S&P 500 - September 30, 2010

Much Ado About Nothing?

Index ended -3, like flat, which is quite something given this chart


Days like this can be hard on trigger happy traders.

So far, from the look of the weekly chart, we have had a slow week.


This is a daily


We talked about a possible hit on the blue mid-line around 1155 and it happened. Is that THE TOP perma bears have been dreaming every night? I guess we will know at some point ;-)

Since bulls have a hard time getting into the upper half of the blue channel, let’s see how price has been doing in the lower half



I have divided the lower half into thirds. Notice how the top third has been containing the price. Index is running out of space and should soon either enter the second third or move to a new high.

I would like the index to stay above 1130, the breakout level. If it can’t, I would like it to stay above my top purple line, and I would like it to stay in the blue channel.

Daily volume expanded. Daily breadth was negative


McClellan Oscillator dipped a little more


Market has corrected substantially in short term breadth and short term momentum. Price, however, has shown resilience.

There are so many different ways one can count the smaller waves. This is one I showed today


Expansion in breadth was one criteria I had for up moves, and today’s spike clearly lacked that. Yet, notice how index has dealt with negative divergences. Not only it has not dropped, it has slanted upward. This must have made it really tough in perma bear traders.

On the positive side, index has worked off a lot of short term momentum without giving anything back. On the negative side, index is susceptible to a sharp drop that might force the momentum to bottom.

As I mentioned today, a move above 1145 increases the probability of the count, and a new high may help confirm it. As long as index stays below 1145, the above count is in danger of extending it C leg of wave 2 down, or even getting obliterated by the market.

This is another count


It may be setting a triangle or an irregular flat.

There can be numerous other counts, bullish and bearish. Important thing in my opinion is how index does with respect to 1140 and 1120 areas in the coming hours (days?).

I was thinking that today’s econo-news could possibly shake the index into some trend out of this range, but market decided on an in-range Yo-Yo. Tomorrow’s another so-called important econo-news.

OEW pivot support at 1136 and 1107. Pivot resistance at 1146 and 1168.

Long term trend is up. Mid-term trend is up. Short term trend is up (keep an eye on 1140 and 1120)

Have a Nice Evening!

S&P 500 - September 30, 2010 - Intraday 2

Perhaps by posting this count, you may think that I have lost my marbles and become a perma bull. I have not :-)


I am still following a scenario where 1120 started a wave 1 up. So,, here it is that scenario



I may be wrong and there are other ways of counting. A move below 1120 shall prove me wrong and that would be that.

A move above 1145 increases the chance of the above count being right.

Even if right, the C leg of wave 2 may still have more to drop. Only a move to new high could validate the count, but a move above 1145 increases its odds.

Waves are not the only tool in the world, and rely more on levels and MAs. 1140 still is in play, and 1120 is very important in the short term scheme of things

Have a Nice Day!

S&P 500 - September 30, 2010 - Intraday

This is what I said yesterday:

"Index has been caged in a tight range below the mid-line of the blue channel. If it wanted to hit the blue line again and pullback, that would give us 1155 or so – no prediction or anything, just thought I would mention it."


market hit an early high of 1157 -- pretty neat, eh?

Anyhow, market has just brought the risk level up to 1140. I have been saying that if 1120 were to be the beginning of a wave 1, then it had to hold.

Now, if we indeed have some sort of impulse, then 1140 should hold. Actually, a bit higher than 1140 should hold, but let me just say 1140.

Does that mean that if 1140 fails market cannot go higher? Not necessarily, just that it may become choppy indicting the entire rise may indeed be correcting the drop into august low, or it may mean that the high prior to failure of 1140 was the top of intermediate wave 1 from August low -- I'll think about it if I have to.

I would keep an eye on the mid-line of the blue channel. It's been rejecting the market at every attempt. Index may walk it up, but it should blast through it if it is to show us force.

So 1140 is a key area. that said, a move below 1144 is a warning, not a change in trend, but a warning that a change in trend may come.

Have a Nice Day!

S&P 500 - September 30, 2010 - BMO

Not surprisingly future market seems to have been in a waiting mode ahead of the All-So-Important, Life-And-Death, Secret-And-Meaning-of-the-Universe GDP crap at 08:30 today :-D



What has been amusing me a bit lately is that I see a lot of talks about POMO, and Fed monetization, and equity run up and stuff like that.


