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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

?- 3/31/20

Up 5/29/20

Intermediate

Up 10/2/20

Up 8/21/20

Up 10/9/20

Sub-Intermediate

Up 10/15/20

? 10/21/20

Up 10/13/20

Short term

? 10/19/20

? 10/19/20

? 10/19/20


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Thursday, October 31, 2013

Daily update 10/31

Lets take a look at the current sentiment situation to start with.  Here is the NAIIM survey first.



 Source



The only reading in the last two years was back in Feb. of this year.  That ushered in a period of mostly sideways price movement in SPX.   Needless to say fund managers are nearly all in on the long side.  There have only been a few readings this high in the entire history of the survey which started in 2006.  But wait there is more.  Check out the II survey.

Source

At 16%  the number of bears is at the lowest level in the two years on this chart.  I believe this is the lowest reading in this bull market.  Needless to say there are not many bears left.

What really strikes me at the moment is the number of times I have read or heard there is nothing to worry about before the end of the year.  It is nearly a universal feeling.   The market is clearly loaded up long.  You have to wonder how much hedging there is going on with so many feeling there is nothing to worry about.  Maybe there really is nothing to worry about. 

Today was a battle between the bulls and the bears, but nobody clearly won.  Here is the daily SPX chart.


Volume was relatively heavy today.  This chart is still extended on the upside.  Is it starting a pullback?  Lets zoom in to the SPY 60 minute chart.


SPY bounced off the 50 SMA this morning and rallied up to the 18 SMA.  It then sold off into the close.  However, it ended the day still above yesterday's low and at the 50 SMA again.  The volume pattern clearly shows big red bars dominant now.  If that continues we are headed lower.  The bulls need to get SPY above today's high before claiming victory.  The bears need to break yesterday's low.
The first week of the month tends to be bullish.  However, this market is still really extended.  That may not apply this time.  Nov. is also tax loss selling season and in both 2011 and 2012 we saw a sizable pullback.  With the complacency noted in the sentiment surveys above if SPX gets below 1700 I think a trip to the 200 DMA would be in store before the month is out.

Bob

Wednesday, October 30, 2013

Daily update 10/30

That was interesting.  After the last FED meeting where no change was made to QE gold, bonds and stocks all went up.  After today's meeting with again no change in QE gold, bonds and stocks all went down.  Hmm.  The market topped at both the May and Sept. FED meetings.  Will it do it again?  Here is the daily SPY chart.


SPY shows a key reversal day on heavy volume.  IWM had an even more bearish looking reversal bar.  Will the market follow through on the down side or was this just another buying op?  Lets zoom in to the SPY 60 minute chart.


SPY broke the lower channel trend line and closed below the 18 SMA.  However, it has not confirmed that break by closing below the break bar low.  The last two times that never happened as the market rallied the next day.  Maybe the third time will be different.  So for tomorrow SPY should either confirm the break by an hourly close below 175.66 or climb back above the 18 SMA.  I would expect some follow through in either case.  Sometimes what happens on FED day is reversed the next day and sometimes not.  With the over bought nature of the market and the reversal bars we had today down side follow through could be significant.   If we head down tomorrow it might be a good time to raise some cash and/or hedge long positions.  I have never seen a more complacent market environment that nothing bad can happen.  That usually is when it does. 

Bob

Tuesday, October 29, 2013

Daily update 10/29

The song remains the same.  Here is the daily SPX chart.


That is a pretty steep climb going there.   The NASDAQ and the Russell2000 have stalled out.  Take a look at the SPY 30 minute chart.



This last leg up is a very tight trend channel.  I think that is the tightest trend channel on SPY I have ever seen.   It looks like nobody is in a hurry to take profits the last few days.  That usually ends with a big down day as the short term traders all rush to the exits at the same time.  At one point this morning IWM, IYT, and QQQ were all red while SPY was staying positive.  Most of the time that would have dragged SPY down, but it didn't.  SPY held up and those other ETF's eventually rebounded into the close.  Today's strength may be related to the FED meeting tomorrow.  Once upon a time unless there was some really bad news the market would gap up on FED day.  The FED even put out a paper about to make it common knowledge.  I think that was an attempt to get it to stop happening.  When everybody knows something like that it tends to stop working.  I think we are starting to see a pattern of a rally the day before now.  I need to start paying a little closer attention to that.  Maybe the market has just changed the move to one day earlier, LOL.   It seems nobody expects the FED to do anything tomorrow.  That could make for a quiet day. 

The number of stocks above their 200 MA actually declined slightly today.  It is still at 56% which is very low at all time highs.  I don't see any sign the rally is broadening out yet.  I think that will need to happen at some point to keep price moving up.  In the short term I will still be watching the SPY hourly 18 SMA for a break. 

