S&P 500 - July 31, 2010

Index holds support!

This is a weekly chart


It was a hectic week with lots of intraday ups and downs. To a weekly player, however, index just ended flat and at support. So far, it seems like we have had a week of consolidation (indecision?) above immediate support of MAs and actionary lines.

This is a daily chart


A few days ago, I wrote:

“S&P has closed above the much ballyhooed 200 SMA. Many watch that moving average, many more discuss it, so I guess they should think that it is a bull market and rush to buy stocks with all they've got and all they can borrow”

Anybody who jumped on the index because the close above 200 SMA had to sit through a week of beatings.

I think it is better to pay attention to the whole technical package of price posture and breadth and momentum than just jumping the tape on only an arbitrary cross of an MA

All the moving averages on the daily chart are either flat or rising. They are not positively aligned but they should provide support if market decides to keep chopping and consolidating in the coming week.

I noted the hit on the center line of the blue channel and that was to be the high.

In addition to tests of 55 EMA and 21 EMA, notice that index bounced from the purple line on Friday.

The whole week may be viewed as a week of consolidation and testing support.

There are some improvements that I would like to see as soon as possible: I like RSI to turn around next week and make a new high in the overbought region

I would also like some expanding volume on up days.

1090 area provided support last week and I would be very disappointed with bulls if they could not hold it in the coming week.

Breadth, as measured by McClellan group of oscillators, worked off it overbought conditions and is back near neutral.


There has been improvement and short term buy signals from the overall breadth picture


There is more to do. For starters, I would like the percentage of stocks above 200 MA to expand.

This is a 60-min chart


During the week, I made intraday posts and noted that I thought the decline’s wave structure looked corrective. It appears, at this point, that it was a correct observation. Still, market decided to do more correction on Friday. Sometimes, market tricks us with a setting and changes its course to do something else, and then changes again to tell us that we might have been right all along. One needs to be flexible and adapt to the situation as it develops within the time frame of one’s choice. I see no point in arguing with the market.

So, the decline of last week looked corrective. But there is no guarantee that is over. The lows of Friday occurred around a significant support area across multiple time frames and bulls must be able to hold it.

I am still keeping with the bullish count (no reason to ditch it yet) but I am concerned about the inability of bulls to get seriously overbought and staying overbought. I would like them to do that this week.

OEW pivot support at 1090 and 1061. Pivot resistance at 1107 and 1136

Long term trend is up. Mid-term trend is down. Short term trend may have turned up.

--------------------------------------------------------------------------

Do you think that equities would collapse in an environment where market perceives corporation’s balance sheets as being healthy and capable of maintaining ongoing obligations?

Do you think that market would not punish corporate bonds if it perceived corporation as being credit risks?

Do you think these are charts of a market perceiving corporate obligations froth with heightened levels of risk?




Do you think this is a chart of market’s urgent concern about immediate liquidity risks?


Just food for thought

-----------------------------------------------------

On May 22, I made a post and wrote:

“There are all sorts of stories from disintegration of Europe and dismantling of Euro to this piece that says US will be unrecognizable by the end of the year”

In that post, linked to a piece about some Guru (Sullivan) joining some other Guru (Russell) going cash and calling the end of the world or some grandstanding of that ilk

This is a link to a piece of May 18, 2010 that talks about Russell predicting HARD RAIN and indistinguishable country by the end of the year

http://pragcap.com/richard-russell-sell-anything

In there, Russell told the world to sell everything, his advice was to tell your friends to sell everything

This is quote from the article saying what Russell said


OK, the guy has a high opinion of himself and the world should listen and ask no questions and demand no reasons (I am happy he is not my Prime Minister). All he says is that he tells you because market told him. Maybe he gets into details in his letter which is available for some fee that I am not willing to pay.

