bullish)
trend at present. A move above the 200-DMA would confirm a bullish trend.
Hertler Market Signal Update #810 11/5/2017 2
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S&P 500
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EMC (Cumulative Early Market Component of SMI)
___EMC 200-DMA
____EMC 50-DMA
S&P 500 vs EMC
The EMC (early market component of the SMI) was nearly unchanged last week. It is well
above its 50-DMA. Although in theory the EMC is supposed to represent the dumb money the
emotional traders it is apparent that the EMC has been correlated well with the S&P. It is
bullish.
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0.06
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Russell 2000 Small Cap
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Ratio of Russell 2000 to DJIA
Small Caps vs Ratio of Russell 2000 Small Caps to DJIA
The small cap/DJIA ratio fell further last week as the Russell 2000 was still near its high.
It is bearish.
Hertler Market Signal Update #810 11/5/2017 3
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NASDAQ COMP
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Ratio of NASDAQ Composite to S&P 500
NASDAQ Comp vs Ratio of NASDAQ Comp. to S&P 500
The ratio of the NASDAQ Composite to the S&P surged to a new high as the NASDAQ
made a new high. It is very bullish.
Euphoria
Panic
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S&P 500
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S&P 500 vs Citigroup Panic/Euphoria Model
Citigroup Panic/Euphoria Model
The Citigroup Panic/Euphoria Model (from Barron’s) climbed to 0.29 – the highest since
early 2015. It is getting close to euphoria. Note that prior to the last market top, the Model
remained in the euphoria zone for 9 months and headed down long before the market topped.
The Model bottomed on 2/4/2016. It remains in neutral territory.
Hertler Market Signal Update #810 11/5/2017 4
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S&P 500
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AAII Members Bullish Sentiment Oscillator (3-Wk Moving Avg.)
S&P 500 vs AAII Member 3-Week Bullish Sentiment Oscillator
The three-week bullish oscillator rose slightly last week. It is bearish.
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S&P 500
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AAII Bull-Bear
S&P 500 vs AAII Member Bulls Minus Bears
The AAII percent bulls minus percent bears climbed last week, and well above zero it is
bearish.
Hertler Market Signal Update #810 11/5/2017 5
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NYSE Composite
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Fear Index: Product of VIXO and Total Put/Call
Ratio (50-Day Moving Average)
NYSE Composite vs Fear Index
___Fear 5-DMA
The Fear Index 50-day moving average is at a new low. The 5-DMA is still near an
historic low. I have marked some of the past occasions where the 50-DMA turned up (which it has
not yet done).
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DJIA
Date
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IDV (Interday Volatility of DJIA, %) 10-Day Moving Avg.
DJIA vs Interday Volatility of DJIA
The 10-Day Interday Volatility dipped slightly last week, but it is still in about the middle of
its recent range.
Hertler Market Signal Update #810 11/5/2017 6
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DJIA
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idv (Intraday Volatility of DJIA, %) 10-Day Moving Avg.
DJIA vs Intraday Volatility of DJIA
In contrast to the interday volatility, the intraday volatility is in a more
distinct downtrend with lower highs and lower lows.
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NYSE Composite
Optimism Index (OEX 15-Day Put/Call divided
by Relative VXO)
NYSE Composite vs Optimism Index
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The Optimism Index dropped from the highest level of our data base, but is still very high
and bearish.
Hertler Market Signal Update #810 11/5/2017 7
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S&P 500
S&P 500 vs S&P 100 Option 15-Day Put/Call Ratio
The "smart money" OEX Put/Call Ratio is
Bearish above 1.4 and Bullish below 1.0.
CBOE S&P 100 Option Put/Call Ratio
(15-Day Moving Average)
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The smart money OEX put/call ratio has fluctuated in a range that can be defined as
bearish above 1.4 and bullish below 1.0. It fell from the highest level in our data base, but it
remains very high and very bearish. Many of these surges above 1.4 preceded rather minor
declines in the S&P 500.
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1/1/00 1/1/05 1/1/10 1/1/15
S&P 100
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___BCI 50-Wk MA
Barron's Confidence Index is a high-grade
bond-index divided by an intermediate-grade
bond-index. A decline in the latter vs. former
is said to generally indicate rising confidence,
pointing to higher stocks and vice versa.
Barron's Confidence Index
S&P 100 vs Barron's Confidence Index
Barron’s Confidence Index appears to be breaking above a long term
downtrend.
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The Smart Money Index is bullish assuming an inverse correlation to stock prices.
The LMC is bullish, at least for the short term. Probably it is best labelled neutral”.
Hertler Market Signal Update #810 11/5/2017 8
The EMC is bullish. Note that in classic Smart Money Index theory, buying by EMC and
selling by LMC is a very bearish combination. But, this classic theory has not been operational
for several years!
The AAII member bullish oscillator is bearish, and the difference between bulls and bears
is bearish.
The Citigroup Model is approaching bearish.
The relative strength of the NASDAQ Composite is strong again and bullish.
The relative strength of small caps is weak and bearish.
The Fear Index is bearish.
The Interday Volatility Index is low as is the Intraday Volatility Index.
The Optimism Index is very high, which is bearish.
The OEX put/call ratio is very high and bearish.