Bob

Monday, October 28, 2013

Daily update 10/28

More of a mixed day then Friday.  Even though SPX closed up on the day many indexes did not.  My watch list of big cap stocks was 2/3 red.  Here is the daily SPX chart.


The song remains the same.  The market is extended.  It is looking pretty tired though.  The breadth was negative today and barely positive on Friday.  There is the possibility of a short term double top developing between last Tuesday and today.  The last weekly bar closed above the upper Bollinger band as noted on Friday so there is reasonable odds of a pullback or at least a pause here. 

There really is not much to do until it stops going up.  The extended price makes adding long exposure high risk.  I will be watching the SPY hourly 18 SMA for a break.

In Rare yearly price action for 2012 I showed data from Bespoke on years when price never closed negative on the year.  At the time only in 1975 and 1976 did the phenomenon repeat again the next year.  Unless we have a major crash between now and year end it looks like it will happen again.  The next year the market was down the entire year not bottoming until March of 1978.  The decline was around 20%.    In 1976 SPX hit its high in Sept. with a retest into the end of Dec. then all down from there.  Here is a look at the chart.


Will it be different this time?  We don't know what is going to happen, but while everybody on TV is busy telling me the market can only go up from here you do have to wonder.  Bob Farrell's Rule #9 states:  "When all experts and forecasts agree; something else is bound to happen"  

It is clear to me that right now all experts and forecasts agree the market can only go up.  I have seen many long time bears capitulating lately.  David Rosenberg and Nuriel Roubini to name a couple.  I don't know what happens between now and year end.  However, come Jan. and the new tax year I think there will be considerable profit taking.  If it is like 1976 there may be some volatility before the end of the year.

Chart practice has been updated with UA the stock tonight. 
http://traderbob58-chart-practice.blogspot.com/

Bob

Friday, October 25, 2013

Daily update 10/25

Kind of a mixed day.  Here is the daily SPX chart.


We ended the week right at Tuesday's high.  We really spent the last three days going nowhere.  The market remains over bought, but has not started a pullback yet.  A few indexes like the transports and the Russell200 were negative on the day.  The last rally lasted 15 days.  We are now at day 13.  If the pattern of each up move lasting a smaller number of days is to continue then this rally needs to end early next week.  If SPX makes new highs on day 16 that would at least be a small change in the pattern.  Lets take a look at the weekly chart.


SPX has a blue bar meaning it closed above the upper Bollinger band.  I marked the prior instances with arrows. The one marked with a yellow arrow is the only one that did not have its low tested in the next few weeks.  The rest caused a pause or a significant pullback.  The price action over the last few months is considerably different then any other time in this bull market.  There are a lot of rapid oscillations very unlike the rest of the chart.  Most of the time a blue week is followed by some downside testing.  Will that be the case again? 

All I heard this week was how the market can only go up while the FED is printing  This is so much like 2000 I can't believe it.  There really is no fear whatsoever.  Maybe everybody is right and the market just keeps going straight up forever.  I guess I will keep watching the hourly 18 SMA for a break just in case the market decides to pullback some year.

Chart practice has been updated with SINA the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

The market and sector status pages have been updated also.
Have a great weekend all.

Bob

Thursday, October 24, 2013

Daily update 10/24

Dip buyers to the rescue.  Here is the daily SPX chart.


SPX is still holding above the 6 SMA.  The bulls supported the market today, but did not show much vigor.
Since the key reversal day in May there have been nothing but big swings.  None of the moves have been stopped by either the 18 or 50 SMAs.  Every sell off was caught by the 100 SMA.  Even though price is making higher highs this is hardly a strong uptrend the last few months.  If we pullback again I don't think there is any particular odds we will stop somewhere above the 100.  After three bounces off the 100 the odds of a fourth bounce might not be as good.  If you look at the chart closely you will notice that the number of days in both the up and down moves are getting smaller.  If that pattern persists and we roll over again we could be back at the 100 SMA pretty quickly.  Lets take a peak at the 60 minute SPY chart.


This morning SPY climbed back above the 18 SMA.  It spent the afternoon trudging its way up to the red line which marked the gap fill area.  The bears stepped in and stopped the rally there.  Yesterday's gap down has been completely filled.  We also know there was some resistance there that stopped the up move.  What we don't know is how significant that resistance is yet.  Will we break out to new highs or roll over?

In the short term the market is still very extended.  Will people chase price higher from here?  That looks like a tall order to me, but I guess we will see.  A break of the SPY 60 minute 18 SMA could be a sign we are rolling over again.

