Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Wednesday, September 1, 2010

A shift to being proactive?

click on above images to enlarge

Today we saw the bailout team execute a wicked jamfest of all stocks well ahead of the pivot point that was coming late tomorrow afternoon.  In the recent past they have been waiting until the very minute the pivot point is here or sometimes letting the market lose the pivot before stepping in.  Almost to the point of being indifferent until they absolutely had to intervene.  This has allowed the bears to prepare for the pivot point fight and they have been winning almost all of these pivot points.  Today though, they caught the bears off guard as they were waiting for the pivot point to do battle and this surprise intervention well ahead of the pivot caused a fierce short squeeze on the bears.  This is the kind of initiative it will take to push the markets higher and it's refreshing to see they have finally figured it out.  Now the shorts' standard game plan of resting until the pivot then giving it all they have to drive the market down is no longer a viable approach.  This could be a game changer.  The bailout team has really been stuck in a rut with their last minute intervention approach, then only applying half the effort needed to get the job done and ending up in failure.  This change is very encouraging.

In the upper chart cluster, row 3, the bond drop off this morning earned the number 2 buy signal but you will notice that they did start climbing back up as we approached the bell, probably in disbelief of everything that happened today.  Row 2, we see that the vix dropped back down into the bullish blue channel which earned a #2 buy signal. 

In the lower chart cluster, row 1 chart 1, the volume did bypass its average volume blue line.  In chart 3 row 1, at today's close the S&P got right up to its 50 day MA but hasn't crossed yet.  In chart 4 row 1, we have the highly pivotal situation of the red 108 EMA line is going to coincide with the lower brown line of the mother channel tomorrow which amplifies the power of this additional, very unique pivot point.  In row 2, the thin red line at the bottom has been changed to a medium blue line because this is the 3rd time that level has been used for support this summer, thus creating the 3 level trading range of blue lines that can be seen now.  Also notice that today's jamfest did break us out of month long black line down hill channel which is what the bulls have been waiting for.  In row 3 chart 1, the 30 year chart, you can see today's 3% move up in the markets raised the tip of the red 5 MA line up to the underside of the green 10 MA line whereas the red line has been curved down for a couple of weeks now.  In chart 3 row 3, we are in overbought territory but in this strong of a rally mode they typically will only let it fall to the black center line and use that as the buy line for a week or so to really keep the market drive going.

Everything overall looks good except for the bond chart, row 3 of upper charts.  That chart is signalling that there is hesitation with the short term bond players shifting anymore money over to the stock market until they see follow-through.   Maybe they will see it tomorrow.


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