Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Monday, December 31, 2012

It's all in the details......

Latest:

 The Senate agreed to kick the can down the road two months and doesn't address debt ceiling breach.

Happy New Year

Alan


Regular blog post below

US Looks to go Over Fiscal Cliff - Market Rallies Big

Stock Market Technical Analysis Blog


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In light of the likeliness of going over the fiscal cliff, today they decided the best defense was a good offense and jammed the market higher using the AAPL 432 EMA line bounce technique they used on 11/16 & 12/17 that I called out on my blog posts on those dates.  Since they are not going to have the major positive event that would avoid the fiscal cliff, they are trying to put the VIX "cat" back in the bag by using the technique I described in the third paragraph of my Sunday night blog post.  

Looking at the chart above, today's drop in the VIX has already morphed the red line upcross back down to a pancake merge in just one day.  Everyone knows that when they spring AAPL off the 432 EMA line that short squeezes start on the broad market.  We'll have to see if they can put some legs on this one.

Alan

Sunday, December 30, 2012

Sunday Post - Nasdaq - VIX

Stock Market Technical Analysis Blog


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In the Market Friday we had big index triangles waiting for a direction from the afternoon fiscal cliff meeting.  When it leaked that no new plans were presented the market sold off hard into the bell and in the aftermarket trading.

Tonight I am focusing on a four-year chart of the VIX, with Weekly bars and the sentiment EMAs applied.  Over the past four years anytime the smaller red EMA line crosses above the green line the stock market has sold down big for several weeks.  Tonight's closing of the the current Weekly bar, shows the upcross has begun again.  The upcross has happened three times in the past four years with each one marking the beginning of a couple of ugly months in the stock market.

As with any upcross on a Weekly chart, if there is an event in the following week that causes the price to reverse back down and close below the numerical value of the larger line at the close of the next weekly bar then the cross itself could be twisted back and possibly enough to morph the line cross into a neutral line merge situation going into the third week as happened in first quarter of 2011 and second quarter of this year.

Obviously, the only event of that caliber would be a real and genuine fiscal cliff deal being passed.
I am not holding my breath on that one.



Alan

Friday, December 28, 2012

VIX Sentiment EMAs Upcross

Stock Market Technical Analysis Blog


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In the Market today we had big index triangles waiting for a direction from the afternoon fiscal cliff meeting.  When it leaked that no new plans were presented the market sold off hard into the bell and in the aftermarket trading.

Tonight I am focusing on a four-year chart of the VIX, with Weekly bars and the sentiment EMAs applied.  Over the past four years anytime the smaller red EMA line crosses above the green line the stock market has sold down big for several weeks.  Tonight's closing of the the current Weekly bar, shows the upcross has begun again.  The upcross has happened three times in the past four years with each one marking the beginning of a couple of ugly months in the stock market.

As with any upcross on a Weekly chart, if there is an event in the following week that causes the price to reverse back down and close below the numerical value of the larger line at the close of the next weekly bar then the cross itself could be twisted back and possibly enough to morph the line cross into a neutral line merge situation going into the third week as happened in first quarter of 2011 and second quarter of this year.

Obviously, the only event of that caliber would be a real and genuine fiscal cliff deal being passed.
 I am not holding my breath on that one.

Alan

Thursday, December 27, 2012

Intraday Market Reversal

Stock Market Technical Analysis Blog





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In the market today we had a big sell-off in the morning then a reversal back up in the last two hours.  At midday today, I sent out a number of tweets listing reasons why the market found support at that level.  Shortly after, the SPY rallied for a $1.75 gain into the final hour.

Looking at the first chart cluster, 60-minute bars, we see the sell-off in the Nasdaq in the morning with a reversal taking it back up into the horizontal channel by the bell.  The lower chart, VIX, we see the surge on up to the 21 level area that I discussed last night and  then at midday you see the 60-min, shooting star reversal bar as the VIX started falling back down from the 4-month uphill black line channel.  Note that it did close just above the center line of the 4-month channel which is actually neutral market-wise at best.  It will have to drop through that center line tomorrow if they want to have the rally continue.

In the second chart cluster, we see the reversal bar in the SPY and below that the reversal bar in AAPL as it bounced from its lower blue channel line at midday today.

In the third chart cluster, we see the upper six Weekly bar charts show little change in the Sentiment EMAs.  In the lower part of this cluster I added Daily candles charts of the Nasdaq, SPY, DOW, and XLF (Financial ETF) all showing Day long tailed  hammer reversal candles and all four have an either basis line or standard two deviation Bollinger Band envelope support.  The last two charts to the right show that the VIX and VXX both printed long tailed shooting star topping candles today.

In the fourth chart cluster first chart, the VIX hit the upper line of its 5-month uphill channel at midday today (which was one of my tweets) and fell well back down into the bell.  Chart 2 top row, we see that AAPL did not break its lows from last week.  Third chart top row, once again the market rebounded as AAPL touched down on its blue Day 432 EMA safety net line at midday today.   Second and third row charts, the short term channel charts, we see that AAPL, S&P, DOW, and XLF closed not far out of their short term channels at the bell, especially the XLF, with AAPL still hugging the upper line of its 4-week downhill channel.  In the bottom three charts, I posted an inner channel also being used on the VIX showing it tested a breakout but came back.  Second chart, VXX, shows an extremely long tailed reversal bar today.  Third chart, UUP, while it did break out of its downhill channel at the open, it came back down in it through the early afternoon and pretty much closed on the line at the bell.