Flash forward a couple of months: Mr. Russell is now bullish according to this piece of July 26, 2010

http://www.moneytalks.net/daily-updates/4063-dow-theory-confirmation-qin-the-big-picture-we-now-know.html

What happened to HARD RAIN? Someone actually asks him about the flip and the quick flop


Now, he’s good enough to eat crow as soon as there is crow to eat, and that’s maybe why he’s lasted so long.

But can you imagine some poor chap selling his livelihood on his flip only to be left slack jawed to his flop?

Now, what if he gets it wrong again? What if we actually get a HARD RAIN? Better to ask if he knows what conditions would make him flip again, and if cares to share them ahead of time.

The issue, you see, is that many of these Gurus, never tell us what would make their forecast wrong when they make the forecast. It is like not having an exit strategy. That may be fine for someone who sells letters and advisory (or economic forecast), but is it fine for someone who deploys capital based on such advisory?

We all need to be able to analyze the basic tenets of the market on our own. We all need to make the analysis and the ensuing decisions our own. Only then we can objectively view the opinions of others and take them for what they really are: opinions.

If there is a mistake to be made about a market move, I’d rather that mistake to be mine and no one else’s

Have a Nice Weekend!

S&P 500 - July 30, 2010 - Intraday

If what we are having is a correction, we may have enough waves for it to be over (they can always extend.

Near the drop low, I reduced hedges (again), thinking that if it is a correction then the GDP number blah-blah should have done its damage.

If it is going to be a more serious decline, or if the GDP number is going to be more than blah-blah for the day, I will either crawl back into the shell or do something bearish.

Remember when I was talking about calls for a rally I was saying 1090 was the pivotal point for me to arrange my calls and spreads? 1090 area is still the pivotal area for me.

Bulls should hold this or they deserve no respect from me -- let alone my money.


The short term trend is down. The mid-term trend of S&P is also down. We have a series of higher highs and lows on daily, but a series of lower highs and lower lows on weekly.


It is up to the bulls to prove their case as they face the overhang of the weekly frame and the resistance of the daily.They have a platform (above all of my Weekly MAs and above daily short term MAs) to springboard them higher -- it's up to them to use it.

Let's see if the area around 1090 and today's low hold or not

S&P 500 - July 29, 2010

A Slider, a Fast ball, and a curve ball -- changeups :-)


S&P gapped up nicely but soon ran out of power, filled the gap and then sank below it. That typically is a harbinger of weakness, at least for the day.


Aftet some further selling and a test of 55 EMA, we had a fast run up. I had posted as market was trying to find a foothold around 1095. Because the kickstart to the

decline/pullback looked like a corrective ABC and because index had corrected near 50%



I though maybe the correction was over ands lifted some hedges. But then came a quick turn and market lost some points into the close. Because I had detected the bounce early, and the market did not drop below the low of the day, I ended up OK, but that does not change the fact that I was tricked into misreading the tape

You may ask why I think I was tricked, or why I suddenly lost my confidence in my ability to read the tape for the day -- after all, we had a powerful bounce and the low of the day held, after all, it was a good trade taking the bounce

Here is 5-min chart


I still think the the entire down move is corrective but, first, it does not matter what I think, second, the correction may be extending. If extending, it may invalidate the count I am carrying right now as you can see on the 10-min chart above.

On one hand it all may be interpreted as a series of corrective waves. On the other hand, what if the gap up was a failed 5th?


Bottom line is that I felt like crawling back into my defensive shell and wait for more clues from the market.

Stepping out of the intricacies of the small waves, the larger picture has not change. Change starts from smaller frames, of course.

This is a weekly chart



So far, it looks like it is at support. It needs to hold on to that support

This is the daily that I posted yesterday intraday


just had a bounce off support. It needs to hold support.

Notice that we have had two down days with above average volume -- just an observation.

Breadth these past three days has been soft, yet, overall breadth picture still looks good but it's about time we got some bullish activity


I still think probabilities are on bulls'side and as long as support holds, and decline is correction/consolidation, but who cares what I think?

OEW pivot support is at 1090 and 1058. Pivot resistance is at 1107 and 1136.

Long term trend is up. Mid-term trend is down. short term trend is down.