Bob

Wednesday, October 23, 2013

Daily update 10/23

There was a chill on the semiconductor industry today.  I suspect that had a lot to do with the gap down this morning.  Here is the daily SPX chart.


The 6 DMA and the upper trend line provided support when touched early this morning.  There were numerous rally attempts throughout the day, but each pop was sold into.  The  number of new highs dropped down to 150.  One day off an all time high that was a very low number.  If it drops below 100 in the days ahead that would be fairly bearish.  The reversal pattern I mentioned last night saw some follow through today.  Over the last few months this market has made some rather quick turns in both directions.  We don't know if it is through doing that or not.  This could be another high that sees a sizable pullback.  Closing back below the upper trend line could send us back down to the lower line.  I expect the market to continue to focus on earnings now that all the other distractions are gone for the moment.  Here is a look at the SPY 60 minute chart.


The first bar this morning closed below the 18 SMA.  However, SPY did not close below that bar's low so the break is not confirmed.  This makes things pretty easy.  An hourly close above the 18 SMA should be bullish again.  An hourly close below today's low should be bearish in the short term.

I can't recall in all the years I have been studying the market a time when people were more complacent.  There is a general feeling that the market can't go down because the FED is printing money.  This belief seems to be pervasive even among the longer term bearish crowd.  It reminds me of the old saying that goes something like when nobody is worried is when you should be worried.  It is pretty damn hard to find anybody worried now.  We have a market loaded up on margin and very complacent.  That is a recipe for a much bigger move down then people expect.  Maybe it won't happen, but these are the conditions of past crashes.

Chart practice has been updated with CAT the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Tuesday, October 22, 2013

Daily update 10/22

It had to go and mess up my nice little pattern I mentioned last night didn't it, LOL.  Here is the daily SPX chart.


We did run into some sellers after the first hour today.  The dip was bought for a retest of the high in the afternoon, but sold off a bit going into the close.  That pattern could be a short term top.  We certainly are stretched enough for a pause of some kind.  Check out the stocks vs. their MAs chart.


The number of stocks above their 10 MAs (yellow line 2nd panel) hit levels seen only twice this year.  In Sept. and back in Jan.  In looking at this indicator over the last few years of data it almost always marks a short term top.  Even in Jan. the market paused long enough for SPX to touch its 6 DMA before moving up again.  This can be a sign of strength and a new leg up or mark a short term top and pullback like it did in Sept.  It has very high odds of a pause at least to let the 6 DMA catch up.  The profit taking that came into the market today backs that up.  The number of stocks above their 50 DMAs is the highest level since back in May.  That is another case of it is over bought, but could be a sign of strength. 

The overall pattern of slightly higher highs just does not look like a pattern to launch from to me.  Normally a correction is sideways or has a downward slope to it.  I will say there is no shortage of bulls in the media.  I
have heard plenty of nice Wall Street folks on TV lately spouting off a lot of upside targets.   Lets look at the number of stocks vs their 200 SMAs.


At 56% it is still very low for a market with the indexes at all time highs.  This needs to get up into the 60s at least to sustain the uptrend I think.  We will see what happens.

The new margin debt (Sept.) data came out and there was an $18 billion increase to a record high $401 billion.  I don't know if the shutdown mess in Oct. will make the next data come out lower or not.  As I have said time and time again margin debt does not unwind until the market goes down.  Some day it will and the higher the margin debt is when that happens the bigger the fall will be. 

Bob

Monday, October 21, 2013

Daily update 10/21

Today may have been more interesting then it appeared.  Here is the daily SPX chart.


At the low SPX closed below the lower trend line and was followed by a doji bar.  Friday we close above the upper trend line and today was a doji bar.  Nice symmetry there.  Time will tell if we made a high or not.
I noticed something that is kind of odd though.  Sometimes the market does things that just make you go hmm.  Since the May intraday high of 1687 SPX has retraced to the 100 SMA and bounced to new highs three times.  Lets look at those new highs just a bit closer.  The Aug. high was 1709 (+22 points above the May high).  The Sept. high was 1729 (+20 points above the Aug. high).  Today's high was 1747 (+18 points above the Sept. high).  Do you see the pattern?  We don't know if today's high was the end of this rally or not, but it does fit the pattern.  How does the market even do that?  What caused the range between the prior high and the new high to drop by 2 points each time?  Will this time break the pattern or have we made another high?