All in all, everything is dressed up nice for a rally tomorrow but I am still holding to a neutral position (outside of intraday only option plays) because of two things in the above charts.  The first is in the top cluster, lower chart of the VIX which stopped falling and came back up a little as it hit the center line of the 4-month uphill channel in the last 30-minutes.  The VIX must drop below that center line tomorrow or this afternoon's rally was nothing more than a bounce off of multiple supports.  The second reason is found in the lower cluster, UUP (Dollar Index) where it did not stay down in the channel.  If it breaks out of the channel again tomorrow all bets are off.  We are still highly vulnerable to any and all news blips coming about fiscal cliff developments or lack of.

Alan

Wednesday, December 26, 2012

Indexes Lose Short Term Channels

Stock Market Technical Analysis Blog






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In the markets today we had another down day as the VIX continues to climb higher as market participants really don't like the way the fiscal cliff situation is unfolding.

In the first chart cluster, we see that the VIX gapped all the way above the stock unfriendly blue channel last Friday morning after the Boehner fiasco and with today's close it established the long term black line channel as being active again which could easily take the VIX up above 20.

In the second chart cluster, I've posted the long term charts of the SPY and AAPL.  Notice that the SPY slipped out of its 18-month blue uphill channel.

In the third chart cluster, the Weekly charts of the indexes with the Sentiment EMAs applied, we see that the Nasdaq and DOW have flatlined their two EMAs where it would not take much downward movement to have the smaller red EMA show below the green and trigger sell programs.  The most notable chart in that cluster is the VIX because it is starting to have an upcross which hasn't happened in about a year and a half and would also trigger big sell programs.

In the fourth chart cluster, top row, we see that the big triangle in the VIX I discussed about a week ago has broken out and heading toward the 22 level.  In the center chart of the top row, we see that AAPL continues to sag after having tested and failed at the underside of its gold Day 324 EMA line last week.  In the top row, third chart, we see that AAPL is almost down to its Day 432 EMA safety net blue line.  Also, AAPL is showing a bearish descending wedge pattern now.  In the center row, we see the Nasdaq, S&P, and DOW have all dropped out of their short term channels, but the XLF financials is still hanging on to its lower channel line while AAPL keeps trying but is still failing to break out of its downhill channel.  In the bottom row, the VIX does have an inner channel showing resistance where it is at right now which could possibly reverse it or we may have to go on up to the 22 level shown in the top left corner chart.  In the center chart bottom row, the VXX (VIX Futures) are running higher fast after being contained for five weeks in a small channel.  In the right final chart, the UUP (Dollar Index) is just a few pennies from breaking up out of its steep 6-week downhill channel which if it happens would cause havoc on stocks.

Putting it all together, the stock market is in a precarious situation right now.  It will be day by day for a while.

Alan

Thursday, December 20, 2012

Thursday Night Part 2



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Boehner announced a little bit ago that they cancelled the vote on their plan as they realized they did not have enough votes to pass it.  Immediately after the announcement we had a 35 point flash crash in the S&P futures.  They have come most of the way back up now but there will be some very rattled traders tomorrow morning.

Alan

Weekly Charts Lifting Market

Stock Market Technical Analysis Blog


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In the market today participants grew more weary of the fiscal cliff situation as both the Nasdaq and VIX climbed today while AAPL sagged a little more.  Tonight I would like step back a little and look at the Weekly charts of six indexes with the Sentiment EMAs applied.  In the top row, Nasdaq-S&P-Dow, are all three starting a smooth orderly movement higher.  In the bottom row, the UUP (Dollar Index) and the TLT (Bond Index) are both turning downward inverse of the stock indexes in the top row as they should be.  The odd duck tonight is the VIX where we see that it has actually been climbing the past couple of weeks even as the stock indexes climbed which normally never happens.  What we're seeing is the elevated level of fear across the board starting to grip the market as we're still not seeing a fiscal cliff deal materialize.  It's possible the VIX may climb right along with the market indexes for the next couple of weeks as the market truly enters uncharted waters.

Alan

Wednesday, December 19, 2012

Indexes Have Channel Pullback

Stock Market Technical Analysis Blog


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In the stock market today we had a pullback in all the indexes from the restraining short term upper channel lines. 

Looking first at the upper cluster:
  • Chart 1:  we see the slow sag of the Nasdaq from the restraint of the upper line of its blue channel. 
  • Chart 2:  Last night the VIX was at the lower black channel line then by lunch today was holding tight at the lower line of the blue channel as the market traded sideways.  In the afternoon as the market started to fall, the VIX climbed up into the stock unfriendly upper blue channel.
  • Chart 3:  We will see if the VIX green EMA will continue to suppress the smaller red EMA and keep the VIX in check or if the red will break above the green and cause some serious selling.  One other note is the huge triangle that has been building for the past three months that has obviously been timed to come to a point right at the Jan 1st fiscal cliff deadline.  Remember, however, that many symmetric triangles actually break out before they come to a point.  
  • Chart 4:  We see that AAPL is having trouble with the gold 324 EMA line as it is now resistance until AAPL gets above it.  
  • Chart 5:  The AAPL 432 EMA blue safety net line is showing we might be testing it again tomorrow or Friday.
  • Chart 6 & 7:  the week and day candles of AAPL
Looking next at the lower chart cluster, we see the big blue dominant channels for both SPY and AAPL.  At the lower right there are 6 index charts showing the short term channels and the pullbacks we had in the Nasdaq, S&P, and XLF.  AAPL traded down today but did not reenter its steep downhill channel.  The VIX is threatening to enter the upper half of its three month uphill channel.  The VXX (VIX Futures) is threatening a channel breakout tomorrow that could bring enough selling to bring the indexes back down to their lower short term channels on Friday.


Alan

Tuesday, December 18, 2012

The Lift Continues

Stock Market Technical Analysis



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We had another big day in the market today off last Friday's AAPL 432 EMA pivot.