I would be disappointed if bulls lost 1090 and, should that happen, I would look down upon them until they retook it.

Have a Nice Day!

S&P 500 - July 29, 2010 - Intraday 2

This is what I am seeing



So far, it looks like a fast retreat to around support. If I am bullishly inclined, I might look for a spot to lift some hedges and/or increase exposure.

One does not have to take a huge risks to be involved, gradual positioning and use of options are some ways of limiting risk.

On the 60-min frame, short term trend has turned down and I could, alternatively, wait to get a change in trend in a smaller time frame before doing anything bullishly.


The kick off to this decline looked like choppy to me (like ABCs) and, if I am right, this is a correction and not some massive wave into the depths of perma bears' dreams.



It will take a move below 1060 to prove me wrong and that is quite a lot of points to drop before eating crow, so, I need to be patient and do not expose myself too much if I am siding with the bulls.

If I were to side with the bears, I would become worried if I were to see a series of higher highs and higher lows above support areas or supporting short term MAs.

Tomorrows expiration for end-of-month index options, so, who knows how much gymnastics price may do.

Trade Safely!

S&P 500 - July 29, 2010 - Intraday

S&P is still selling.

It could not hold on to the early gap, and that typically is a sign of weakness.

It is fast approaching 1100.

After 1100, we have the 1090 pivot (55 EMA = 1095ish), and 1085 (top of the July 22 gap) an area the bulls need to hold.

The decision of July 23 to mitigate some (or all) exposure/risk seems to have been a good one.

I may be looking at removing protection and/or adding to long exposure depending on how my levels and MAs perform.

As noted before, the entire rise from July 1 may have been an ABC (a bit unlikely, but possible). Unfortunately, only a move below 1060 can rule out the bullish count, and that is 40 points away. So watching risk and exposure is paramount if I am leaning on the bull side.

S&P 500 - July 28, 2010 - Intraday

Yesterday's post, I said that we might be close to some sort of correction. Seems like a correct call now.

I would like the bulls to hold 1100 area, but if they can't, they should hold 1090 pivot or they may be perceived as weak.

I would be concerned if the area around 55 EMA 1095 +/- which falls inside OEW 1090 pivot range did not hold.

S&P 500 - July 27, 2010

Above the super-hyped 200 SMA!


S&P has closed above the much ballyhooed 200 SMA. Many watch that moving average, many more discuss it, so I guess they should think that it is a bull market and rush to buy stocks with all they've got and all they can borrow :-)


I pay more attention to the markets profile using moving averages of different lengths, line studies, range studies, etc, etc. If I had wanted to wait for the 200 SMA to open a long position, I might have exposed myself to chances of immediate draw down from short term overbought levels.


This is a weekly chart



Index has moved above all of my movig averages, and above my actionary lines. It has a lot of room to go, but first it needs to get above the June high. As long as it satys above the MAs, its in a good shape.


This is a daily chart




RSI is is getting into overbough levels. As we all know, in trending markets oscillator extremes may stay extreme.


The purple line is the same line as on the weekly chart. I have had a bue channel for some time now. Notice that index has twice hit the mid-line and stalled. It would be really good for the bulls if they could take the index into the upper half of the channel.

Index has support from all of my MAs. Shorter moving averaged have turned up nicely and look like cradle support for pullbacks.


I have a bullish count as my preferred, but, as always, I am not married to a certain count and shall err on the side of caution. If, however, the count is correct, we are in intermediate 3 of major 1 and if intermediate 3 matches the point gain of intermediate 1, it may taget 1140-1150. That would definitely confirm an OEW mid-term uptrend. I must note that some sectors of the US market and some international indexes have already confirmed and OEW mid-term uptrend. The DOW has also confirmed. So, probabilities (not certainties) are for S&P to follow suit.


I would become very suspicious if index dropped below 1080.


today, after a few days of advance on good breadth, index paused. Volume expanded, and breadth was poor



We may be close to some sort of correction


McClellan Oscillator pulled back from a recent high in the overbought area. Summation Index is positive and rising.