The last couple of months have seen rapid shifts from buying to selling and back again.  The things that people talked about as things to worry about like the FED tapering or the debt ceiling debate are out of the way.  Does that mean the market has clear sailing now?  I see a lot of people think so.  Until we have some kind of pattern change I don't see how we can know.  In the short term the market is still very overbought so some consolidation or pullback would be normal.  If the market is going to accelerate up that action should happen above 1700.  If SPX drops below 1700 for a third time I think the selling might pick up considerably.  The likely catalyst would be earnings.  With everything else out of the way the fundamentals might come back into focus. 


Chart practice has been updated with DIS the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Friday, October 18, 2013

Emotions are high

The market has been shifting back and for between bull and bear mode in an unusual way.  It has been flying up and down through the 18 DMA like it was not there.  Here is another look at the emotions that are present.  Check out the Nova/Ursa ratio chart.


From the Nov. low to May of this year the ratio shows most of the spikes on the upside.  It also spent most of the time positive.  Starting in May it shows very big spikes in both directions.  Today's spike being the biggest one yet.  People are switching back and forth from bull to bear funds like crazy.  I wish I had more experience looking at this chart.  In the 18 months or so I have been watching it I have not seen anything like this.  Lets look at the longer time frame version.


This chart goes all the way back to 2006.  In all that time it has never gotten as wild as it is now.  Those upside spikes are really abnormal.  Something odd is going on.  I wish this chart had more history.  We can see some increase in the upside spikes in 2007, but we can't see far enough back to see if that was unusual or not.  It seems like this might be a sign of a major top forming, but I don't have enough data to be able to say that.  I don't think it is a stretch to say this is a sign that emotions are rising and that could easily lead to an increase in volatility.  Volatility can increase in the market while going up or down.  Most often it is while going down, but not exclusive.  I have a feeling things are going to get wilder. 

Bob

Daily update 10/18

The buying panic continued for a third day.  This reminds me of the old joke I heard many years ago.  The people that bought on the first day were smart, the people that bought on the second day were lucky and the people that buy on the third day are bag holders.  Here is the daily SPX chart.


SPX closed above the upper trend line.  That pretty much matches what happened at the recent low.  There was a little bit of poke through then a reversal.  I think this is going to have a hard time staying above that upper line.  Price is extremely extended in the short term for one thing.  A lot of times news induced moves are reversed for another.  The last three days of panic buying were sparked by news the U.S. is not going to default at this time.  That sure sounds like a good reason to buy everything in sight to me, LOL.  That move started around 1700.  I suspect there will be a pullback to there in the not too distant future.  There were 463 new highs today.  That is the most since back in May.  There is a reasonable chance this was a buying climax.  Until we get a down move lasting more then 5 minutes it is a bit hard to judge exactly what is going on.  Was this a final blow off move or the start of a big leg up?  Listening to the TV it would certainly seem that the majority are in the camp of blast off.  Time will tell if they are right.  I am a little skeptical at the moment.

For early next week this market is very extended.  A pullback seems likely to me.  I will be watching that upper trend line to begin with.  The price action over the last few months is very sloppy.  There are not clear cut support and resistance areas.  The 1700 level has not held on any pullback from the highs.  If we test that this time will it hold or fold?  Stay on your toes.  This market has done a lot of sizable reversals lately.  I don't know if we are past that or not.

Chart practice has been updated with JNPR the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

The market and sector status pages have been updated.

Have a great weekend all,
Bob

Wednesday, October 16, 2013

Daily update 10/16

Finally a deal.  Now we can get back to business.  Here is the daily SPX chart.


The market reacted as everybody expected to a deal by rallying.  I think most people were afraid to sell or be short because of what happened in the past.  So unlike past squabbles in Washington the market never seriously sold off.  Now we will find out if there is a sell the news reaction.  There is a real possibility that the latest move up was simply a relief rally that we were not going to shoot ourselves in the foot.  Since the deal was a short term deal is the market really going to continue to celebrate.  We still have the problem of weak internals.  Here is a look at the new highs/lows data.


The trend line makes it obvious that fewer stocks are making new highs.  We finally surpassed 200 today, but still well below the prior peaks.  The most telling chart though is the number of stocks above their 200 MAs.  Check this out.


This is common at bull market tops. Is it going to be different this time?  Time will tell.

The SPX chart still has some room up to the upper trend line from here.  We could easily go up there to it.  I have my doubts about it breaking out above it though.  However, it is also quite plausible there is a sell the news reaction and the market sells off from here.  This deal has nothing good in it fundamentally for the market.  It also only moves the possible foot shooting out a few months.  I guess we will see what people do. A close back below 1700 would be moderately bearish.  A close below the 18 DMA (1690) is likely to be very bearish.  Lets see if the bulls are interested in pushing price higher or not.

Bob



Tuesday, October 15, 2013

Daily update 10/15

Deal or no deal?  The market fell apart late in the day when news broke of the talks in Washington breaking down.  Here is the daily SPX chart.


