Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Thursday, May 31, 2012

Premarket PMI Smackdown 5/31/12

Stock Market Technical Analysis

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This morning we had another premarket smackdown but this time it was because of a huge drop in the Chicago PMI Index, a benchmark indicator for the broad economy.  This morning's reading was 52.7 down from 56.2 last month.  The last time we had a reading in the 52 area was back in the fall of 2008 when the economy had just fallen off a cliff.  Nonetheless, WallStreet is still defending the lower line of its three year brown line mother channel, shown in the bottom left corner chart, which really should be considered a noteworthy feat in lieu of the implications of the PMI drop.  Something interesting today, the UUP really didn't close much higher than yesterday's close which has got to be some sort of relief for the bulls and also on the positive side AAPL continues its climb as shown in the bottom right chart.  Also, the VXX (VIX Futures) pulled way back down from its early morning high today.  Tomorrow premarket we will have the Friday job numbers  and if they are bad we may have yet another premarket smackdown.

Alan

Wednesday, May 30, 2012

Premarket Euro Zone News Smackdown 5/30/12

Stock Market Technical Analysis

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Premarket this morning there was a market smackdown from the bad news coming out of the euro zone as the world is learning that the deterioration is happening more quickly.  As WallStreet having sent in across the board entry markers for all the mega cap stocks yesterday, they awoke this morning to a nasty slap in the face which I know breaks the hearts of most traders out there (lol).  Nonetheless, I checked every mega cap stock that had entry markers yesterday and there was a long list of them and found that there were no reversal exits in any of them.  AAPL continues to build steam from last Wednesday's entry date.   Worth noting is that the PPT sent through three million plus blocks at $1.50 above the current trading price on the SPY during the last hour of trading today.  Normally when they decide to take action they will send these markers through after the bell.  One has to assume they are really trying to emphasize to as many people as possible that they are determined to keep this rally from failing.

In the four charts tonight, the 30 minute bars chart of the UUP gapped up at today's open and climbed throughout the day but never actually got above the lower line of the red channel.  To make things worse we now have a confirmed shadow channel shown with the pink line that will now have to be breached in order for the market sell off to truly end.

In the bottom left corner, the daily chart of the S&P 500 with today's bar we fell back down out of the three year brown line mother channel but climbed back up some late in the day to close virtually right at the brown line. 

On the right side top chart, the daily VIX Futures and the bottom chart is AAPL, both are powerful inversely traded forces that are both showing a lift upward at the same time which indicates the rising tensions on the market as they try to make this rally go in spite of the rapidly deteriorating euro zone.  With the PPT sending through its intention markers during market hours there will be a lot of anticipation with what they can do with the market tomorrow and the cards will be in their favor as the advance decline went out at the floor, -4421. 

The market could have a powerful break in one direction or the other soon as there are two week wide triangles showing on the sixty minute charts of the VIX and VXX now and they look poised to break upward which would sink the market if they do.  Which is obviously why they are putting a full court press on AAPL right now and WallStreet is showing its intentions with its entry markers and the PPT took the cloak off today and sent their intention markers through before closing so that everyone could see them.  We could see big moves in both directions before this is resolved. 

Alan

Tuesday, May 29, 2012

Heads Up...WallStreet Went In Big Today 5/29/12

Stock Market Technical Analysis

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Before we look at the three charts above I want to mention that whenever WallStreet as a group decides they are ready to reverse a downtrend and take the market up for a while they have a long history of signaling this with large "twin" block trades at the same hour of the same day on all the megastocks.  This happened in the last few minutes of trading today, below is a list of just a few of the long side institutional entry markers:

Two  INTC  1.3 million blocks
Two MSFT 1.1 million blocks
Two AMZN 109k blocks
Two AAPL 186k blocks
Two GOOG 171k blocks
Two XLF 105k blocks

In addition, the SPY had four blocks sent through together that are always sent through in these amounts exactly and are always back to back right before they take the market on an up leg for a while.  These four marker trades are 4.74m, 2.5m, 500k, and 500k.  Who knows what the reason is for the odd amounts but they have been a superb marker for when WallStreet has decided they are going to take the market up for a while. 

