Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Thursday, October 23, 2014

S&P Climbing But VIX and VXX Not Falling

Stock Market Technical Analysis


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In the market Thursday we had a 3 AM SPY intervention that I detailed in my Thursday morning website blog post.  Throughout the day Thursday the squeeze was back on leaving us with closing charts I posted above.  The pink elephant in the room is whether or not there will be any new buyers coming into the market after the squeeze is finished.  

Looking at the charts above:

  • Chart 1 & 2:  the S&P and NASDAQ got above their 50 EMA lines today
  • Chart 3:  the VIX still closed above its 50 day at today's closing, it should have closed below it if traders felt this move today was going to hold
  • Chart 4:  the VXX held tight today, not buying into the overnight intervention and subsequent short squeeze at all
  • Chart 5:  the S&P tried but failed to reenter the two year bubble channel today
  • Chart 6:  the big EMA setup on the VXX was not hampered at all by today's action, still setup and ready for a big takeoff
  • Chart 7:  the VXX still holding that lower trendline and closed at the high of the day




Now taking a look at the short term channels of the four Indexes above.  

  • The S&P chart shows that it is trying to maintain its upper blue line squeeze channel but keeps falling out of it
  • The NASDAQ chart shows that it slipped out of its blue line squeeze channel going into the closing bell
  • The VIX chart climbed back up into its primary uphill blue channel in the last hour today
  • The VXX chart did the same, also reentering its steeper blue line channel

Putting it all together, there was a very successful intervention in the SPY at 3 AM and a surprisingly strong short squeeze today but looking at both sets of charts it appears that the VIX and VXX are just not buying into all of this.  A definite divergence as they should be falling hard but they are not. 


Trade well my friends

Alan

And 3 AM Magic It is

Stock Market Technical Analysis


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Following up from last night's blog where I showed how the VXX was setup to lift and cause another sell off, Team Yellen was ready this time and came in at 3 AM on the SPY (left chart) taking its price to a much more desirable number by 3:10 AM then holding it for a big regular session gap up and the subsequent short squeeze.  In the center chart we see the huge gap in the SPY compared to yesterday's close.  In the third chart they took the liberty of having the data feeds fill in the S&P with a solid bar making it look like it was a rally from the opening tick when in reality it was a monstrous gap up from 3 AM.  They hope you will forgive this minor tweak in the data feeds.




Compare this cluster to last night's chart and you can see how effective the 3 AM SPY intervention was.


Note that the VXX isn't sure it wants to go along with all of this.


Trade well my friends

Alan

Wednesday, October 22, 2014

VXX Setting Up Again

Stock Market Technical Analysis


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In the market Wednesday we had a number of technical situations develop as the short squeeze wound down and the market retreated.

  • Chart 1 - the S&P climbed up to test its blue line 50 day EMA and was rejected by it
  • Chart 2 - the NASDAQ climbed up to test its 50 day blue EMA line and was also rejected by it
  • Chart 3 - the VIX (Volatility Index) found support at its 50 day EMA line today and bounced up from it
  • Chart 4 - the VXX (VIX Short Term Futures ETF) found support at its 50 day EMA line and bounced up from it
  • Chart 5 - the two year Bernanke bubble channel where after four days of climbing the S&P reached up to the lower line of the channel today for the token back test and was rejected by it
  • Chart 6 - the VXX has a high quality lift setup ready to start with EMAs that are twice as large as the ones that caused it to rocket two weeks ago
  • Chart 7 - the VXX found support and bounced up from its lower channel line today





Taking a look now at the short term channels of the Indexes shown in the charts above.  The S&P and NASDAQ were both rejected by their blue channels they were trading in before the market sell off. The lower two charts shows that VIX and VXX both found support and bounced up from the lower lines of their blue channels.

Putting it all together the market looks poised to start another wave of selling unless we have another overnight S&P Futures or pre-market SPY intervention by the Fed.  Speaking of the Fed intervening in the stock market, the headline story at MarketWatch.com today was a good piece on what's going on behind the scenes in the stock market.  The links to the article and another article it mentioned are Opinion: The world’s best market timers: the Federal Reserve and ‘Plunge protection’ behind market’s sudden recovery.  Here is a link to another article that came out last month:  The Fed's Plunge Protection Team on Real Money The Street.com which explains how Reagan set up what is referred to among traders as the PPT or Plunge Protection Team or as I often refer to the current PPT, Team Yellen.

The truth is that the stock market has slowly morphed over the past six years from an independent investment arena into a micromanaged component of the US economy. 


Trade well my friends

Alan

Midday Chart Update: Short Squeeze Looking Tired

Stock Market Technical Analysis 


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Yesterday's blistering short squeeze appears to be running out of steam.


Trade well my friends

Alan

Tuesday, October 21, 2014

S&P: Up and Over

Stock Market Technical Analysis


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The S&P was in total short squeeze mode Tuesday.  Looking at the charts above, Monday's closing left the S&P up against three major resistance lines.  Later, the overnight S&P futures sold down through the night which of course is not acceptable for Team Yellen, so they opted to come in at 3 AM and run the SPY up $2 from 3 AM to 6 AM which is the equivalent of 20 points on the S&P. They held the gap through the regular session open to cause the S&P to hop completely over all three resistance lines at the open triggering a blistering short squeeze the entire day.


Who wanted to deal with those pesky resistance lines anyway?  




Looking at the second cluster of charts above, the short term channels of the Indexes, I have zoomed a little farther out so that we can see the blue channels we were trading in before the market broke down.  The S&P and the NASDAQ got right up to the lower line of their blue channels at the close. The VIX & VXX both got down to the lower lines of their uphill blue channels.  This leaves all four Indexes at trendline pivots for Wednesday morning.  