The volume picked up quite a bit today.  Just like the other two times SPX crossed 1700 it went up the next day then turned down.  The question now is this another short term top like those peaks or not.  The intermediate trend indicator turned down today.  SPX needs to close lower tomorrow to confirm the trend change.  Here is a look at the breadth chart.


Both the McClellan oscillator and the 10 DMA breadth lines had negative crossovers.  The VIX popped up considerably today as well. 

SPX appears to have turned back from the key .786 retrace level.  The VIX popping and breadth going negative would seem to indicate the market is turning down again.  If the market had reacted this way on its own without any news I don't think there would be much question about that.  SPX tested yesterday's high and turned back before the political news broke.  That indicates some hesitancy on the part of bulls to chase price above 1710.  However, until the news broke about the deal falling apart the selling was somewhat persistent but muted.  The breadth was pretty negative all day even when testing the highs.  That indicates there is a possibility that today's downward action was real and not fake based on the news.

The most new highs we have had on this rally was 185.  Both prior trips over the 1700 level saw new highs over 300.  That is quite a divergence and shows that the market is thinning out.  I don't know what is going to happen in Washington or exactly how that will affect the market.  The price action and internals seem to indicate the market may be turning down.  A close below the 18 DMA (1690) would go a long way in confirming that view.

Bob

Monday, October 14, 2013

Daily update 10/14

It did it again.  What happens now?  Here is the daily SPX chart.


Yesterday I noted that the other two times SPX crossed 1700 it went up the next day.  However, it then topped out.  We were up today just like before.  Will tomorrow be different this time?  SPX came up just a tad short of the .786 retrace level.  This is the first time we got over 1700 while the 18 SMA is still falling.  If we close back below that MA while it is still falling it would be a pretty bearish sign.  Lets take a look at the VIX chart.


The VIX divergence is still persisting.  This is by far the highest level it has been at while SPX was above 1700.  It was even slightly positive today with SPX up.  The 50 SMA has crossed above the 200 SMA for a second time this year.  This is the first time we had two crosses in the same year in this bull market.  There was no cross above last year at all.  The last one before this set was in 2011.  I don't know if this is a sign that volatility is going to pick up for sure or not.  However, I do know that down side risk is increased when in this condition.   Should the market turn down, the VIX is in position to spike higher then it has been since 2011.

The other times they got to squabbling in Washington the market sold off then rallied after the deal was made.  This time the market has not sold off obviously as we are very near the highs.  People figured they would make a deal at some point so they did not want to sell.  What happens once the deal is done?  We still have weak market internals and that persistent VIX divergence.  I have the feeling there might be a sell the news reaction.  Keep an eye out.

Chart practice has been updated with CME the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Friday, October 11, 2013

Daily update 10/11

Panic buying continued today.  I believe the constant buying was people all trying to get in before SPX got above 1700.  As soon as it got there things cooled off until it briefly dipped back below it.  Rather comical to watch actually.  Here is the SPX daily chart.


SPX closed above 1700 and in the retrace resistance zone.  This now qualifies as a retest of the Sept. high.  The yellow arrows mark the days SPX crossed over 1700.  As you can see we have been here twice before and each time the market went up the next then rolled over.  Will that repeat or is this the time 1700 gets conquered?   The VIX was rejected at the weekly 200 SMA. The last three times that happened SPX went on to new highs.  Will that happen again or will this time be a failure?  Lets take a peak at the weekly SPX chart for a change.


When you look at that last bar what do you see?  It is both a bullish engulfing bar and a potentially bearish hanging man?   Which of those interpretations is going to play out?  Here is what we know.  Up to this point SPX has had trouble staying above 1700.  With each trip to the highs market internals keep getting weaker.  The number of stocks above their 200 MAs is very important and continues to diverge.  To me the market internals look like a market topping out and not getting ready to race higher.  With this being the third trip above 1700 I would expect another failure to have much more selling pressure this time.  Now it is up to the bulls here.  Will they chase price higher or not?

Chart practice has been updated with WPX the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

The market and sector status pages have been updated as well.

Have a great weekend all,
Bob

Thursday, October 10, 2013

GLD and GDX

It has been a long time since I have looked at GLD and GDX on the blog.  The trouble is that the charts are not exactly providing easy trades lately.  The bounce from the oversold condition garnered a lot of believers in the gold community at first.  I saw many declarations that the bottom for gold was in.  I think some of that support is wavering a bit now.  Here is the daily GLD chart.


The initial rally looks a lot like an ABC correction pattern.  Since the C high GLD has moved stealthily down.  Kind of like a trend move.  A break below the B low would likely accelerate the move down.  That would likely spark a retest of the summer low and possibly new lows.