Looking at the charts above:

  • Chart 1:  Nasdaq shows we may have a sideways or pullback day tomorrow as the Nasdaq has reached its upper line of the its dominant short term channel shown with blue lines.
  • Chart 2:  VIX is also reflecting the same thing as it has reached the lower line of its short term dominant channel.
  • Chart 3:  We see the follow thru on the VIX of the red EMA being pushed down from the green EMA as I discussed last week.
  • Chart 4:  AAPL will get its first test tomorrow as it tries to cross back above the gold Day 324 EMA line.
  • Chart 5:  AAPL shows the blue 432 EMA safety net line I discussed in last Friday's blog.
  • Chart 6:  Weekly candle of AAPL
  • Chart 7:  Daily candle of AAPL
  • Chart 8:  Intraday of AAPL showing a $15 gain today on top of yesterday's $20 gain.  Anyone who was ready to buy yesterday morning when the pivot started to the upside has banked $35 on AAPL in two days.
Looking at the lower cluster above, the top left chart shows that the SPY is well on its way in its year and a half blue line uphill channel.  The lower left chart shows AAPL is rising nicely in its 10-month downhill blue line channel.  Note however, that it will have some resistance at the 550 level which is the upper line of its multi year black line channel.  

Taking a look at the three right side charts in the lower cluster where I have drawn the short term channels we see that it's likely that the Nasdaq and S&P will have pause tomorrow at their upper short term channel lines.  AAPL in the bottom chart actually broke up out of its 3-week downhill channel today.  

Tomorrow we will be watching to see if today's breakout in AAPL causes the Nasdaq and S&P to only go sideways and not down or whether the Nasdaq and S&P's upper channel line restraints will slow the AAPL rally.  It really could happen either way but it's likely to be influenced by any new developments in the fiscal cliff talks that emerge tomorrow.

Alan

Monday, December 17, 2012

AAPL Lifts the Market

Stock Market Technical Analysis Blog


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Following up from Friday's blog, AAPL tested the safety net 432 EMA line in the premarket this morning and ripped higher through the day for a $20 plus gain from the premarket launch and lifted the market for a huge gain.

Looking at the charts above:

  • Chart 1:  Thr Nasdaq regained the horizontal channel and made its way to the blue incline channel.
  • Chart 2:  The VIX slipped out of the stock unfriendly blue channel.
  • Chart 3:  The VIX's green EMA prevented the red from crossing above as it did two weeks ago.
  • Chart 5 & 6:  We see bullish reversal candles on the week and day of AAPL.
  • Chart 7:  AAPL's bounce today from its 432 EMA line.
  • Chart 8:  AAPL's intraday run from 500 to 520.
Looking at the lower cluster above:
  • Top chart:  SPY bounced up from the lower line of its 16-month uphill blue channel today.
  • Lower chart:  AAPL bounced up from the lower line of its 10-month downhill blue channel.
If you follow my tweets, midday Friday I tweeted that I was expecting a breakthrough in the fiscal cliff negotiations today.  I knew it would be ideal for such an announcement to be timed with a big market lift point.  Today we had multiple breakthrough announcements.

Alan

Friday, December 14, 2012

AAPL

Stock Market Technical Analysis Blog

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In the stock market today we saw the slow meltdown continue from the weight of AAPL.

  • Chart 1 Nasdaq:  saw it slip out of the horizontal channel but came back up in the last hour.
  • Chart 2 VIX:  continued up into the blue channel but in its fifth 60 min. bar it became overextended and closed with a 60 min. shooting star candle.
  • Chart 3 VIX:  we see the red EMA has come back up to the green where it will either cross above Monday morning or start turning sideways underneath it to end the sell off as it did last week.  This outcome will have a big effect on the market.
  • Chart 4 AAPL:  we see that the red 5 crossed down thru its gold 324 at the open which immediately drew two downgrades from bull-side AAPL analysts.
  • Chart 5 & 6 AAPL:  the day and week candles, we see that both are back down to the lower bollinger.
  • Chart 8 AAPL:  showing its Day 432 EMA line.  
The really important charts tonight are 4 & 8.  In chart 4 the Day 5/324 EMA juncture is the strongest reversal point in technical analysis and when it is lost as it was today many people bail on the stock.  Wall Street does keep a backup line to give themselves a second chance to turn the stock back up when there were just too many sellers at the 5/324 juncture.  This backup net is a single line, the Day 432 EMA that is shown in blue in chart 8.

Note that back on 11/16 the 432 safety net caught the bottom tick and reversed AAPL back up and the entire market.  The invisible net is there but it requires commitment across Wall Street for it to hold.  Monday morning we will find out if Wall Street commits to it or if they themselves are bailing on AAPL.

Alan

Thursday, December 13, 2012

All About AAPL Tomorrow

Stock Market Technical Analysis Blog

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The stock market had a slow motion meltdown today as everyone was in AAPL watch mode.  Chart 4 above is the only thing that means anything in that tomorrow AAPL's 5 either crosses down thru its 324 or starts to show lift.  Whichever way AAPL goes the next few trading days, the broad market is not likely to be far behind.

Alan

Wednesday, December 12, 2012

Neutral Market Close

Stock Market Technical Analysis Blog

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The biggest thing in the market today was Bernanke's ramping up of QE3 with increased visibility.  The market's first reaction was positive and it rallied but after further analysis the sentiment developed that the only reason that Bernanke would have gone a step further in the free money program is that he knows we may be heading into a recession the first half of next year.  Stocks pulled back to pretty much neutral into the close.

