Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

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

Thursday, April 14, 2016

Pro SPY Traders Agree with VXX Traders

While the iron grip tractor program has forced all the retail stock market indices (S&P, Nasdaq, Dow) out of their multiyear declining channels the past 3 days, pro traders are largely ignoring this as they go by their own chart, the SPY ETF.




Today's high finally hit the upper channel line on the SPY and should close with an overextended shooting star candle that just kissed the line and pulled back.  This is likely why the iron grip tractor program seems to be losing its grip on the retail indices.  The pros on Wall Street will be fighting to maintain the downtrend line on their chart, the SPY.


Trade well my friends

Alan

VXX Believes 3 Day Iron Grip Tractor Program to Force Channel Breakouts is About To End

While the tractor program that has been locked on the market for 3 days has been hugely successful in forcing the stock indices to break out of their restraining channels, the breakouts haven't gone very far and it begs the question of what happens next if the VXX traders are right with their chart indicating the tractor program may be about to be turned off.




Trade well my friends

Alan

XLF Up Against Double Resistance

The XLF financial ETF had a big day yesterday but finds itself up against the upper line of its six-month declining channel this morning.  At this juncture you can expect them to put lipstick on some really foul bank earnings.





Trade well my friends

Alan

Wednesday, April 13, 2016

Midterm Channels Projecting Market Pullback

The S&P 500, Nasdaq, and USO have maxed out in their midterm channels as the VIX is basing at the 13.75 level which has projected stock market tops for the past four weeks.  The USO was stopped dead in its tracks after the Saudi Arabia oil minister denounced yesterday's oil deal rumor which had triggered the algos into a blind buying frenzy on the USO and stocks Tuesday and fueled a continuing short squeeze higher today.





Trade well my friends

Alan

USO December Support Level Becomes Resistance

The USO continues yesterday's late afternoon reversal downward while this morning Saudi Arabia's oil minister Ali al-Naimi threw water on the hopes of oil producers taking action in regards to crude output at the Sunday meeting in Doha.

He was asked this morning about the possibility of this action happening and said " forget about this topic".






Trade well my friends

Alan

Tuesday, April 12, 2016

Is Russian / Saudi Arabia Deal a Game Changer for Stocks or a Ruse?

The stock market ripped higher Tuesday as oil took off on a monster squeeze from the moment a Russian news agency reported that a Russian diplomat said that Russia and Saudi Arabia had reached a deal ahead of this week's OPEC meeting.  This news / rumor / prepackaged algo spiker was effective in triggering an outrageous short squeeze in oil and the accompanying squeeze in stocks.  

The algos are set so tightly to oil news now that they have no need for confirmation they will just buy the rumor then sell the news come Monday if we find out this weekend's OPEC meeting that the news was true.  Either way it is a risky trade as if it's true, the sell the news exit is Monday and if it is not true, oil will take a nasty turn back down and take the stocks with it.  

The charts below show where the indices are in the channels after Tuesday's short squeeze.





Trade well my friends

Alan

Monday, April 11, 2016

S&P Establishing a Steep Declining Channel

The S&P 500 continues its topping process even though oil has been squeezed relentlessly the past few days.  Monday we had a two point confirmation of the S&P market top that is textbook.  First, the third lower high was printed in the newly developing declining channel shown in red in the chart below.



Also, in the same trading day the S&P closed outside of its transition channel shown in blue.  These two together provide textbook technical confirmation that a new leg down has begun.  This is also where technicians pull out the Fibonacci scale to mark the token bounce points on the downward path.  The first benchmark Fibonacci line is the 38% retracement which is at 1974.  Swing traders wanting to catch the flip in the options montage when we catch a solid bounce will be watching for that 1974 Fib number and/or the Percent of S&P stocks above their 50 day moving average to reach the 40 level as I discussed in my April 6th blog post.  

Don't look for smooth natural trading for the next couple of months, I expect constant interventions in the overnight futures which will produce very choppy charts.


Trade well my friends

Alan

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