BigTrends

Hi, just wanted to pass along a couple of new developments that I'm excited about.  These are available on our free TrendWatch newsletter, which arrives daily in your in-box.  If you aren't yet receiving the TrendWatch, please register for it here.

In our new re-design of the daily TrendWatch, we've added some new features.  One of these is the BigTrends TrendScore.  TrendScore is a numerical formula we've designed, based on our different Percent R readings, that gives a snapshot of the current strength of the market trend in Stocks (SPY), Gold (GLD), Oil (USO), and Bonds (TLT).

Also new on the TrendWatch in addition to the Featured Article of the Day is:

Options Educator, a brief explanation of various option and technical trading terms and concepts.

Editor's Picks, links to our best recent articles.

Popular Articles, links to some of the all-time reader favorites from the BigTrends site.

We're sure you will find the added information on the free daily TrendWatch to be educational and informative to you in your trading.  Please feel free to leave me suggestions and feedback in the comment box.

The stock market correction began in earnest on Tuesday and has continued through the end of the week.  The sovereign debt crisis appears to be spreading to different countries around the world -- or at least there is a fear/perception that it will.  Often, the perception/market reaction to events is more important than the event itself, at least for the short-term.

We've seen a classic "flight to quality" during this pullback.  Gold and the U.S. Dollar have seen a strong rally, as have U.S. Treasuries.  Stocks have born the brunt of the move to safe products, as has Oil.  Take a look at the following performance chart for 2010 for the SPY, GLD, UUP, and USO.



You can see that as of the current prices on Friday, the S&P 500 has now wiped out all the gains of 2010 and is flat for the year.  The fact that the yearly gains were basically erased in 4 trading days is sure to frighten some individual investors.  Many retail investors were already wary of the market from the 2008/2009 crash and yesterday's false-looking huge downprint isn't likely to pacify them.

I would note that the de-coupling of Gold from Stocks, and the flight into Gold and the Dollar is a classic correction safety move.  We've seen this occur time-and-again in the past, although the last couple years were a bit of a different aberration -- and it actually is somewhat of a healthy sign for the world financial state that "normal" kinds of market rotations are back.

Scott Downing
Director of Research
BigTrends.com

Oil moved higher again today, continuing its rebound, and the general recent strength of many hard commodities.

The USO, an ETF which attempts to track the price of West Texas Crude Oil, is above its Top Acceleration Band on the Daily Chart below.  In addition, Percent R and Efficiency Ratio are showing very strong readings.