Looking at the charts above:

  • Nasdaq, Chart 1:  I applied longer term channels to get a bigger view.  It shows the resistance the Nasdaq has had the past couple of days but also note we closed with a hammer candle being supported by the center line of the horizontal channel.  
  • VIX, Chart 2:  Also closed neutral, it may drop back into the stock friendly channel at the open or it could start the move back to the high channel.
  • VIX, Chart 3:  The large EMA pushdown was a little overdone yesterday causing the VIX to pull back up some today but no indication for tomorrow. 
  • AAPL, Chart 4:  Following up from last night's discussion of the day 5/324 setup they are constructing, today's sag in AAPL helped the 5 EMA line continue to construct a dish pattern of the line itself which is what technicians want because it implies a sustainable upward move but beware that when the 5/324 are compressed it would not take much bad news premarket to start the tip of the 5 down through the 324 which would trigger big sell programs.  If AAPL starts gradually rising tomorrow and a little more the next day then the dish will complete and AAPL will have its double bottom in to go higher thereby pulling the market up with it.  This will be a close one.
Alan

Tuesday, December 11, 2012

We Have Lift

Stock Market Technical Analysis Blog

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In the last thirty minutes before the bell yesterday I tweeted that a strong setup on the Advance Decline had developed and today we saw the results of it with a big move up in the market.
  • Chart 1 - Nasdaq:  big move up today and established new uphill channel
  • Chart 2 - VIX:  dropped down into the stock friendly lower channel at the open today 
  • Chart 3 - VIX:  the large EMA pushdown continues to send the VIX lower
  • Chart 4 - AAPL:  I was hoping for a large drop and reversal back up today to produce hammer candles on the week and day plus to get the  pinpoint 5/324 retest bounce.  They instead decided to just go ahead and launch the move at the open and rely upon the bullish double prong price pattern that completed prior to today as the accompanying driver.  This is also a strong setup just not quite as strong as twin time view hammers.  There is an advantage to this approach in that it causes the 5 EMA line to approach the 324 at a gradual angle which causes a more sustainable rally in the long run but not the multiday explosion like back on the Nov. 16th   5/324 bounce.  If they let tomorrow basically be a sideways day then they will have themselves positioned to construct a dish pattern in the 5 EMA line itself which typically produces a much longer run than the 11/16 rally especially if the bottom of the dish curve makes pinpoint contact with the 324 which could happen tomorrow or maybe more likely the next day.  A dish pattern in a small moving average implies a smooth gradual transition from mostly sellers to balanced buying and selling then to mostly buyers.  After they have completed construction of this 5/324 double bottom setup they will have a much stronger hand in moving this market higher.
Alan

Monday, December 10, 2012

Broad Market Continues to Improve

Stock Market Technical Analysis Blog


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In the stock market today we saw another day of slight improvement in the technicals that were shown in last night's blog.  Tonight I would like to focus on the Nasdaq, VIX, and AAPL.  

  • Nasdaq Chart 1:  We see that we are starting to shift to a slightly uphill channel over the past few days.
  • VIX Chart 2:  We see the continual decline of the VIX as it is getting closer to the lower stock market friendly channel.
  • VIX Chart 3:  I've applied two fairly large key EMAs showing that a red / green pushdown situation has developed which is bullish for stocks.
  • AAPL Chart 4:  Back on the 16th we saw a huge purge as AAPL's red 5 EMA caught and bounced from its gold 324 EMA line.  They are obviously trying to work the same setup again for a 324 double bottom.  On Nov 16th we kicked off a huge multiday move from this setup but to have the play happen again we have to get a hammer candle on both the day - chart 5 and the week - chart 6.  Today's candle on the day and week are both spinning tops.  In order to produce a bull reversal hammer on both the week and the day they have to let the price bar drop well below the 324 line right as the 5 comes into contact with it then in the afternoon of the same day bring it all the way up to slightly above its opening price so that they produce a day and week reversal hammer candles without letting the 5 slip below the 324 EMA.   The first time back on the 16th it was free money on a stick, this time though AAPL has the pressure of a 50 / 108 pushdown and also the weekly sentiment EMAs in a pushdown as I showed on the 12/5 blog.   If they can pull this off a second time with AAPL under new pressure they will have the winds at their back for a Santa rally.  The bears are going to be on their toes this second time, they really don't want to see AAPL successfully complete a 5/324 double bottom setup.  The bulls could try to make it happen tomorrow or it could be the next day.  It is important for AAPL's chart that this happens, if they can't pull it off AAPL could suffer a day 5/324 downcross which will be a huge Xmas present for the bears.


Alan

Sunday, December 9, 2012

Broad Market Improving

Stock Market Technical Analysis Blog

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In the broad markets we saw a slight improvement Thursday and considerable improvement in the technicals on Friday.  In the charts above in the top row the S&P 500 is beginning a red 5/ pink 50 EMA lift.  In the DOW (top center chart) we see it beginning a pink 50/ rose 108 EMA lift.  The XLF in the top row third chart, we see it in the third day of a red 5/ pink 50 EMA lift.  Looking at the two lower charts, the Nasdaq is having trouble underneath the pancaked pink 50 and rose 108 EMA lines while AAPL is struggling to hang on to its gold 324 EMA after a major rescue of losing the line on Thursday.

As long as APPL's 5 EMA doesn't slip through its gold 324 EMA line it can continue to hold in this area without problems.  The Nasdaq, however, desperately needs AAPL to firm up support at its 324 and start rising from it while the Nasdaq red 5 is still close enough to the pancaked pink 50/ rose 108 to jump back above it from an AAPL short squeeze.  If all five charts get in sync from another rescue play on AAPL we are likely to see the Santa rally begin.  If AAPL loses its 324 line convincingly then the Nasdaq will be in real trouble as a pink 50/ rose 108 pushdown will begin for it.  This could produce a rare market divergence where the S&P and DOW and XLF are all on solid ground, climbing higher and the Nasdaq and AAPL are going down the chute.  Very little market history on how that would turn out if it continues.