When, in Jackson Hole, Bernanke said that FOMC would resist price deviation on the downside, I quoted him in a post the same day. I was not hearing a lot about it then, back in August. When QE ended in April, I talked about its effects around the same time -- constantly asking: "Where is the Money?". I am not aware of any pundit having talked about the end of QE and market malaise that started in April. I am sure there are people of the same mind but I haven't read anything like that in the blogosphere.

Now, quite a few place talk about POMO days and stuff. Just search for POMO and the effect of Fed's purchasing bonds.

I am not trying to argue that it does not happen. I think Ben Bernanke is a man of his words.

Yet, the amount of money that has been pumped, or is scheduled to be pumped is nowhere near the size of QE, and market's already up 100 points and everybody's talking how you gotta be in everything but cash.

Seems like everybody has figured it out ;-)

So, yes, I believe Mr. Bernanke means what he says, and yes, I am scared of going against him, but, market has a funny way of dealing with conventional wisdom

Just some thoughts this morning

S&P 500 - September 29, 2010

"The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard."

-- epigraph of The Razor's Edge, taken from verse in the Katha-Upanishad

Gotta hand it to the market! Three days of chopping around a tight range. What did these three days have in common? They did not have any econo-news ballyhooed as a market mover. That will probably change tomorrow as we get some econo-news ballyhooed as a market mover.

This is a daily



Index has been caged in a tight range below the mid-line of the blue channel. If it wanted to hit the blue line again and pullback, that would give us 1155 or so – no prediction or anything, just thought I would mention it.

Not much to say really, the chart hasn’t changed much these past days. There is negative divergence on RSI and that matches the recent inability of the market to make new highs and to get above the mid-line of the blue channel. If index decides to pullback, I would like the RSI not to dip below neutral by much.


Daily volume shrank a bit. Breadth started poorly, but recovered and went positive for a while, and, then finished neutral


This is a 60-min chart



I have removed some wave labels from the chart. The action has been cagey and smaller waves can be counted in a number of ways, and I think it’s better to concentrate on important levels at this point. If you are interested, you can refer to prior posts and see a couple of different ways that I have counted this.

We have something that looks like an ascending triangle, it theoretically measures to 1170 +/-.

We also have an Inv. H&S that measures to 1245. Half the Inv. H&S target range gives us 1185 +/-


So, if we get a genuine breakout from this tight range. Then, I may think about a minimum 1170-1180 target. It’s all theoretical, of course.

If index needs a pullback, then I would like it to stay above 1130. If it can’t, I would like it to stay above my upper purple line (1100-1110 right now) as shown on the first daily chart above

1140 is still a level than can indicate short term trend has changed.

As we have discussed, if the scenario of the rise from 1120 being a wave 1 is alive, then any drop should not violate it

With option expiration on index ETF this Friday, and on October 15, I thought a nervous player with positions from further below could possibly use options to hedge/insure.

OEW pivot support at 1136 and 1107. Pivot resistance at 1146 and 1168.

Long term trend is up. Mid-term trend is up. Short term trend is up (keep an eye on 1140 and 1120)

Have a Nice Evening!

S&P 500 - September 29, 2010 - Intraday 3

On the Razor's Edge!

Market could not have done better than this.

It did not resolve anything :-)

So, staying in a situation where it can dash either way, or fake one way and dash the other way, market keeps many on the edge ahead of some econ-news tomorrow and Friday.

Have a Nice Afternoon!

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

Seems like market has shaken off a few sellers.

Intraday breadth has turned positive. This is the second day in a row that market starts off on a rough patch and then recovers. We'll see how it ends.



S&P never moved below 1040 that I said would have the potential of changing short term trend. Sounds like we picked a good level to watch for the day

Have a Nice Day!

S&P 500 - September 29, 2010 - Intraday

Boring day.

Intraday breadth is negative and that may act as an overhang on the index.

A move below 1140 may indicate a potential change in short term trend.

If you remember from last night's post, price seems trapped in tight box between 1130 and 1150.

On a 60-min chart it looks like some sort of a triangle, itdoes not really matter, how it resolves may be important.



The longer it stays there, the more frustrated trigger happy traders may become, and the more of their capital may get destroyed by the market.

S&P 500 - September 28, 2010

V-Day!

No, I don’t mean any victories or anything like that. I just mean that intraday prices went up and down a few V’s


Sell in a rush – buy in a rush – sell in a rush – buy in a – you get the picture

So, why is that? Why so many Vs? Maybe buyers sit content and shorts think the coast is clear and short a little. Then buyers come in and squeeze them out – and again.

