Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Sunday, April 16, 2017

AMD - Take Profits or Hold?

Many investors are going to have a tough time deciding what to do with their AMD holdings.  The monster hold of the last 16 months, going from $2 to $15 in a little over a year.  Many are hoping that AMD will run back up to its $42 range of several years ago and it may well do so but even with it holding the status of the number one investment stock play it has been showing weakness.




In the weekly bars chart we can see that this run is not much more than a third of its previous level shown earlier in the chart.  

Looking at the upper daily bars chart, however, it dropped out of its 16-month red channel on Thursday.  This happened back in November also and AMD recovered and regained the red channel but it was with the help of a fierce year-end push in the stock market.  However, this trendline failure in AMD is different because we are seeing the geopolitical risks on the stock market escalating at an alarming rate.  Anyone that got in at AMD's base at the $2 area and is now sitting on a six bagger will likely sell now.  Those who got in late will be less inclined to do so.

In the top right 210 minutes bar chart we see the year-end rally shown with the brown channel and the two-month horizontal move in the blue channel with AMD failing both.

Nonetheless, AMD has not only been the leading stock but also the stock market sentiment indicator for the past sixteen months and it seems to be turning sour quicker than anyone might have imagined.  

Trade well my friends

Alan

VIX at Major Pivot

Thursday afternoon, the VIX volatility index closed right at its two-year blue downtrend line.  





This blue line has been the absolute end of all sell-offs for the past two years.  If the VIX crosses this line it could easily move into the black channel which would be an unfriendly place for the stock market.  The VIX itself over the past two years has basically been a huge declining wedge which is a pattern that normally breaks out feverishly to the topside before the declining line meets the horizontal base line.  Since we are so close to that situation here, investors are concerned that there might not still be one more oscillation inside the narrowing point of this wedge.  

Anything could happen here, the blue line has actually been the point where the market has been rescued from big sell-offs over the past two years.  Maybe it will happen again next week, or it might not.  My gut feeling is that for the blue line to hold, there would have to be substantial easing of the geopolitical risks that are escalating currently.

Trade well my friends

Alan

SPY Getting Heavy

Looking at the SPY through three time views it has become apparent that it is starting to look heavy where it is now.  Viewing the bottom weekly bars chart it can be seen that the SPY reached up to tag the upper line of its eight-year red channel at the beginning of March and has been pulling away since.




In the upper left daily bars chart we see the SPY is starting to fall from the upper line of its sixteen-month black channel after losing the blue year-end rally channel a few weeks ago.  

In the top right 210 minute chart we see the SPY has established a declining shorterm channel shown in brown.  Investors will probably stay calm as long as the pullback stays contained in the 210 minute brown channel with frequent bounces within.

Trade well my friends

Alan



Saturday, April 15, 2017

GLD the gold ETF Testing 6-Year Trendline

THe GLD (gold ETF) has reached a major decision point as it closed Thursday at its 6-year downtrend line.  



Last Fall, the GLD put in the second bounce up from its lower blue channel line establishing the solidity of this line giving it a better probability of piercing the six-year red downtrend line having established a double bottom at the lower eight-year blue line.  The GLD has a world of undercurrents from the gold spot market but nonetheless, the direction it takes at this trendline should have  a substantial inverse affect on the stock market.

Trade well my friends

Alan

XLF Banks ETF Being Watched Closely Here

The weekly bars chart below of the XLF (big financials ETF) shows a situation developing where market participants are examining it closely.  The XLF recently peaked at the upper blue line of its eight year channel.  





This past week the XLF dropped through the lower line of its eight year inner micro channel shown in brown.  Over the next few weeks if the XLF continues to decline, investors will be watching for a tradeable setup inside the 16 month red channel.  As well supported as the financials are on most days, it would be reasonable to expect the XLF to trade within the red channel for some time even if it ends up later falling to the lower line of the blue channel because of worsening geopolitical situations.

Trade well my friends

Alan

Friday, April 14, 2017

RUSSELL 2000 Closes at Triple Juncture

The IWM, Russell 2000 small cap ETF, closed Thursday at a triple trendline juncture.  




In the lower chart showing weekly bars, the IWM is sitting on the lower line of its channel going back to the 2009 low.  In the upper left chart showing daily bars, the IWM is sitting on the lower line of its 15 month climbing channel.  In the top right chart showing 210 minute bars, the IWM is sitting on the lower line of its 5 month horizontal channel.  

The broad market's trading the past week has been constrained as uncertainty builds as to how this triple juncture will resolve itself in the Russell 2000.