Taking a look at the charts above, it is easy to see why Wall Street intends on moving the market up here.  In the top chart the thirty minute bars chart of the UUP (Dollar Index), we see that with today's opening we gapped down a little but because of the technical anomaly of having a holiday blank space in the chart it shows us the gap down also took us down well inside the blue channel.  Traders instantly sold the market and the UUP shot back up to back above the blue channel as traders do not consider a sideways move in a chart because of the holiday a valid double channel failure.  On through mid day the UUP traded sideways on top of the blue channel until late in the day when it traded down into it not gapping down nor appearing down in it because of the blank space of a holiday trading day off.  We could easily see a week or more of upward movement in the market if the UUP travels down towards the lower line of its blue channel.  If that occurs, possibly 4-6 days out, the market should pause again as that will be a major decision point for WallStreet, hedgefund traders, and the broad trading community as we stop to decide if the UUP is truly going to drop down into the horizontal brown channel.  It will be interesting to see what happens when we get to that juncture.  If the UUP fails to drop down into the brown channel, we could have another down wave in the market later next week if the UUP tries to climb back to the top of its upper blue channel line again. 

In the bottom left chart, the daily bars chart of the S&P 500 regained its three year brown line mother channel today after spending a week and a half building an ascending triangle pattern. 

In the bottom right chart, the daily bars chart of AAPL we see a high quality day 5/10 layup powering up through the blue 20 and pink 50 EMA lines, a point where WallStreet goes in big on any stock.

While we will still be vulnerable to premarket smack downs from bad euro zone news and WallStreet has had market pushes where they have not been able to pull it off and ended up aborting, it is a most noteworthy situation to finally see them going into the market after letting it fall almost continuously for nearly a month with no real attempts to turn it around until now.

Alan

Thursday, May 24, 2012

5/24/12 Dollar Continues To Rule

Stock Market Technical Analysis


Click on above image to enlarge

In last night's discussion of the markets, I emphasized how critical it was for the UUP (Dollar Index) to fall out of its uphill red channel that is shown in the top left chart and how traders would exit their new longs quickly if we stayed in or returned to that red channel.  The two large charts above are intraday charts showing 15 min bars of the UUP and below it 15 min bars of AAPL.  Looking at AAPL you can see how it climbed up into its last 15 min bar yesterday as the UUP came down and closed down on its lower red line in its last 15 min bar yesterday.  With today's opening 15 min bar you can see that the UUP actually did drop down out of the red channel for 15 minutes allowing for AAPL to gap up in its first 15 min bar but in the next bar the UUP turns and shoots back up into its red channel and you see an immediate drop in AAPL as it falls $10 over the next thirty minutes.  Things were improving for the markets as the UUP started drifting down in its fourth 15 min bar and drifted on back down out of the red channel allowing AAPL to climb from 565 back up to 572 but as you can see in the charts, the UUP reversed a second time mid morning and started climbing back up into the red channel which caused a sudden drop in AAPL (also marked with corresponding red marks).   Throughout the rest of the day the UUP continued to climb higher in its red channel causing AAPL continued to trade lower.  

In the last three 15 min bars of the day, we can see that the UUP set down on top of the upper line of the blue channel which is passing through its red channel right now.  It appears poised to lift from there to threaten havoc on AAPL and the market again tomorrow but if you notice below that AAPL also climbed in its last 15 min bar but that has to be disregarded as intraday only shorters covered in the last fifteen minutes and that is typical to a stock that has been trading down all day to move up in the last fifteen minutes as intraday only shorters cover their positions before the close.

In the chart to the right, we see that as I mentioned last night, AAPL closed yesterday above its blue 20 and pink 50 and then we see the gap open higher this morning but with the sell down today it closed down below the 20 and 50 again.  Not a good thing but the bulls can take a little bit of comfort that the low of the day did not pierce through 5 or 10 lines. 