Here is a look at GDX.


GDX has a very similar pattern only it is closer to the summer low.  It has been leading GLD down for a long time.  Is it doing it again?  These stocks have had a terrible year.  I wonder if they might experience some tax loss selling in Nov.  If that turns out to be the case GDX could provide a good buying op in late Nov. or early Dec.  In the mean time I don't see anything to get excited about on the long side.

Bob

Daily update 10/10

That was some day.  I should have discussed the targets above 1670 last night, LOL.  The upper target for the bounce was the 18 DMA which we hit today.  Here is the SPX daily chart.


I added two horizontal lines to mark the standard .618 to .786 retrace zone.  If SPX continues up from here that is the next most likely place to find resistance.  A close above the upper line targets a full retest of the high.  The last two times SPX bounced off the 100 DMA it went to new all time highs.  Can it do it again?  Let me just say that I have absolutely no clue.  The celebration today seems out of proportion to what actually happened.  If I understand this correctly the politicians talked about doing something everybody knows they are going to do at some point anyway.  Here is a look at the SPY 60 minute chart.


There were plenty of big green volume bars today.  This really looks like panic buying which often is a lot of short covering.  We were over sold enough that there were probably plenty of shorts.  SPY is now very far away from the 18 SMA.  In fact it is about as far away as it gets.  This suggests sideways to down for the next day or two.  This chart is showing an explosion in volatility.  That can mean the market is becoming unstable.  We need to keep an eye out here.  More volatile days could mean serious trouble.  Lets take a peak at the breadth chart.


Both breadth indicators are still negative.  The McClellan oscillator could turn positive with another up day.  The 10 DMA lines will probably take a couple of days.  There were only 106 new highs today which is not very many considering the magnitude of the move and relative proximity to the highs.  The breadth and volume ratio was very strong though.

Where does all this leave us?  The intermediate trend indicator on SPX turned up today, but by the narrowest of fractions.  It will be easy to turn it back down if the market rolls over.  We need another up close to confirm the trend up.  SPX stopped right at the 18 DMA.  That leaves it at possible resistance after a very big move.  Will the rally chasers that have been clearly absent since the Sept. high now show up?  SPX has not been able to string two up days together in this pullback.  Some of the major financial companies have earnings tomorrow which could drive the early trade.  I think the key pivot line is SPX's 50 DMA (1678 tonight).  A close back below that could spark some selling again.  A consolidation or slight pullback that stays above that could provide a buying op.  If SPX then moves up watch that retrace zone area for resistance. 

We had extremely weak internals at the Sept. high which usually means a prolonged correction or bear market is at hand.  Now we have some unusual volatility.  That can also be a sign of a correction starting in.   In the next few days we will see whether people chase the market higher or choose to sell into the strength.

Bob

Wednesday, October 9, 2013

Daily update 10/9

Rather mixed at the close today.  SPX and a few indexes were up while the COMPX and a few others were down a bit.  Here is the daily SPX chart.


Since SPX did not close below yesterday's low we did not confirm the break of the 100 SMA.  There was a slight increase in volume today.  The market sold off pretty hard this morning, but found a low when the Dow hit its 200 DMA.  This looks like a bounce setup.  Price is extended on the down side and we had a VIX spike.  Will the bulls show up tomorrow and take it higher?  SPX broke down from a consolidation yesterday that formed above 1670.  If we do bounce from here that area could provide some stiff resistance. 

Yesterday seemed to be the first day the market started to worry about what is going on in Washington.  I don't think the market will make a long lasting low until things get settled there.  I have not seen any sign that is close to happening yet.  The only other thing that could turn this into a low is much better then expected news on the earnings front.  There is likely to be news driven volatility ahead.  Be careful.

Chart practice has been update with LEG the stocks tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Tuesday, October 8, 2013

Daily update 10/8

Confirmed break of the 50 DMA.  The lower close today confirmed yesterday's intermediate trend flip to down.  That means the market has quite a bit more work to do to get fully bullish again.  Here is the daily SPX chart.


SPX also closed below the 100 SMA and the trend line formed by the summer lows.  A close below today's low would confirm a break of the 100.  Quite often that will lead to a move to the 200 SMA. The blue price bar indicates SPX closed below the lower Bollinger band and is extended in price.  We have a slight oversold condition, but I do not have my real over sold buy signal.  The VIX crossed above its weekly 200 SMA.  Since the rally began off the 2011 low every time the VIX has hit that MA it has been rejected.  Each time it was rejected SPX moved to a new high.  That may be enough to bring out some buyers tomorrow.  How the VIX closes the week will be very important.  If it closes above that 200 SMA it will be the first time since 2011.  That should make a bigger move down then we have seen in the last 18 months likely.