Alan

Thursday, December 6, 2012

AAPL RESCUE

Stock Market Technical Analysis Blog


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In the premarket trading today, AAPL slipped through its Day 324 EMA line shown in the left chart above.  Shortly after the open this morning AAPL dropped down to $519 where I immediately tweeted that if they did not step in and rescue AAPL,  its decline would have only just begun.  About ten minutes later they did step in and ran AAPL up $35 over the next hour from $519 to $553.  The AAPL 555  Calls were $3 when I tweeted how the rescue must happen here in the chart and they were at $12.35 approximately an hour later when AAPL was $35 higher for a 400% plus option gain.  While I had to leave my computer for the day shortly after my tweet, hopefully some of my followers caught the play.

Alan

Wednesday, December 5, 2012

AAPL

Stock Market Technical Analysis Blog


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I am skipping over the broad market again tonight as today as it was another day of propping, a little more successful than yesterday. 

Last night I sent SMV OptionAlert subscribers another Day 50/108 option play of the same setup as yesterday's NFLX winner, but today it was a Pushdown 50/108 on AAPL, shown in chart 1.

After the open AAPL 540 Puts were priced at 0.46 for the entry and closed at 8.80 at the bell today for over 1500% intraday gain.  Just as soon as the 50/108 pushdown began this morning we had a second major bearish setup begin, the weekly SMV Sentiment EMAs pushdown shown in chart 2 which I have focused on many times in recent months.  

The combination of the two SMV alerted signals took AAPL down $37 as is shown in the intraday chart 3 and caused AAPL to drop through its Weekly 50 ema line shown in chart 4.

The stock market media suggested AAPL's drop today was from announcement of increased margin requirements.  The reality is that margin requirements were raised because of the peril that AAPL is now in from the double pushdown set up that began today 


Alan


Tuesday, December 4, 2012

NFLX

Stock Market Technical Analysis Blog



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In the market today we continued the back and forth grind of a heavy market being propped up diligently as shown in the lower chart cluster.  

Rather than rehash more of the same tonight I would like to focus on today's NFLX play.  Last night I emailed SMVOptionAlert subscribers of the Day 50 EMA / 108 EMA pancake setup that was ready for the pinpoint price bounce play.  After today's open the NFLX 85 Calls were in the $0.30 range and closed this afternoon at $3.40, over a 1,000% gain intraday.  

MarketWatch posted that it was because of NFLX getting exclusive rights on Disney movies but the charts told us that the play was today and the news was cut and pasted onto it.  The agreement may have been made days or weeks ago.  

I also have a green mark on the NFLX chart back on 10/31 where on that date it crossed above its 108 EMA for an option gain that dwarfed today's gain.  The stock news media on that day cut and pasted the news that Carl Icahn had bought a 10% stake recently as the reason for that move.  

The big plays are from the technical analysis.  The news, good or bad, is prepared and ready to be released when the technical analysis says the play is here.  Both 108 line interactions were free money on a stick on NFLX.

Alan

Monday, December 3, 2012

Bearish Market Close

Stock Market Technical Analysis Blog


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This morning at the open we did get our move up in the stock market with the Nasdaq actually hitting its top channel line right at the open.  This quick move was not liked by the market because nearly all gaps and quick opening moves have been sold down hard recently.

Looking at the charts 1-3 above we see that the SPY, QQQ, and the XLF all crossed above their restraining 50 day SMAs this morning but as the market pulled back through midday they all 3 slipped back below, a substantial technical failure.  What caused the selling to continue thru the day can be seen in chart five of the VIX where immediately after the open the VIX reversed and took off toward the higher blue line channel which has been very stock market unfriendly.  

Toward the closing we had two bearish events, the first being that the bullish ascending wedge pattern they have been building on the 120 minute chart of AAPL, shown in chart six which actually tried to break upwards at the open but pulled back is dangling on the verge of failure as it approached the very point of the wedge at closing.  Whichever direction that AAPL goes at the open tomorrow will be crucial.

Lastly, in chart seven we see that the VIX crossed back above its 50 day SMA in the late afternoon, an unfriendly place for stocks also.    Barring a 4am intervention which I will show tomorrow night if they happen to do it,   caution should be taken here.  

Alan

Friday, November 30, 2012

It's Not Pretty But They Are Keeping Market From Selling

Stock Market Technical Analysis Blog

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Today the market was sideways as an incredibly powerful support was put under the stock market. We may have to just never mind the fact that they hopped over the last four barriers as today's show of force in not letting this market drop was actually quite impressive.  Their biggest problem in getting this market higher before the fiscal cliff deadline is the 50-day simple moving average that has been resistance on the SPY for two days, resistance for XLF for four days, and became resistance for the QQQ yesterday, as shown in the three left side charts above.  

On the right side charts above, Nasdaq & VIX, we can see the extremely tight tractor program they have had on the market since Monday 11/19.  Keeping the market contained this tightly improves their ability to keep a flash crash from happening over fear of the fiscal cliff but it makes it quite difficult for successful two to four day swing trades as fewer and fewer traders are willing to hold overnight.

Nonetheless, looking at the VIX chart if their tractor program continues to hold then Monday should be an up day if the VIX pushes down from the green line.  The problem is that the VIX will likely be down to the red sell line by the end of the day.  They just might keep tightening the range to get an even firmer grip on the market as the fiscal cliff approaches.

Alan

Thursday, November 29, 2012

Really?

Stock Market Technical Analysis Blog


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At first look you can see from the charts in the background that we got above the four barriers and actually came down to the barrier line and came back up from it.  