This is what I wrote in the morning:

“5-min chart got nicely oversold, that may give the system some shorts to cream.”

Seems like it worked like that, but who knows?

This is a weekly chart


Price is hitting the mid-line of the blue channel. We are in the 5th week of the advance. It won’t be record finishing the 5th week in green. The move from March 2009 went with 9 straight weeks in green before correcting a bit. The move from Jan 2010 had 6 green weeks as a part of it. From a weekly point of view, any drop that stays above MAs (1090-1100) may just be a correction.

This is a daily


So far, the breakout is intact.

There is not much to say that I have not said. Not much to do either. I am just waiting for the market to make a move. I personally would like the market to spend some time going sideways and thrash some trading capital before doing a move.

Daily volume expanded but came about average. Daily breadth was good


As market opened and sold fast, breadth was poor, but it turned around with price and finished the say nicely positive. Maybe some of it was because of some hapless shorts covering all across the market, but hey, rallies have to start somehow.

Notice how price is making a tight box between 1130 and 1150. Bulls have to get above this or they may give the appearance of falling to an Inv. H&S

McClellan Oscillator turned up from around neutral.


This is a 60-min chart


Are we really dealing with super bullish count?

Even if so, it may be following this count


We need expansion in momentum and breadth to perhaps indicate that 1120 was the beginning of a smaller degree wave 1 up. Breadth did alright today. It needs to keep doing alright. Momentum is still behind and needs a good push

A move below 1140 may indicate a change in short term trend.

OEW pivot support at 1146 and 1136. Pivot resistance at 1168 and 1177

Long term trend is up. Mid-term trend is up. Short term trend is up (keep an eye on 1140 and 1120)

Have a Nice Evening!

S&P 500 - September 28, 2010 - AMC

Interesting day, wasn't it?

Early in the morning, it really looked like gold was about to correct, especially since miners had been soft on breadth. But then it did a hard bounce from 1277 and that was that for gold's early morning correction.

PM Miners recovered early losses but I have a hunch breadth was not good -- I will know more when I get all my EOD data.

USD, of course, had another day of misery, and that can hardly be bad for all sorts of things priced in dollars.

Other currencies, too, perhaps: this was in the news:

"An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness."


I am wondering if The Brazilian said it before or after the hard bounce by gold from 1277.


It's an interesting time when almost anything you buy in the financial markets goes up -- bonds, stocks, commodities, etc. Only shorts lose, and the dollar -- so far, at least.



It's a sad, sad chart. However, it may tell us how lopsided everything is: short the dollar and long the whatever - at some point, this has to do a dead cat thing, I guess, but when? And how dead is the dead cat?

we said that 1138 would be a level to watch, and S&P lost it and recovered. In effect what market did was some sort of a test of the breakout and our 1136 OEW pivots is around there, and 1138 was a fine-tuned level of mine.

So, the scenario of the rise from 1120 being a wave stays alive -- let's see if it can survive the overnight traders?

Enjoy Your Afternoon!


PS. I read the Brazilian quote at ZeroHedge, here's the link

http://www.zerohedge.com/article/brazil-confirms-what-everyone-knows-currency-war-has-broken-out

S&P 500 - September 28, 2010 - Intraday 3

Interesting action!

A rush down, and a rush up!

Now, if we get a pullback after market's finished creaming the early morning shorts, we'll probably know more about market's iontentions


I have been laying out some requirements to regard the move from 1120 as a wave 1, and market's so far has kept its end treating it as such.


Intraday breadth was poor when the day started but has now switched positive.

Other than the fact that market's busy squeezing some bears, nothing's really changed 1138 and 1120 stay levels that bulls need to defend.

S&P 500 - September 28, 2010 - Intraday 2

The correction in gold futures did not last long. December gold is now +9, from a low of 1277 to now at 1307. That tells you more about market's view of US Dollar (and other paper currencies) than anything else, I think.

Intraday breadth so far is poor and TRIN is hitting 1.5.


5-min chart got nicely oversold, that may give the system some shorts to cream.


S&P needs to retake 1140 and stay above it. and then bulls may have something. If they retake 1140 and turn breadth positive then they may be in good shape

S&P 500 - September 28, 2010 - Intraday

Seems like cautioning about S&P levels was not a bad idea.

1120 on S&P is a key, and if market can hold it, it may have a chance at continuing the rally, otherwise, the correction may drag deeper and/or longer.