There has been a lot of improvement in the overall breadth profile


As I said, prfobabiities are on the side of the index confirming an intermediate uptrend.

This is a 60-min chart


The blue lines are the same as the blue lines from the daily chart. Price is showing some signs of pause (fatigue? indecision?) near the upper blue ine (mid-line of the daily bue channel). I also have some short term line studies (pink and green) on this chart, and as we can see, index is sandwiched in a tight area. A good break above the blue line would be really nice for the bulls.


We have a gap below, 1070-1085, and I shall be disappointed if the top of the gap cannot hold any drop in the next few hours and days.


Once again, the count I have here is bullish, but I stay open-minded and shall bail if index starts behaving badly. The rise from July 1 can be counted as an ABC as well.


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


Long term trend is up. Mid-term trend is down. Short term trend is up

Have a Nice Evening!

S&P 500 - July 24, 2010

An acceptable close to an acceptable week!

This is a weekly chart


Index managed to close above my weekly MAs and above the actionary purple line. Weekly volume expanded on the way up this week. This was quite an acceptable effort from the bulls, but they need to do more. At the very least, they should end the coming week above the MAs. They should also force a MACD cross which would be a nice positive given that RSI finally moved above 50.

This is a daily chart



Interesting how we get cliffhanger daily closes. Wednesday closed at 1090 (an OEW pivot). Thursday closed at 55 EMA. Friday closed at 1100 and 144 EMA. Index is now above the overly famed and ballyhooed 200 SMA. Does that mean we are back in a bull market while 4 days ago we were in a bear market? I don’t know, and, as many longtime readers know, I don’t care. A market is either trending or not. Animal designations mean little. We are at the verge of getting an uptrend in terms of highs and lows. We are very close to confirm an OEW uptrend as well. Even if we get our uptrends, there is no guarantee that we will match or better the April high – one level at a time as I monitor, adjust and adapt

Bulls need to get past this hurdle (1100-1110) and, while they are trying for it, they need to hold 1083-1090 on any setbacks. I will be concerned being long if index drops below 1070-1075.

Breadth has been slowly, but steadily improving


There is a short term buy signal from Bullish Percent Index. There has been noticeable improvement in percent of stocks above the widely watched 50 and 200 SMAs. A/D line made a higher high.

We had a steady set of good up volumes, and a steady rise to number of net new highs.


McClellan group of oscillators look good as well


So, we have a uniform picture of breadth that looks good at the moment. Does it mean that things cannot drop all of a sudden? Absolutely not. Does it mean that we won’t have pullbacks? Not at all.

It just means what I said: the picture is good at the moment. Market is against an area of technical resistance. Bulls have the wind in their sails and they can go for the kill early next week, ram it through 1100 and 1110 and you may get the shorts feeling the heat on their backs; dilly dally and you may embolden the bears shorting on a failed test of resistance.

I decided to play a little with regression channels


Notice that price is hitting against the second band of the longer term grey channel. Also notice that the top of the short term orange channel coincides with a couple of VWAP curves I have launched from the Feb low and the April high.

Then I decided to widen my longer term channel to fit the flash-crash-fat-finger low


Now the inner line of the grey channel is holding the price while the outer line is coinciding with June’s high.

It’s neat, isn’t it?

Anyhow, most studies are based on price and often paint the same larger picture.

This is a 60-min chart


The chart just looks good. It has resistance ahead, but it has built some momentum that may carry it through. I wouldn’t get caught in the minutiae of the intraday waves, there are quite a few different ways this can be counted. I would instead pay attention to what price interaction with my levels and MAs. Notice what a good long trade the index gave by testing the top of the July 22 gap.

I would be concerned and disappointed if bulls fail to hold 1070-1075. But before those levels, I expect the bulls to stay above 1080. They have everything working for them now. There can be no excuse, and I shall have no patience for lack of performance – they just need to get on with it and do the jobs.