Friends, there is nothing real about this.  For starters PPT came in at 3AM and opened the first trade on the SPY at nearly $1 higher than yesterday's after hours close, come 830AM the third quarter GDP numbers were released with a ridiculous revision higher and the media claimed through the morning hours that this was the reason for the market's higher open when in reality the market was opened at that number five hours earlier.  Everyone knows that all gaps need to be filled and crossing a barrier line needs to retested.  At first glance the chart pasted over last night's cluster above shows a successful midday retest of the barrier line from the topside but that is not what happened.  The sudden move down to the barrier line was because of a three minute $1 dive in the SPY from Boehner's comments on CNBC.  The drop was sudden and caused a rubberband effect to pull it back up as always happens on these knee jerk market tanks happening in minutes.  That doesn't count as a retest, it was a fluke and now the SPY needs to trade steadily down to that line, stabilize, and push up from it to make it a successful and genuine confirmation.

If this is all we are going to get, this convoluted mess that was served up today then I just cannot turn bullish until I see something more genuine.  I may miss out on a rally tomorrow but I believe that if enough people saw what actually happened today instead of the illusion they were trying to create this market might just tank tomorrow instead.  It's not that I am bearish or trying to be bearish, it's just the fact that this is simply not how it works.

Alan

Wednesday, November 28, 2012

SPY Almost Across Quadruple Barrier

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In the stock market today we saw a serious tank at the open.  The PPT came in and executed a rescue as they have been working behind the scenes since fifteen minutes after the opening bell on Monday when they sent out their two trademark one million share block buys on the SPY at a full dollar above that moment's price (I tweeted their marker at that time).  While they have had mixed success through the past few months, today they had no trouble in bringing the market back up to close near its high of the day and just barely crossing above two of the four barriers I discussed in last night's blog.

Taking a look a those four barriers shown in charts 1-4 above:

  • Chart 1: SPY closed about $0.15 above its pink 50 day EMA line
  • Chart 2: they failed though to take it above the center basis line of the weekly Bollinger band
  • Chart 3: it peaked a few cents above the 50% Fibonacci but then retreated and closed right at it again
  • Chart 4: we see it breaking clear of the upper channel line primarily because it is a descending line but still a few cents above the high of the past few days
Out of the four barriers, two are crossed, one is neutral and one is still resistance.  It won't take much upward movement tomorrow to move up across the weekly basis line and 50% Fibonacci if they just refuse to let up.

Looking at the lower three charts we see that today's rescue of the XLF prevented a blue 20, pink 50 downward line cross.  In chart 6, after a huge move in the VIX this morning it fell so much into the bell that we now have the tiniest point of the red trying to show underneath the green which if it becomes fully visible tomorrow below the green it will put the bulls back in business.  In chart 7 we see the 120 minute UUP where we had a big spike at the open this morning taking it back up into the steep uphill red channel but with today's market rescue it actually closed barely down inside the horizontal black channel.

If they can just keep this going the bulls will be back fully in charge by Friday morning.  IF is the key word, I don't know how many times over the past few years I have called out a PPT entry and watched them take it to the threshold of having the bulls back in control but then the next day they totally drop the ball and it falls apart and the bears come back in for a week.  Considering that many people believe we are actually going to go over the fiscal cliff because it is not possible to get a deal by then, you just have to believe that the PPT will continue to drive the market as high as they possibly can into year end knowing that the market could get a 10% haircut in one day if we actually do go over the cliff.

As I mentioned last night, crossing above a barrier or multiple barriers is not confirmed until the price falls back and tests the line to be sure that the line switched from resistance to support when we crossed it and then pushes back up from the line in a classic retest.  My gut feeling is that if they successfully clear all four barriers tomorrow they might not risk letting the price fall back and confirm the crossed line as support just in case it slips back through with a bear attack at the key moment.  The safer play will be to cross all four and then turn on one fierce short squeeze and never look back.   We will have to see.

Alan

Tuesday, November 27, 2012

Red Flag for the Bulls

Stock Market Technical Analysis Blog


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Forty-five minutes into the trading day on Friday 11/16, I called out the price bar / 324 EMA line pinpoint bounce buy signal on the SPY on my Twitter feed.  I also called out the 5 / 324 EMA pinpoint buy signal on AAPL.  At that time AAPL was at $520.

This morning when AAPL reached $590 I tweeted the exit for a $70 / 12% gain on AAPL in a week and a half and also closed out my SPY position for a nice gain.  When I called out the entries on 11/16 I went from being neutral to 100% bullish at those two pinpoint bounces on AAPL & SPY.  Today I tweeted my stance from bullish to neutral and also posted an early morning blog to mark it.

Looking at the charts above I would like to explain why I made such an extreme move so quickly this morning.
  • In chart one the SPY failed for the third day to cross above the pink 50 day EMA line and hold it finishing the day printing a bearish candle.  
  • The reason why SPY failed yesterday and today can be seen in chart two, the weekly Bollinger and where we see that this morning's early morning high touched the center basis line and quickly pulled back even though it crossed its day 50 EMA getting up to it.  This marks the weekly Bollinger basis line as being resistance for the SPY until it breaks through it.  
  • Looking at chart three, the SPY also failed at the 50% Fibonacci where it stopped at on Friday.  This marks the 50% Fibonacci as another major resistance at the exact level as the weekly basis line in chart two.  
  • Chart four also shows that at the same time and numerical level, the SPY attempted to break out of its two month downhill channel and failed there marking it also as resistance.
This morning when I saw the SPY being stopped cold because of hitting all four barriers in almost exactly the same moment it was a red flag for this rally.  Personally, I was hoping we could convincingly cross above the 50 EMA line in chart one today which would have pulled us above the center basis line in chart two, the 50%  Fibonacci in chart 3, and the upper channel line in chart four.  Instead they are four barriers to the SPY and they are all four at the same price level which would make all four considerably more difficult to break up through.  I mentioned in my early morning tweet that I would reenter on the long side after a new daily setup has developed primarily seeing the SPY cross through all four of these synchronized barriers and then setting back down on top of them to test the cross and then bush them back up from those barriers for confirmation.  Until that happens I am remaining neutral, the risk is just too high until that is accomplished.