Looking at the last chart above, the multiple channels of the S&P, we can see that the S&P closed right up against the lower line of the red channel which is the primary channel going back two years. Slipping out of this channel is what caused the market to sell off.  

They are obviously trying to get the S&P back into that channel, the so-called Bernanke moon shot tube.  The question is, can they patch that hole in the bubble?


Trade well my friends

Alan

Mid Afternoon Chart Update

Stock Market Technical Analysis


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The short squeeze continues to rip the stock indexes higher.  The S&P and Nasdaq both have broken out of their red line 5-week downhill channels.  The VIX & VXX have both dropped out of their 5-week uphill channels. 


Trade well my friends

Alan

Midday Chart Update: Up and Over

Stock Market Technical Analysis


click on image to enlarge

After yesterday's closing up against three major resistance lines the overnight S&P futures sold down through the night which of course is not acceptable for Team Yellen, so they opted to come in at 3 AM and run the SPY up $2 from 3 AM to 6 AM which is the equivalent of 20 points on the S&P. They held the gap through the regular session open to cause the S&P to hop completely over all three resistance lines at the open triggering a blistering short squeeze even higher.

Who wanted to deal with those pesky resistance lines anyway?


Trade well my friends

Alan

Monday, October 20, 2014

Can S&P Cross Multiple Resistance Lines To Start a Rally?

Stock Market Technical Analysis


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In the market Monday, we had a slow climb in the morning as the S&P proved to be heavy. While there were still shorts continuing to reluctantly cover, new buyers were not to be found as the S&P bumped its head up against three resistance lines in the final hour.  

Chart 1:  S&P closed right at the resistance line across from the early August low.

Chart 2:  S&P closed up against the underside of its 200 day SMA line.

Chart 3:  S&P closed right up against the lower line of the long term blue channel.

Chart 4:  Shows what is to be gained if they can get it across these lines.  There is a pair of large EMAs set up in a classic lift formation ready to start.  

With Fed head Bullard stating late last week that QE may be extended, we have had a complete reversal of the bloodbath that was taking place right up to the moment he ushered those words.  The shorts remember well when Bernanke did a 180 to completely surprise everyone when the market was in crises and now the market is climbing just upon the possibility that QE may get extended and more importantly, their stealth buying of the SPY and QQQ which has accompanied QE all along.  

What happens if QE instead gets turned off as scheduled?  The only sure thing would be that a lot of really angry shorts would come back into the market with a vengeance if they think they were tricked into covering their positions. 


Trade well my friends


Alan

Midday Chart Update: VIX at Lower Channel Line

Stock Market Technical Analysis




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Everyone watching VIX as it arrived at the lower line of its uphill red line channel.

Trade well my friends

Alan

Sunday, October 19, 2014

S&P: The Week Ahead

Stock Market Technical Analysis


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Before we take a look at what the bulls have to work with this new week, someone needs to give credit to the Pacman style buyer of the S&P futures during the night last Wednesday and Thursday. It caused the market to put in at least a short term bottom.  Of course, they had a little help, or should say a lot of help, in that there has been massive Put buying the past two weeks and with options expiring last Friday, Wall Street came in to assist in turning the market back up so they could wipe off a great deal of the Puts that had been bought.  Now that their dirty deed is done, we will see how much they would like to work with the Fed on taking the market back up.  

Looking at the charts above, there are a lot of technicals that will be helping the bulls this week.  In the top left chart, we see that the S&P held support at the 324 EMA which is a critical line not to be broken.  In the inlay chart, we see that the weekly S&P candle is a bullish long tail reversal hammer. In the top right chart, we can see that the S&P held at the April low.  In the bottom left corner chart, we see that the VXX's incline channel is helping keep it below the 40.25 line.  

In the bottom right chart we see the most important thing that could help the bulls take back control of the market:  Fed president Bullard came out and announced that QE may be extended right as the market was struggling to solidify a bottom.  Since that moment there has been continuous short covering on big volume and we may actually have a playable bounce now.


Trade well my friends 

Alan

Friday, October 17, 2014

Indexes Back Above Short Term Bull / Bear Line

Stock Market Technical Analysis


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Just a quick look at the Indexes viewed with the short term bull / bear line on sixty minute bars. When the price is below the line the bears are in control and when the price is above the line the bulls are in control.  The VIX, VXX and TLT in the lower charts work inversely.  A lot of automated trading systems key off this line for going long or short.

My weekend blog will be focused on weighing what the bulls and the bears have to work with in the coming week.


Trade well my friends

Alan

Mid Morning Chart Update

Stock Market Technical Analysis



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They're making some progress...

Trade well my friends

Alan

Thursday, October 16, 2014

Closing Charts Update

Stock Market Technical Analysis





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No time tonight, here are the closing charts updates.  


Trade well my friends

Alan

Mid Afternoon Chart Update

Stock Market Technical Analysis




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Since this morning the Indexes have broken out of their blue channels slowly trying to make their way back into their red channels as shown in the top chart cluster.  

Looking at the multiple channels, chart 2 of the S&P, we can see that the S&P showed support at the top line of the green channel this morning but is now starting to show resistance at the lower line of the  brown channel above it. 

Looking at chart 3, VXX, we see that after gapping well above the 40.25 line at the open, here in the past hour it is starting to show support at that line instead of falling back under it.  Overall, pretty neutral and tentative.

Trade well my friends

Alan


Mid Morning Chart Update

Stock Market Technical Analysis




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The market gapped down once again taking the VXX (bottom chart) back above the 40.25 line. However, they are working quickly to try to get it below the line.  What's helping this morning is that the S&P did not drop into the green long term channel (middle chart) as it did yesterday, giving it extra footing to push upward and if it continues will help get the VXX back down below 40.25.


Trade well my friends

Alan

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