Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Friday, October 31, 2014

Mid Morning Update: S&P Rings the Bell

Stock Market Technical Analysis


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In the market today the S&P gapped up and quickly rang the bell at the September high as the VXX 5/50 juncture we have been following successfully completed the down cross.  Team Yellen now has the S&P all cleaned up and in its finest tuxedo for Tuesday's election (yes, Yellen is a democrat).  Looking at the chart above, the big question now is did the party just begin or just end?






Trade well my friends

Alan

Thursday, October 30, 2014

Closing Charts


As we head into the closing, the VXX 5/50 EMA juncture (shown in top chart cluster at bottom right) which showed a down cross earlier in the day is now too close to call for the closing print.  If the market is positive tomorrow morning there should be no problem for the VXX to continue its down cross.  However, if the market is negative tomorrow morning, because these are EMA lines a large enough down morning could easily pull the tip of the red 5 line back up to a bounce position on the turquoise 50 line and bring in sellers.



Stock Technical Analysis




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Trade well my friends

Alan

Midday Update: VXX Down Crosses, Market lifts



The VXX 5/50 EMA juncture (highlighted in red in the bottom right corner of the top chart cluster) has now down crossed, producing the rally.


Stock Market Technical Analysis




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Trade well my friends

Alan

Mid Morning Update: VXX 5/50 EMA Battle

Stock Market Technical Analysis




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In the market this morning the fight is already on as to which way the VXX 5/50 EMA juncture will break (bottom right chart of top cluster highlighted in red).  It has already had false breaks in each direction.  This market isn't going anywhere until we see a clear down cross which would produce a market rally or see the red line being forced upward by the turquoise line which would cause a market sell off (red line is 5, turquoise is 50). 


Trade well my friends

Alan

Wednesday, October 29, 2014

After Yellen, Market Watching VXX

Stock Market Technical Analysis


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In the market Wednesday we had a FED statement that was decidedly less dovish or more hawkish depending on whether you are a bull or bear but everyone agrees that they have tightened their view. The afternoon trading was pretty much paralyzed as one key chart needs to resolve itself before traders and investors can see which direction the next market move will be.   That chart is the VXX (VIX Short Term Futures) with the 5 and 50 EMAs applied which I have highlighted in red in the bottom right corner of the chart cluster above.  The red line is the 5 EMA and the turquoise line is the 50 EMA line.  These two lines come to a juncture forming another EMA pivot for the market.  If the market is up Thursday, the 5 EMA line will likely start to cross down through the 50 EMA line allowing stocks to rise but if the market is negative we could have a "v" bounce begin at the line juncture which would cause a quick reversal downward in the stock market.  The bears are eyeing this chart closely and would be more than happy to take the market back from Team Yellen and the bulls.   



In the second chart cluster just above, the S&P is still inside of the bubble channel after Wednesday's drift lower.  Tuesday's low in the VXX held again today.



In the short term channel charts above, it can be seen that the S&P and NASDAQ have clearly started a new uphill channel and both got back out of their blue down hill channels in the last hour after a brief dip during the Fed statement.  The VIX (Volatility Index) and VXX are working within taller downhill channels.

The VXX 5/50 juncture will be key for the next couple of days in determining where the market will go from here.


Trade well my friends

Alan

Into the Close

Stock Market Technical Analysis




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No reaction to the FED yet..


Trade well my friends

Alan

Mid Morning Update: Market Waits for Fed Statement



In the market this morning, traders are sitting and waiting for the statement from the Fed coming this afternoon.  The charts below are updates from the situation we have been following the past two days with one notable exception.  The bottom right chart in the top chart cluster is a day 5/50 EMA juncture (5 red / 50 turquoise) that the bears have set up for a "v" bounce should Yellen's statement contain anything that the market really doesn't like.  This is the primary reason the market is flat in the hours before the statement instead of the traditional float up.  The VXX 5/50 setup shows that traders are keenly aware this market could reverse back down in a heartbeat if it gets spooked this afternoon.






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Trade well my friends

Alan

Tuesday, October 28, 2014

15 Minutes to Close, Indexes Break Out

Stock Market Technical Analysis




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Following up from last night & this morning's blogs about the breakdown on the VXX right before the bell yesterday, we now have the bulls running the market up full steam.  The Nasdaq broke up out of its multi-month downhill channel this morning & the S&P broke up out if its multi-month channel this afternoon.

Trade well my friends

Alan

Bears Blink, Bulls Charge

Stock Market Technical Analysis


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Following up from my blog last night where I discussed how the drop in the VXX right before the close Monday might be a sign the bears were about to blink in the big EMA standoff, with the new trading day we see that is exactly what happened.  Looking at the top chart cluster we see that the S&P has begun to lift in its EMA setup and the VXX had its price drop below the pair of lines this morning, a precursor to setup failure.  In the lower charts above, the SPY has reentered its two year bubble channel this morning and the ADX shows that the buyers came in fast.




In charts 1 and 2 above we see that the S&P and NASDAQ both broke above their 50 day SMA lines this morning.  In the small weekly candles chart inlaid on chart 5, the S&P broke above the weekly center basis line of the Bollinger bands.  In the bottom chart we see how the VXX fell out of its uphill channel this morning.




In the short term channels cluster above, we see both the VIX and VXX dropped well out of their blue channels.  The NASDAQ actually broke out of its multi-month downhill channel.

The VXX drop yesterday before the bell was all the warning that was given that the standoff was about to break.  If you acted quickly on it you have already made good money going long.