Looking now at the bottom row of charts above to see what damaged was caused:
  • Chart five:  a candle breakdown  setup is now showing on the XLF, which was the designated breakout leader. 
  • Chart six:  the VIX, I've applied two large EMAs that trigger meaningful moves in any symbol.  It can be seen that two lines are at a perfect pinpoint merge.  If the smaller red EMA starts emerging topside of the green EMA in the next few days the bulls will be in big trouble.
  • Chart seven:  the turn back up in the UUP that was caused by the market interpreting the Greece deal as nothing more than a paper over mirage with the ridiculous extension in terms which caused the UUP to jump up out of the horizontal channel this morning and spent the day building a small ascending wedge threatening to jump again on up into the steep red channel which has wreaked havoc on the stock market.  
We may have several days of back and forth fist fighting between the bulls and bears here.

Alan

Tuesday, Market Open

I have gone from Bullish to Neutral 45 minutes into the trading today.  The market really doesn't like the implications of the Greece deal.   UUP dollar index is running higher quickly.   Major profit taking in AAPL.

I need to see a new Daily chart set up to build on the indexes before I can become bullish again.  This may not last any longer than a few hours but the key to keeping your gains is to act quickly at the first sign of trouble. You can always go back in at a lower number if the situation resolves itself quickly.

Alan

Monday, November 26, 2012

Monday Evening Part 2

Stock Market Technical Analysis Blog


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This evening I am starting a new cluster of daily bars charts called "Charts of Interest".  Normally I will have the symbols where the line interaction has already started the stock moving placed toward the bottom of the cluster and the symbols in which a new move could start any day towards the top of the cluster 

 Today we saw TIF and EBAY starting the lift.

 RIMM is looking overextended.

Note the top row is all big financials getting ready

My regular Monday blog is below

Alan

The Bulls, Day 5

Stock Market Technical Analysis Blog


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In the market today we had the classic digestion day of Friday's huge gains, with the markets closing mixed between the indexes.  There were two real stories behind the market today, the first was AAPL which ran up $18 today as shown in the top left thirty-minute bars chart.  The reason for this run in AAPL can be seen in the daily bars chart of AAPL just below the thirty-minute bars chart. By Friday noon there was a visible ascending wedge pattern shown with the two red marks.  Many people missed this bullish pattern because there was no bar for Thanksgiving Day, nonetheless, it is a powerful launching pattern for a big move up and today that is exactly what happened in AAPL.

The second reason the market held tight and didn't sell off today can be seen in the large 120-minute bars chart of the UUP shown at top right.  In that chart you can see that on Friday we fell out of the UUP's steep uphill channel.  Today it came back up and did the classic retest of the horizontal channel line and was pushed back down from it in the last hour.  A very bullish sign for stocks.

Another bullish development can be seen in the bottom left corner chart of the top cluster, the daily of the XLF (large Financials ETF).  In that chart we can see that with today's close we had the blue 20 starting to lift from the pink 50 and today's candle is a bullish hammer retest of the topside of both lines.

Looking at the lower cluster we see the continually rising market since the pivot to the bull side I called out Friday a week ago in the 11/16 blog.

All in all, we still look good for continuing to move higher.

Alan

Friday, November 23, 2012

The Bulls, Day 4

Just a quick holiday post tonight.  The entire stock market was up over 1% today, closing at its high,  as the Nasdaq crossed above both its Week and Day 50 ema lines today.

AAPL also crossed above its Week and Day 50 ema lines today.

Also notable, the XLF, the big financials etf crossed above its Day 20 and 50 EMAs today.

 SPY also crossed above its Day 20 and 50 EMA lines today

Additionally the VIX finally dropped out of the steep ascension channel it has been in for 10 weeks

Also, the SPY got well back up into its uphill 3 year mother channel and closed at its high of the day, after having fallen out of the channel 3 weeks ago

 A good weekend to all,
Alan

Wednesday, November 21, 2012

The Bulls, Day 3

Stock Market Technical Analysis Blog


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The markets were slightly up today on extremely low volume which was no surprise.  Tonight I would like to take a step back and look at the Nasdaq, AAPL, QQQ, and the Dow Weekly bars charts with the red 5 and pink 50 EMA lines applied.  

The 5/50 EMA line bounce is the most prized setup in technical analysis.  When you have the 5 line being turned up by the 50 line on the Weekly bars chart it's typical to expect six to twelve weeks of upward movement.  Looking at the current Weekly bar on each we can see that since last Friday night they have turned the red 5 EMA line sideways on the topside of the 50 EMA line on all four, Nasdaq, QQQ, AAPL, and the Dow.  

If the current rally continues through the end of next week we will start seeing the 5 begin rising from the 50 on all four and the buy programs that will be triggered in small capital firms, hedge funds, and all big Wall Street Firms will be a bullish force that will put anyone still short this market into a world of pain.

Alan

P.S.  Happy Thanksgiving to All

Tuesday, November 20, 2012

The Bulls, Day 2

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Today in the markets we had the classic consolidation day, always a necessary counterpart to follow such an explosive day as Monday.  While today's volume was the lowest of the past five days on the SPY, a stair stepping down volume is the norm for Thanksgiving week.  The stock market had a bit of a drop during Bernanke's speech as he emphasized that if we go over the fiscal cliff there is nothing the Fed can do to help the economy in that situation, insisting that Washington must tend to business on this.  After the speech into the final hour, the intraday technicals on the SPY and Nasdaq and AAPL recovered completely and closed bullish on the intraday technicals.

