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II Insight 

Oct 2010

Global leaders in Technical Analysis since 1947


Welcome to the October edition of II Insight.


In the last issue we reported that at the end of August we rapidly moved from a short/cash stance to substantially long equities.  That opinion paid off for our subscribers, as the S&P 500's performance in September proved to be the best for over sixty years!


We maintained the bullish view until the rally showed signs of tiredness going into the end of September. On the 1st of October, we closed out the bulk of our remaining ETF longs, pocketing the profits, moving our portfolios back into cash. Over the past few sessions we have also opened a handful of short positions, with limited risk, to exploit any short-term correction. A buy and hold portfolio is just not fruitful in 2010 as markets are side-drifting.


In this issue we draw evidence from our website that supports our present market view. The current market condition does not warrant a buying spree such as that at the end of August and early September. A more favorable buying window will arise but it is not now. It may be Friday, next month or six months away. We don't know and neither does anyone else but we are confident that when it does arrive, our subscribers will be amongst the first to the plate. In the mean time we are content to bank profits and keep a watchful eye on technical developments.


The tools and features now available on our website have been utilized by subscribers and market professionals for the past 50 years and a subscription is available for as little as $1 a day!. For further information please contact Sarah our subscriptions manager at


Tarquin Coe, Market Technician


Commodities boom.........

Take a free trial to the II Commodity service

Readers of our services will be well aware of our long-term positive stance on gold, but the precious metal is not the only commodity that is in a bull market. The powerful upside breakouts seen in grains and other agriculturals (see chart of RICI Enhanced Agricultural index, right) confirms the completion of a major base formation in softs.

Investors interest in the asset class is growing by the day. Commodities are seen as both a trading vehicle and a potential hedge against inflation. Professional traders continue to be active in the market, but this activity is being joined by the growing weight of ETC and ETN-driven activity from funds and private investors. With more funds moving into supply-contrained markets, we can expect further volatility ahead.

This month, we are offering a free trial to the Investors Intelligence Commodity Hotline. Published from our London office and edited by Cornelia Dichio (MSTA), this service provides an incisive overview of the international commodity markets and highlights on daily basis technically-driven trading opportunities.

  • Covers Energy, Agriculturals, Metals & Precious Metals
  • Daily email hotline with Chart of day, featured contracts and model portfolio trades
  • Online charts of the major European and US contracts (EOD basis)
  • Daily automated signals scanners - Breakouts, Key Day Reversals etc
  • Tracks relative performance of commodities to CRB index
  • Commodity breadth - tracks internal strength and ob/os condition of CRB and other commodity index/groups 

If you would like to take a trial, just follow the link here. Existing subscribers can add a month's sub to their current package for no charge. New subscribers can sign up in just a few minutes with no financial commitment.


Charts of the month


The S&P 500 closed out September with an 8.8% gain. There are only a handful of monthly gains of that magnitude on record. Three historic examples are annotated in the charts here.


May 1990 saw a 9% rally, December 1991 saw a gain of 11% and March 2000 also saw a 11% rise.




In each of the above cases, performance over the subsequent months was dire. The most worrisome being March 2000, as a cruel bear market followed.


These charts appeared in the Coe Report on the 1st of October. This three times a week intraday service is available for just $35 per month. Reports go out mid session and we advise our trades ahead of time (no front running!). As well as generating potentially lucrative trading ideas, the methodology and reasoning is educational.




Weekly buying and selling climaxes


Last month we reviewed the high count of selling climaxes over the final two weeks of August (weekly Selling Climax occurs when a share makes a new 52-week low but then closes higher for the week). The high level back then was one of the reasons we turned bullish.


In last month's report we noted selling climaxes in Intel, Yahoo!, Cisco and Bank of America. How did they perform? Between September 1st and October 1st Intel rose +4.8%, Yahoo! up +4.7%, Cisco up +4.1% and Bank of America off slightly at -1.5%. Not bad bearing in mind that investors wouldn't touch these shares with a barge pole during August.



What does the weekly climax survey reveal for the week ending October 1st?  The data is now turning more and more bearish by the week. Over the past four weeks the weekly counts of buying climaxes has been on the rise. This is occurring as the S&P 500 nears the top of a rising trend channel. We advise caution.


Weekly climax data is available to subscribers every Friday at 4.50pm (Eastern Time). 


A subscription to the US Hotlines service provides online access to the weekly climax data along with hundreds of other vital indicators

Don't forget the website!

We recently conducted a survey of some our readers, and one of the facts that came to light is that many of the subscribers rely on the Investors Intelligence emails, but rarely visit the website. I'd like to remind readers that we have some great features available online. Here's a few features that the website has to offer. I hope you find them useful:

  • Archive material - look up Hotlines or the AS indicator from last week, last year or even further back
  • Flexible online charts - not just P&F but great line, bar and candlestick formats. There is a whole host of useful functionality such as MAs, volume indicator and the ability to set custom relative pairs ( compare stock with stock)
  • Scanners and filters - daily scans for stocks making new highs, new relative highs and technical signals such as Key day Reversals 
  • Set Alerts - Click on chart alert on the chart page to set either price limits or signal alerts. Either way, we will send you an email when the event occurs  
  • Select you own watchlists add to my watchlist to monitor groups of stocks or portfolios.
  • View stocks by index or sector groups - quickly rank by performance or technical strength.
  • And of course all our well-known breadth indicators - available for both index and sectors

Note - if you have lost your password just drop us an email at

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This report has been produced and compiled by Investors Intelligence, a division of Chartcraft Inc, and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time Chartcraft and any of its officers or employees may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also Chartcraft may from time to time perform other services (including acting as adviser or manager) for any company mentioned in this report. The value of securities can go down as well as up, and you may not get back the full amount you originally invested. Derivatives in particular are high risk, high reward investment instruments and an investor may lose some or all of his/her original investment. If you make an investment in securities that are denominated in a currency other than that of US dollars you are warned that changes in rates of foreign exchange may have an adverse effect on the value, price or income of the investment. The investments referred to herein may not be suitable investments for all persons accessing these pages. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. This report is prepared solely for the information of clients of Chartcraft who are expected to make their own investment decisions without reliance on this report. Neither Chartcraft nor any officer of Chartcraft accepts any liability whatsoever for any direct and consequential loss arising from use of this report or its contents. This report may not be reproduced, distributed or published by any recipient for any purpose without the prior express       

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