Trade well my friends

Alan

Monday, October 27, 2014

Closing Charts

Stock Market Technical Analysis




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In the market today we saw day two of a powerful tractor program that they have clamped down on the SPY  & QQQ to keep the S&P and the Nasdaq in a tight slightly uphill range.  You can see the tiny channel that is drawn with pink lines in the lower chart cluster on the past two days of trading in the S&P and NASDAQ.  

In my midday blog today I discussed in detail each of these charts and nothing has changed with the closing print of these charts except for one thing that happened in the last thirty minutes of trading. Look at the VXX in the bottom right corner of the lowest cluster and you can see that it dropped out of its blue channel about twenty-five minutes before the close.  This could be the first sign that the bears may be the first to blink in this standoff.  My thoughts are that the bears are weary of these tight range tractor programs that are put on the market to control it when market conditions are critical. After seeing the tractor program complete two days of tight containment successfully, many of the shorts may begin to feel that even if Yellen turns off QE Wednesday instead of doing an extension that they may have their tractor programs locked so tight on the market that it won't drop regardless of the selling pressure.  These tractor programs are that strong and if traders see that stocks are not dropping in light of such a negative event then it follows that a short squeeze would be very easy to get started.

We will see...


Trade well my friends

Alan

Market Holding At Big Pivot

Stock Market Technical Analysis


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Following up from last night's blog where we were considering that there might be an intervention in the futures last night, it clearly did not happen and the market opened down this morning.  This lends a little to the argument that the Fed is saving its dry powder for the Wednesday afternoon Fed speech.  

Looking at the two upper charts above both showing the same large EMAs on the S&P and VXX, we still have a stalemate situation as the VXX is ready to lift and cause a market sell off but the Fed refuses to let that happen and has forced the S&P into the same pancake line setup as the VXX which is something that is rarely seen.  As I said last night, one has to drop soon.

Looking at the two lower charts above, I have inlaid the ADX active lines at the bottom of the SPY chart.  You can view the green line as buyers and the red line as sellers.  Here once again it shows we are stuck at a neutral stalemate waiting for the pivot in both indexes to break one way or the other. The focus chart in the bottom right corner is a zoom in on the SPY ADX and if you get your nose up to the monitor you can see that the red line is very slightly under the green line indicating the beginning of bullishness but the green line is falling also instead of turning up which indicates the buyers are backing off also at this pivot.  No clear indication either way.




Looking at the second chart cluster above, we see that in chart 1 the S&P is showing resistance at its 50 SMA.  Chart 5 shows the S&P has found resistance at the lower line of its two year bubble channel.  Also, I inlaid a weekly candle chart at the corner of chart 5 that shows the S&P has resistance at the center basis line of the weekly Bollinger bands.




Looking at the third cluster above, the short term channels, we see the trading action is coming to a standstill as traders wait for the big EMA pivot situation on the S&P and VXX to resolve itself.


Trade well my friends

Alan

Sunday, October 26, 2014

S&P vs VXX Down To The Wire

Stock Market Technical Analysis


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Whenever a make or break pivot comes to a point on a Friday the odds normally favor the bulls as Fridays are low volume from the start and drifts lower throughout the day.  The Fed's SPY/QQQ stealth buying program is volume sensitive and as the volume drops its pacman style buying ramps up.  Friday afternoon it was in overdrive because the big pivot in the S&P versus the VXX EMA battle had finally come to a point where one or the other has to drop back.

Looking at the charts above, which  show the situation with both the S&P and the VXX having the same large EMA pairs set up virtually identical and both ready for a big lift.  In my midday chart post on my website blog Friday, I called attention to the VXX because it had its red line appear above the green line.  The S&P still has its red line hidden by the green line.  As you can see above they both closed that way.  Normally, in technical analysis you would call the VXX as the winner because its red line broke to the topside of the green line first.  However, the voraciousness of the Fed's buying program Friday was truly amazing and in the last thirty minutes the VXX price started falling suddenly into the close which would lend to the argument that the S&P will have its red line break to the topside of its green line to match the VXX on Monday.  This is about as close as a dead heat can possibly get and the stakes are high.  If you zoom in, the VXX should be the technical winner but Team Yellen has been driving the market with unbelievable tenacity the past week.  Which way the market is going to break seems too close to call even still plus, we have the variable of the upcoming Wednesday Fed speech where Bullard hinted that the Fed may take a turn to the dovish side with some sort of QE extension.




Looking at this chart cluster, we can see that in charts 1 and 2 the S&P and NASDAQ both closed right at their 50 SMA lines.  In chart 5, the S&P closed right at the lower line of its two year bubble channel and the VXX is still riding its lower channel line in chart 6.



Lastly, a look at the short term channels above shows the movement the past week.

The Sunday night Futures session will be a clue as to which way the market breaks as they were very actively buying S&P Futures the two nights prior to the reversal starting.  If they are in the Futures again tonight there is a good chance we will have a gap up in the morning.


Trade well my friends

Alan

Friday, October 24, 2014

Low Volume, Creep Up Friday

Stock Market Technical Analysis



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In the market today we are having a classic low volume, creep up Friday.  Looking at the upper cluster, the VIX and VXX are still maintaining while the S&P and Nasdaq creep higher.  Looking at the lower cluster, in charts 1-4,  I replaced the 50 EMA with the 50 SMA which is what's coming into play now.  Only notable change overall is in chart 6 where the red EMA has appeared topside of the green today.

Trade well my friends

Alan

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