If you remember, I am wondering id the rise from 1120 is a wave 1 of some degree or not.

If S&P can get oversold short term without violating 1120, then chances of that move being a wave 1 increases.

S&P 500 - September 28, 2010 - BMO

A lot can happen when many are sound asleep.

Future markets have overnight corrected and recovered on what seems like higher volume than is usually associated with future contract transactions at 3 or 4 am NY Time

This is S&P December


The entire move down looks corrective. A lot can happen till the open of cash market. A lot can happen after the open of the cash market. If market were to open right now, S&P cash would be around 1142 or so. A move below 1138 cash may indicate a change in short term trend. That level may change after the market open.

This is NDX December


A hard bounce from close to 2000. The decline here looks corrective as well. Corrective patterns can keep correcting deeper, of course. On clue in knowing if they are done or not is when we see impulsive advance after a corrective leg. So, the low around 2000 and the shape of the upward reaction from it may tell us if there is more to come.

US dollars has seen some bidding overnight

US Dollar has had a correction and a hard bounce against Euro


Interestingly there has been no bounce against Canadian Dollar


Gold contracts also have had a correction and a hard bounce


Look at that 8-dollar bounce from 1277

These past few days, gold miners have been holding up on poor breadth.




A correction in PM area may have started or be close to be underway.

Not surprisingly, US long bonds have bounced



Overall, it seems like we were correct pointing out weakness in S&P breadth and momentum yesterday.

How long this correction would last or whether it turns into something more serious is anybody’s guess. For now 1138 and 1120 are two price areas to watch. If 1120 is the beginning of a some wave 1 up, S&P should waste no time expanding breadth and momentum. If it can't, we may have a problem, at least, for the short term.

Keep an eye on US Dollar

Keep an eye on gold

Keep an eye on bonds

Seems like one needs three eyes this morning :-)

Have a Nice Morning!

S&P 500 - September 27, 2010

A Somewhat Boring Day!

This is a daily chart


Once again, the mid-line of the blue channel capped the day. We now have some divergence on the RSI, and it feels like S&P is having a hard time getting into the upper half of the channel. It all may change tomorrow, or overnight in the future market ;-)

Index can, of course, walk the underside of the mid-line higher. I just would like it to get and stay above it.

In the weekend post, I went through a number of conditions that might indicate a problematic situation. One condition was that if 1120 were to be the beginning of wave 1 up, then, 1120 should hold, and S&P should eventually expand breadth and momentum.

No expansion of either breadth or momentum today. In fact, we had contraction of both.

Now, What if 1120 does not hold? Well, then, we’ll be in a short term downtrend and I would like the bulls to contain it above my upper purple line.

Daily volume shrank. Daily breadth was poor


I mentioned that S&P was at the same level of January 2010 peak, and that failure to exceed that level forcefully may give the appearance of bulls falling to an Inv. H&S.

McClellan Oscillator keeps on diverging


This is a 60-min chart


No expansion of momentum here – not yet, anyways.

As I mentioned in an intraday post, a move below 1144 on S&P would threaten a change in short term trend (we have that now). A move below 1138 may potentially change the short term trend. This may become a very interesting week

I have been saying that the much maligned US currency is probably a key to the performance of the market


This is a very sick-looking chart. Not even a dead cat bounce so far – wonder how market may behave when the dead cat bounces – it may take some serious Forex market intervention, or some financial market calamity to get a rise out of this thing. Keep an eye on the Bucky!

So, back-to-back short term divergences on 60-min chart, and now a negative divergence on the daily does little to instill confidence. The weekly chart still looks good, and broader breadth measure are still OK. If the short term trend changes down, then 1120 becomes an important level for bulls to hold on any drop.

OEW pivot support at 1136 and 1107. Pivot resistance at 1146 and 1168

Long term trend is up. Mid-term trend is up. Short term trend is up (keep an eye on 1138 and 1120).

Have a Nice Evening!

S&P 500 - September 2, 2010 - Intraday

So far today, S&P has not been behaving like a roaring index ready to carry on a brand new wave up.

A move below 1144 on S&P cash threatens a change in short term trend.

A move below 1138 may potentially change the short term trend.

Caution is warranted if those levels are lost and not recovered.

Keep an eye on US Dollar, that is, IMO, the fuel that feeds the frenzy.

S&P 500 - September 25, 2010

Nice Week!