I would rather this rally have taken place next week so that the true volume participation would have been visible to all but after six weeks of synchronized construction on all the indexes we had total completion Friday morning so the time was here and the bulls took off and ran with it from the first tick yesterday morning.  Wednesday and Friday's activity will be holiday low volume skewed so much that we really can't start scrutinizing the rally again until Monday.  Nonetheless, the ultralight volume days favor upside movement on stocks and downside movement on VIX.

Alan

Monday, November 19, 2012

Out of the Ballpark on the First Pitch

Stock Market Technical Analysis Blog


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Following up on Friday's blog where I explained that this week would be the bull's turn to see what they could do with the market, this morning they immediately stepped up to the plate without hesitation and drove the DOW up 208, Nasdaq up 63, S&P 500 up 27, and AAPL up $38.  The upper chart above is a repost of Friday night's charts but includes today's trading showing the silver platter setup prepared for the bulls as I discussed in detail Friday.

With such a major move up in one day it is time to look at the triple index market direction cluster shown in the lower charts where we see the minute changes in the red and green EMAs on each of the three.  Looking first at the top row chart, the VIX, we can see that from the closeup window to the right of the six-year chart with the opening of today's weekly bar that it is finally showing air space between the red and green lines which if it continues would mean we have a multi-week rally ahead of us for stocks.  Realize that it is only showing now as the new weekly bar has opened.  The catch is it is not considered a firm indication until the current weekly bar closes on Friday.  Between now and then a lot of bearish things could happen such as the after hours Moody's downgrade of France today which will no doubt have the market facing at least some headwinds tomorrow.  Nonetheless, the VIX, the most important of the three is giving preliminary indications that a multi-week stock market rally is around the corner.  We will look at it again next Monday night after the current weekly bar closes and prints to get confirmation.

In the middle row, the Nasdaq, looking at the small focus window to the right of the six-year chart we see that the red and green EMAs are still merged in the neutral position on it but if the market continues to climb through next week it will be setup nicely for the red to start showing topside of the green.

To get a better look at today's rally we need to also look at the sentiment EMAs on the weekly bars of the SPY which is shown in the center chart on the right side.  In it we can see that if they can keep the market moving even slightly upward through next week we will have the buy signal on the SPY for a multi-week hold which would help the larger Nasdaq index to start a topside lift.  It's just that right now the big caps in the SPY are doing all the lifting today and the breadth of stocks in the Nasdaq index will have to follow.

Looking at the bottom row chart, the TLT (Bonds Index), we see the over-extension its price bars reached with last week's bar as it started lifting two weeks ahead of the anticipated opposite move in the Nasdaq as they trade inversely.  The bonds are simply the place of refuge when the stocks are in a serious fall and thus have become over time the alternate trade for those that flip between stocks and bonds.  The situation of the TLT starting a move early ahead of the Nasdaq is a fluke divergence caused by the fear of the looming fiscal cliff in the market.  The early birds into the TLT were not actually bonds/stocks flippers believing that the bonds were going to be next to go up and the stocks next to go down.  In reality, the early bond move was caused by investors panicking completely out of stock investing and parking their money in bonds with the intention of not pulling it out until they feel like the economic backdrop of the fiscal cliff, tax rates, and imploding euro zone has reached some resolve whenever that might be.

Of the three indexes, a new market direction is determined when we have confirmation on two of the three which obviously will be the top row VIX and center row stocks when we see how this week's bar prints and certainly a confirmation by the end of next week's weekly bar.

All in all, today's rally was a huge first move now that the bulls finally got their turn but two items will be giving investors pause tonight.  The first is being the fact that today's SPY volume is actually by far the lowest of the past four days as shown in the bottom right chart.  The litmus test to see if the rally is just a short squeeze pop or if it is something that can sprout legs and cause a sustained market move is typically indicated by the volume of the first big move up day.  Today's volume should have been on up there with Friday's volume but it wasn't and that is a substantial red flag as far as sustainability of this rally.  The second item which may be less of a concern is the after hours Moody's downgrade of France, we will need to see how much euro zone fear this new development brings back to the surface.  Also something to remember, Bernanke will be on the tube midday tomorrow with a speech.  Nonetheless, a great first day anyway from the setup I called out in Friday's blog.


Alan

Friday, November 16, 2012

Next Week At Bat...The Bulls

Stock Market Technical Analysis Blog


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There is getting things on a silver platter and then there is the current setup that was completed and offered to the bulls today.
  • In the charts above, left column, we have the day 5 and 324 EMA lines showing QQQ and AAPL having the perfect pinpoint contact reversal and SPY having a price pinpoint bounce on the 324.
  • In the second column, we have the weekly candles of SPY, QQQ, and AAPL with the SPY and QQQ having modest reversal candles at the classic forced curb bounce setup and AAPL having its reversal candle deep into its bollinger band.
  • In column three, the daily candles of the SPY, QQQ, and AAPL we see that all three had nice bull hammer candles today, also at the lower bollinger and in an oversold condition on AAPL.
  • In column four, the SPY, QQQ, and AAPL are all 3 reversing at their 62% Fibonacci retracement levels...the Wall Street favorite.  
Putting it all together, the bulls will be at bat next week instead of the bears.  If they can't get at least a few base hits they'd better pack their bags and go home......it doesn't get any better than this for them.


Alan

Thursday, November 15, 2012

Two-Year Trendline Charts of Indexes & Key Symbols

Stock Market Technical Analysis Blog



Notable are QQQ and AAPL,  both having line interactions today.

Alan                                   Click on images to enlarge














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