I don’t think we have yet seen shorts being seriously pressured by the bulls. There are multiple levels of resistance that might have helped convince the bears to hang in. If bulls ram through these levels without much of a hiccup, we may get a spectacular couple of days burning shorts.

It’s up to the bulls to press it!

OEW pivot support is at 1090 and 1058. Pivot resistance at 1107 and 1136.

Long term trend is up. Mid-term trend is down. Short term trend is up.

Enjoy the Rest of Your Weekend!

S&P 500 - July 23, 2010 - Intraday - 2

S&P's at 1102

There is quite a bit of resistance between here and 1110. If I am paranoid about the attack of the bear, this is as good a spot as any for me to start looking at what I might like to do to mitigate some (or all) exposure/risk.


Bulls need to get past this hurdle (1100-1110), it will be excellent to do it now and really mess up the bears, if not, they need to hold 1083-1090 on any set back.



I would not get overly enamoured by the bullish wave count. Mid-term uptrend is not confirmed yet and it can easily be counted bearishly.

I would pay attention to price interaction with levels and MAs

S&P 500 - July 23, 2010 - Intraday

How index pulls back may tell us if we have had an ABC up or a 1-2-1-2

If 1-2-1-2, 1065 area (the bottom of this swing) should not be violated.

But, really, I will be concerned being long if index drops below 1075.

S&P 500 - July 22, 2010 - Intraday

Here's the headline:

What a crock of you know what.

yesterday, Fed-Head goes on that he is uncertain about the long term macro stuff, as if anybody really expected him to to be certain about that.

He goes today that he'd do all he can if economy disappoints, as if anybody expected anything else.

Why do people put so much emphasis on this crap beats the hell out of me.

All I can say is thank you Mr. Fed-Head for yesterday's drop

Anyhow, who cares? It seems like I have been on the right track fishing at the lows for cheap calls -- for the moment, at least.


Now is the time for me to make sure I do not end up handing back my profits to Mr. Market.

S&P 500 - July 22, 2010 - BMO - 2

If it stays like this into open, market will gap over resistance.

Bulls cannot have it better than that. If they get their act together they can establish a gap up wave 3 or wave C.

Now, it's up to them to show us what they can make of a good start.

No complacency here. Resistance becomes 1090, support 1058, and 1070 the mid-line play field.

Have a Nice day!

S&P 500 - July 22, 2010 - BMO

The future market has been at it for a few hours

It's a long way to the open and a lot can happen, that said, if cash opens for the level of ES now, we will have a gap above 1070.

Again, a lot can happen before market opens.



Yesterday I said that the rise into close looked corrective. Overnight, S&P future has made a low, it may have cleared that. Small waves can become confusing when future market does substantial moves.


There are people who say this is a crazy market, irrational market, manipulated market, etc, etc


I shall ignore them. A market either trends or goes sideways in my timeframe(s) of choice.

If I decide to play, I make a plan with entry and exit criteria and play. I then adjust and adapt as price evolves.

BTW, Bernanke speaks again today, I think it's 09:30 am -- just exactly what this guy may say that we do not know about the economy and uncertainty. You think those who dumped yesterday after Bernanke talked were stupidly thinking that everything was certain and economy was booming? Only to be corrected out of their stupid thinking by Bernanke? Or do you think that they just booked a nice one day profit? I do not think they were stupid. I do not think what Bernanke says about economy matters to them either.

The only thing Bernanke may say that may matter is if/when he plans to start printing with full force, after all, the market ran into a wall after QE ended in March, it's all about money, the rest is hoopla :-)

S&P 500 - July 21, 2010

Never a dull moment, eh?

According to many on the web and media, Bernanke said something and people didn’t like it and they sold.

Maybe.

I personally think that index hit resistance around 1090, which we have pointed out ad nauseum, some started taking a nice one-day profit, and it snowballed from there – of course, Bernanke’s as good an excuse as any.