Market broke out above a level that many were treating like yet another line in the sand, retested the breakout, shook out a whole bunch of people by a fake move, and advanced.

In a post of September 23, the day market did the fake move, I showed this chart of NQ futures


And said:

“Notice that NQ did not fully retrace. It may have ended its correction. I am not making a statement, just that it has enough waves for a correction, and the rocket this morning can very well be a wave 1.”

Was I absolutely sure that it would become a shakeout and a fake move? Absolutely not! I am not psychic, and, that’s just that ;-(

Before market open on Friday, I made a quick post, and said:

“Future market has been at it again, ramming it ahead of some econo-news at 08:30

NQ's been the leader and it may be important to see how it behaves, especially if market masters ram a spike up through shorts to a new high”

This is how NQ looked then


This is what happened after the econo-news and into Friday’s close


I started with just simply asking myself what if the correction was complete. After all, we were in a larger uptrend, the move down appeared corrective, and we had enough waves for a complete correction.

First step into a new position is hard to take sometimes. If one’s lucky and things work out, it becomes a relatively easier case of position management and defining exit levels and stops

One final note about the chart above, the current move higher can very well be an ABC wave up to be followed by another wave down. We’ll see on Monday.

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

This is a weekly chart of S&P



Looking good! The only thing that concerns me on the chart at this moment it that it price has not been able to get above the mid-line of the blue channel. Other than that, the chart looks good. A MACD cross that is expanding, nicely aligned MAs, a higher high, RSI getting into overbought areas – good technicals.

This is a daily


As mentioned with the weekly chart, price is still at the mid-line of the blue channel. I would have liked it to be in the upper half of the channel.

Overall, the chart looks good. The 3-day drop looks like a test of the breakout. If that is the case, the low of Thursday should hold.

Daily volume came about average. Daily breadth was excellent.


Notice that index is at the same level of January 2010 peak. It needs to advance and take that peak or it may give the appearance of setting the right shoulder of a large H&S. I would worry about that if index cannot hold Thursday’s low.

Lots of improvement on the breadth measures of this chart


Hard to argue with breadth! While many have been constantly complaining about low levels of volume as reported by NYSE, we have time and time again seen that breadth has been the harbinger of all moves.

I had mentioned that with McClellan being neutral, I could have been on the lookout for a possible turn. Well’ McClellan turned, now it should rise, if not, we may have a problem


Yesterday, as I was seeing the market rising, I said that I might have to look for negative divergences building again. So, here’s the thing: with end of quarter coming, bears and shorts hammered, faked out, and slaughtered, market breaking out, and Bernanke saying: “First, the FOMC will strongly resist deviations from price stability in the downward direction.”, market should just rise, right? If it does not, then we may have a problem. If it does rise, and if this is a really bullish setup, then we should see breadth and momentum expanding, if not, we may have a problem.

One more note about the chart above: Yesterday, I talked about 1100 being the level of 55 EMA and a level that would be widely watched. It’s not uncommon for many to expect widely watched MAs to act as support/resistance. I also said:

“Before 1100, I would like to see how 1110-1120 performs. That is an area formed by two VWAPs that have done well as resistance and may now become support”

And that’s what market did on Thursday and Friday!

This is 60-min chart


I had said that as long as index stayed below 1135, the short term downtrend would be in force. Friday, index quickly moved above 1135 and aborted the short term downtrend. Market can be cruel and unfair very often. But this time, it played it fairy, we knew 1130-1135 was a defining range for the short term, and market played around it and gave everybody a chance to assess and re-assess.

As I mentioned after close yesterday, 1120 on S&P cash is the risk of being bullish, or having gone bullish. A move below 1120 can turn the short term trend back down again.

If we really have a bullish wave structure


Then 1120 or so should hold for quite some time. Otherwise, we may have a problem.

A move below 1135 may indicate the potential of a short term trend change. A move below 1120 will change the short term trend.

The rather untidy end of the low of August, opens the door for another possibility even if one counts the whole thing bullishly


Failure to expand momentum may indicate that the wave up that started from the low of August has not peaked yet. So, again, 1135, and 1120 are very important technical levels in the coming hours and days.

I would like short term momentum to get really overbought. I would like MACD to rise higher. If not, we may have a problem.

OEW pivot support at 1146 and 1136. Pivot resistance at 1168 and 1176

Long term trend is up. Mid-term trend is up. Short term trend is up (a move below 1120 may change that).

Have a Nice Weekend!