Listening to the political speeches today it would seem that both sides are digging in their heels.  The Republicans want to negotiate before reopening the government and the Democrats say they will not negotiate unless the government is reopened.   We went through similar talk in 2011 and 2012.  In both those instances both sides eventually sat in a room and made a deal.  I am not too sure this is going to end until they do that again.  I think the majority of investors expect that to happen which is why the market has not really been worried about it.  Maybe it was worried about it today.  The indexes that have been hanging around the highs sold off hard today.  This has to be a nightmare for money managers.  How do you put money to work when you don't really know what is going to happen and when.  It is quite possible a deal is eventually made at the last minute but the market could be much lower by then.  Each political party appears to be expecting the other to blink first.  I think a catalyst may be needed to make that happen.  The longer this drags on the more the market is likely to worry about it I believe.  Needless to say be careful on the long side here.  A bounce tomorrow does not mean we have a bottom.

Bob

Monday, October 7, 2013

Daily update 10/7

It is about to get interesting now.  Here is the daily SPX chart.


The intermediate trend indicator turned down today.  It still needs confirmation with a lower close tomorrow.
Today was the lowest close in this pullback so far and below the 50 SMA again.  The 100 SMA and the lower trend line come together at about 1662.  That looks like the next important support level if we continue down.  Breaking below that area makes a trip to the 200 SMA likely.  Lets zoom in to the SPY 60 minute chart.


We have a clear down trend line that has formed since 10/1.  I put in a parallel line at the lows in case we are starting to form a down trend channel.  I don't know if that is valid just yet.  However, the upper line has been well tested so a break out that sticks should be a good sign the pullback is over.  The bulls had SPY above the 50 SMA and above the trend line at the close on Friday, but could do nothing with it.  The dip buyers came out again this morning to buy the gap down, but by the end of the day SPY turned down pretty sharply again.  The volume pattern is still showing a lot of big red bars indicating distribution.  That has been prevalent ever since the Sept. high.  Lets take a peak at the daily VIX chart.


The VIX climbed above the Aug. high today even though price is still well above the Aug. low.  A little fear is entering the market place now.  The number of new highs dropped under 50 for the first time in this pullback.
That shows the bulls are losing their conviction a bit.

The stage is set now for a big move.  SPX closed under the 50 DMA, VIX spiked up and new highs dropped.  We are either making a low right here to retest the high or we are going to accelerate down.  One thing we do not have is an oversold market.  The sideways price action this month has made sure of that.  With Washington not even talking about a deal that is an unlikely catalyst to the upside.  That leaves us with earnings.  If the market is going to rally from here I think it will be for the earnings.  However, that could also be the catalyst for the down side.  The selling has been concentrated largely in the big cap stocks that are the most susceptible to the global economy.  The 2nd quarter saw a global surge in interest rates that did not reverse in Q3.  Has that caused some earnings problems?   We will find out over the next few weeks. 

Chart practice has been updated with WDC the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Friday, October 4, 2013

Daily update 10/4

Another bounce by the bulls to try to jump start a rally off the 50 DMA.  Here is the daily SPX chart.


SPX is still below its 18 SMA, but is back above the 50.  Neither the breadth or the number of new highs was as strong as they were on the 10/1 rally day.  The market has not put together two up days in a row since the Sept. high.  Will they be able to do it this time?  I was unable to conclude any odds of that at the close.  Lets take a peak at the SPY 60 minute chart.


SPY closed clearly above the 50 SMA unlike the last rally day.  However, it crossed that line in the middle of the day and then just muddled around.  Apparently rally chasers were taking the afternoon off.  Will they show up on Monday or not?  I don't see anything that tilts the odds one way or the other.  Even though the bulls got SPY back above the 50 SMA it is still below where it was a couple of days ago.  It did not do enough yet to say the bulls are in control. 

Earnings season kicks off this weak with AA on Tuesday.  There have been lots of warnings and the number of stocks above their 200 DMAs has dwindled a lot over the last few months.  This is likely to be a tricky earnings season.  Be very careful swing trading stocks through earnings reports.  There could be lots of surprises out there.