We have talked about index being trapped in a series of lower lows and lower highs. It’s now a question of whether the recent low and the reversal yesterday were good enough for a turn or not. If so, we should get a higher low soon pending confirmation by a higher high.

Today’s drop was happened on poor daily breadth


McClellan Oscillator seems like it is rolling over towards neutral. Summation Index is still positive but barely


Once again the latest 5-min price structure looks corrective


So, if I am right, more downside maybe in the cards after the corrective rise completes on the short term 5-minframe

There isn’t really much else to say or chart that I have not already said or charted post after post these past few days.

Price is getting knocked back from resistance, and the charts are negative.

Resistance is 1070 and, more importantly, 1090. Support is 1058 and 1041.

Mid-term trend is down and bulls seem to have difficulty to get past resistance.

Have a Nice Evening!

S&p 500, July 20, 2010

Nice reversal yesterday!

Let’s see if holds longer than a New York minute :-)

Weekly chart is at a very interesting technical juncture.


This is where the bulls have to push it. Take down the resistance, get above MAs and thou shall receive free rides from many and many bears. Fail here, and thou shall be served as dead meat.

I would like to see if bulls can finally get the RSI above neutral.

This is a daily chart


Here, also, it is obvious what the bulls need to do: just get above resistance and stay there.

Yesterday, breadth started poor but improved nicely as buyers absorbed the slack off the tape. Volume expanded for the day.


There, however, is a lot of room for improvement


This is a 60-min chart


I shall not get caught in the minutiae of small wave labels. I shall instead pay more attention to price interaction with important levels and my MAs. I would like the bulls to get the 60-min frame overbought, and I would like them to hold 1070.

OEW pivot support is at 1058 (holding 3 times so far) and 1041. Pivot resistance at 1090 and 1107.

Long term trend is up. Mid-term trend is down. Short term trend may have turned up (pending a higher low)

----------------------------------------

If Perma bears are right and market’s about to collapse down some 3 of 3 of 3 of whatever into the depths of hell, then how come junk bonds are doing well?

I just wonder how they explain this chart


Or this


Things may change tomorrow, or later, but, until they do …

Speaking of bonds, rates are quite depressed


If rates start rising a bit, market may get a good dose of money out of the bond land

In the past, we have used TED with success in assessing risk perception.


Right now, TED is pulling back. It’s still not tame enough for my liking. I would like it to drop further and I would like longer bond rates to rise – then maybe I can relax a bit – Ya Right!

Have a Nice Day!

S&p 500, July 20, 2010 - Intraday - 2

Not bad, eh?

Now I have choices:

I can spread

I can collar

I can reduce

I can just do nothing

Support is 1070, 1058 (holding 3 times so far), 1040

1090 is very important resistance -- It is, at this time, the prize to win for the bulls


Are the bulls out of the woodshed? I don't know. I just know the daily and weekly charts are negative as I write this. The bulls need to do quite a bit of work to prove that they matter at this juncture.

Have a Nice Day!

S&p 500, July 20, 2010 - Intraday

Sometimes market makes you get up early for a possible trade -- That's OK -- as long as I don't lose much ;-)

With the early morning drop trade now out of the way, I was still looking at July SPY calls for end of month and August SSO calls (or spreads).

Those call are against a ton of market technicals, against the series of lower highs and lower lows, against the media and against the general market mood of the moment.


The idea is that if I choose to bet against the market, I bet little and know my Max exposure

Regardless, intraday breadth is poor - player beware!!

On a positive side, tick has been strong -- there is a battle out there.

Resistance is , 1070 and 1090 (the level I have had in mind as an anchor for call(s)). Support is 1058 (which held again) and 1040

S&p 500, July 20, 2010 - BMO

seems like yesterday's price action was indeed corrective as I discussed in last night's post.

In the early going futures broke below yesterday's low



Not a very pretty picture at this moment. This brings cash index back into 1058 pivot zone.

If market carries like this, we'll get a gap down at the open, and it will be up to 1058 and 1040 cash to provide support.