Trade well my friends

Alan

Saturday, June 11, 2016

NASDAQ, QQQ & S&P100 Charts Are Bearing Down Heavily on the S&P500 Recent Breakout

Following up from my last post where I focused on how the S&P head and shoulders neckline was going to hold, we have seen a blistering short squeeze since then that took all the major indices up to their upper channel line of their slowly descending channels.  





The NASDAQ, QQQ and S&P 100 ($OEX) have already turned over right as they hit their upper channel lines.  The S&P 500 however, popped above its channel line last week but fell back onto the upper channel line as the market shifted into major selling mode Friday.

Logic says the bearish situation of the first three indices, especially the $OEX (100 megastocks of the S&P 500), should outweigh the S&P 500 breakout and force it back down into its channel next week.  Considering the unusual price action in the SPY lately, traders know that anything can happen in this environment.


Trade well my friends

Alan

Sunday, May 22, 2016

S&P Holds the Neckline

We may have just seen a successful test of the S&P head and shoulders neckline.  Last Thursday the S&P slipped through the neckline but closed back slightly above it for a bullish hammer then on Friday the market squeezed with 500k SPY blocks decorating the climb several times.  

Taking a look a the charts below, the first chart in the top row shows the Day 5 EMA line starting to be turned back upward by the Day 50 EMA line producing the hammer candle on Thursday and the sudden lift on Friday.



Taking a look at the second chart of the top row, we see the short term declining channel the S&P has been trading in for the past four weeks.  Some of the bulls have been arguing that this is a bull flag but the bears are quick to point out that four weeks is too long a time period for a bull flag.  

In the third chart of the top row, we see Thursday's hammer candle and Friday's strong candle above the neckline.

In the lower chart, we see the slowly declining 1.5 year blue channel making it very clear that the S&P has topped but just because it has topped doesn't necessarily mean the journey south is coming anytime soon.  A lot depends on if the current neckline shown in red continues to hold.  Looking at the previous two necklines or shelf lines we see the catastrophic falls that take place when these critical support lines give way.  No one even pretends to know what is coming more than a day out anymore, it has truly become a one day market, today is what today is and good luck trying to figure out what happens tomorrow or the next day.  Having said that, the momentum is with the bulls as along as we have a green close Monday.  A red close on Monday would take it back to a neutral bias.  A red close that finishes below the neckline on Monday would bring the bears back out in force.


Trade well my friends

Alan  

Sunday, April 17, 2016

Nasdaq at Most Overbought Level in Two Years

In my April 6th article I wrote how the S&P 500 was grossly overextended and basically pressed against the ceiling on the Percent of S&P stocks above their 50 day moving average.  Tonight we are taking a look at the Nasdaq to see if it is equally overbought.  The chart below shows the percent of Nasdaq stocks above their 50 day moving average.  Friday the percent above 50 closed at the most overbought level in the past two years.  




With such overbought conditions, investors would do well to keep a close eye on their long positions.


Trade well my friends

Alan

Saturday, April 16, 2016

AAPL's Situation Worsens

Well, we learned Friday that AAPL is cutting back production of its iphone due to slowing demand.  I guess AAPL forgot to tell us that when investors were buying the channel breakout a couple of days ago.  Looking back, it almost appears that someone had a powerful algo forcing AAPL to break out of the channel.  




Looking at the top left chart above, we see where AAPL broke above its 200 day moving average and then retreated back below it with the news.  In the top right chart we see how AAPL broke out of its steep declining channel but then fell back into it with the news.  Notice the two prior false breakouts marked with arrows and how AAPL is punished severely immediately after having a false breakout.  

In the far right daily chart, we see a bearish RSI divergence and lower in that chart a MACD sell signal has appeared.  Next, in the candles chart we see that a second bearish shooting candle was printed in the weekly candles for this past week confirming the previous week's shooting star reversal candle.  Lastly, the large bottom left chart, we see the weekly moving averages I have focused on in several articles as they continue to develop a bearish setup where the smaller red moving average finds itself up under the larger green moving average and is turned back down or deflected downward by the green moving average producing a power flush downward quite similar to the MACD sell signal in the day chart to the right.

The only thing that might save AAPL here is the continued nightly futures interventions by the prop the market coalition and their tractor program that has been strapped on the market this past week to keep it from selling any whatsoever from the high peak it reached from the short squeeze based upon the now known to be a false report of a Russian / Saudi Arabia oil deal.


Trade well my friends

Alan