SPX is clearly consolidating in the area of the 50 DMA.  It will decide which way to go before too long I would think.  The direction may be based on earnings reports next week.  We also still have to deal with Washington.  The rally that started yesterday and continued today may have been sparked by Boehner saying he would not let the government default.  I think everybody already thought this, but to hear him say it was a relief I would guess.  My expectation is that the House will pass something to raise the debt ceiling.  However, a continuing resolution to reopen the government is an entirely different manner.  The president says he will not negotiate until the government is back open.  The problem for Boehner is that he has been trying to negotiate with the Democrats starting well before the shutdown.  They were not interested in doing so.  If the House reopens the government Boehner will have no leverage to get the Democrats to negotiate.  I think there will still be a fight over reopening the government that could drag out.  If that turns out to be the case it could eventually be a problem for the market.

Chart practice has been updated with HOT the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

The market and sector status pages have also been updated.

Have a great weekend all,
Bob

Thursday, October 3, 2013

Daily update 10/3

SPX barely closed below the 50 DMA.  This is a new low for this pullback.  Here is the daily SPX chart.


The market sold off hard early on and tested the 9/30 low.  There was a furious rally intraday that seem to come from news.  That rally started to fizzle going into the close.  This really looked like the first time people were anxiously selling.  Today might really have been the start of the correction.  The bulls have really been trying to support the market around that key 50 SMA, but they have been unable to get any traction.  Can you blame them.  This is a difficult environment to put new money to work.  Lets zoom in to the SPY 60 minute chart.


The 60 thru the 195 minute charts had blue bars mid day at the low.  With the market in a short term over sold condition the bulls were able to spark a rally on the test of the 9/30 low.  There was one high volume up bar, but after that it traded sideways the rest of the afternoon with a bit of a dip into the close.  This looks like just an oversold bounce and not the start of a rally.  I think the path of least resistance is still down.

There is considerable differences amongst the major indexes.  Some were already below their 50 DMAs while others like the NASDAQ were still at the highs.  It was those indexes at the highs that kept fear from coming into the market.  If those indexes start to break down and join the bear's party things could accelerate a bit.

Bob


Wednesday, October 2, 2013

Daily update 10/2

No follow through to the bounce yesterday.  Here is the SPX daily chart.


SPX gapped down and then bounced after almost touching the 50 SMA.  However, the bounce ran out of steam mid day as they have been prone to do lately.  SPX has had two up days since the all time high was made and there was no follow either time.  Price is now stuck between the 18 and 50 SMAs.  Here is a look at the SPY 60 minute chart.


SPY has now hit the 50 SMA four times over the last two days.  Like yesterday it closed right at it.  Clearly that has been significant resistance.  Will it overcome that tomorrow or be turned back again?

It looks like the key is the SPY hourly 50 SMA on the upside and the SPX daily 50 SMA on the downside.
A break out of that zone should be the start of the next move.  The lack of follow through on yesterday's strong bounce indicates that while dip buyers may be plentiful, rally chasers are not.  Rally chasers will be needed to push prices higher.  Otherwise we will eventually break down.

So far the market has pretty much ignored Washington.  The latest word seems to be that they will lump the shutdown with the debt ceiling issue.  The deadline for the debt ceiling is around Oct. 17th.   If things work as usual that means they will come up with an agreement at midnight Oct.16th.  I am positive that everybody expects some kind of deal will be struck and there will be no default.  The market has caught on to the game so it is not really paying much attention.  The only question I have is will that continue as the drama builds towards the deadline.  The drama will undoubtedly build and we will be told many times how serious this is.
I don't know the answer to that.  It still appears the path of least resistance is down based on the lack of upside follow through.

Chart practice has been updated with VTR the stock tonight.
http://traderbob58-chart-practice.blogspot.com/

Bob

Tuesday, October 1, 2013

Daily update 10/1

Pretty good launch off the 50 DMA.  Here is the daily SPX chart.


SPX closed back above the 18 SMA.  Breadth was good and there were 200 new highs today.  The early rally started drifting lower in the afternoon like so many days lately.  However, buyers showed up at the end of the day today.  The NASDAQ and the Russell2000 made new high closes.  Lets zoom in to the SPY 60 minute chart.


SPY had the biggest green volume bars it has had since the highs.  It closed right about the 50 SMA.  Will there be follow through on the upside tomorrow?

The big cap stocks are clearly showing relative weakness.  That was really obvious with the Dow today.  I have been wondering what is up with that.  Is it earnings worries or something else.  I ran across this little tidbit today.

Source

So there have been 94 negative preannouncements for SPX this quarter.  That is nearly 20% of the companies.  Maybe there is some earnings jitters out there. 

SPX closed just a bit below 1700.  During this pullback there were several days where SPX crossed 1700 intraday, but was unable to stay there.  I don't know if that resistance is still there or not.  The bulls showed up in force today.  If they show up again like that tomorrow then 1700 should not be a major problem.   

Bob

Important

The information in this blog is provided for educational purposes only and is not to be construed as investment advice.