S&P 500 - September 16, 2010

“But did thee feel the earth move?”

– For Whom the Bell Tolls, Ernest Hemingway

Did you see that tech rocket into close and after close?


They say good results and managerial blah-blah from Oracle, and Texas Instruments.

I just wonder what goes through the mind of those who are short the techies with the OpEx day tomorrow. Will it gap up? Will it gap down? Will rise or fall steady? Will it just go flat?

Anyways, this is a daily chart of S&P


Not much happening during the day. The tech rocket after close may change the picture. There is no point for me guessing what would happen on OpEx day in a market that has advanced 90 points (8-9%) in 12 days. Many cannot return 9% in a year.

I would like a pullback, when and if it happens, to stay above my upper purple line. If it can’t, then I would like the 1107 pivot to contain the drop.

I don’t think I should buy anything new in here at this time (trading the day is a different matter). I see no reason why I should liquidate either. As I have said numerous times, I like to set multiple levels of exit/concern and let the market play its game.

Today was the fourth day index pussy-footed around the mid-line of the blue channel. It can walk the underline of the mid-line but that is not what big runs are typically made of. I am not saying that it cannot happen, just that a strong move above the mid-line is what we should ideally see like this chart of NDX


Daily volume came flat. Daily breadth was negative.


Short term breadth keeps being oversold. Bears (are they still alive, or marginable?) have not been able to do much with it – not yet anyways.


McClellan Oscillator set back some more.


There is a well-formed potential Inv H&S with the neckline around August high and that is the level that everybody and their grandma are watching. Index is right there. We have OpEx day tomorrow. Oracle caused a big after-hour run in the future market. I think Fed has a matinee on Tuesday. We may have a couple of very interesting days ahead of us.

This is a 60-min chart


So far, the divergences haven’t done much more sideways pauses. That has somewhat lessened the short term overbought conditions.

Notice that RSI has not got oversold at all. In fact, there has been an up-shift in RSI. That is a sign of technical strength. We still have diverging momentum, but a really good day may be able to restart the price momentum.

So, will the market keep on roaring, or will it give a meaningful pullback? I wish I knew. All I know is that I do not want a long position in here, and I have some levels for my existing positions:

1115, 1100, 1090-1085

I may raise them tomorrow if market advances.

OEW pivot support at 1107 and 1090. Pivot resistance at 1136 and 1146.

Long term trend is up. Mid-term tend is up. Short term trend is up (a move below 1115 may change that)

As separate notes, USD does not look very healthy and needs some urgent attention or it may fall below support


High-yield junk bond ETF, HYG has been doing wonders


The risk has been on, and we have known that.

Keep an eye on USD.

And keep an eye on Gold

Have a Nice Evening!