Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

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

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