In summary, the market is still selling down because of the rising UUP.  The lower line of its uphill red channel is a very thin line where the market will flip from buying to selling or vice versa in just a few minutes time as it did twice today, shown in AAPL.  Until we see the UUP convincingly lose its red channel, the market will continue to be a very unfriendly place.   The emphasis is on "convincingly" as everyone can see how the UUP dropped out of the channel on the 21st drawing people back into the stock market and then gapped open the next morning and raced back into its red channel tanking the market.  Nothing means nothing on bullish stock setups until this UUP run is over and the UUP is being driven by the worsening euro zone situation.

Alan

Wednesday, May 23, 2012

5/23/12 The Bull Case For AAPL Now

Stock Market Technical Analysis

Click on above image to enlarge

First a few comments on the broad market, the markets continued their euro scare sell off through the morning today causing the red 5 EMA line to pierce down through the black 200 on the S&P 500 and NASDAQ charts shown on the left side, top and middle charts.  Shortly after mid-day there was a fierce push to rescue this and they drove the S&P and the Nasdaq all the way back up causing the tips of the red 5 EMA lines on the S&P and Nasdaq to return to their sideways bounce position as the chart now shows as of closing.  The reason for the eleventh hour push can be seen in the bottom chart on the left, the 60 minute bars chart of the UUP (Dollar Index).  Looking at its third bar back where the UUP hit resistance at the upper blue channel line was where the push began and its chart shows how the jam effort on the indexes pulled sellers into the UUP quickly.  In the last hour the institutional selling of the UUP was relentless.  We now have the S&P and the Nasdaq with a 5/200 bounce layup that is four bars wide, threatening a good move upward.  The whole picture would have been a little bit safer and conclusive if the UUP has actually fallen out of the red channel, instead it closed right at it at 22.70.  Nonetheless, with even the slightest market push up at the open the UUP should fall out of that channel and begin the path down to the lower blue line over the next 2-3 days.  Granted this is certainly not a done deal by any means and any bad euro zone news will reverse everything in a heartbeat.  As of today's closing though we might well be beginning a nice lift in the market. 


To further reinforce a bullish view of the markets we need to additionally consider where AAPL is at in its chart.  We all know that the market will not go anywhere without AAPL at least going along also, if not, taking the lead.  The three right side charts from top to bottom are the 120min, day, and week bars of AAPL.  In the bottom right corner chart, the weekly of AAPL, we see a 5/10 bounce and in addition it has price bar support from the blue 20 line.  In the middle chart on the right, daily of AAPL, you can that yesterday's bar opened above the blue 20 and pink 50 EMA lines but quickly lost it and sold well below both.  Today's bar crossed back above the 20 and 50 and closed above both, a very bullish setup.  In the top right chart, 120min of AAPL, we see how yesterday it regained the red channel but lost it and today it closed well up in it.  This is classic textbook layup setup for a nice bounce move on the backside of AAPL's peak.  If they can sufficiently muzzle the release of any bad euro zone news tomorrow and Friday, AAPL could easily build enough steam for a run back to 600.

All in all, everything is looking positive but realize if the UUP in the bottom left corner chart does not drop out of that red channel in the morning for whatever reason, traders who went in today will exit quickly.  Also if we have any bad euro zone news make its way to the news wires this market will hand your head back to you in a basket within minutes.

Alan

Tuesday, May 22, 2012

5/22/12 Summer Trading With Greece Looming

Stock Market Technical Analysis
 Click on above image to enlarge

At the open today, major indexes followed through nicely until midday where they turned sideways.  The NASDAQ, S&P 500, DOW, and QQQ all four had their price bars cross above the day 5 EMA in the morning and then pullback to set down on top of the day 5 EMA line at midday.  All was well until that point as that is the first rest point in a market push when the index price bars set down on the 5 EMA line and start trading sideways on it.  Late in the afternoon, the Greek Prime Minister issued a news release that they really are considering exiting the Euro and the entire stock market rolled over and dived into the bell.

The chart above is the 15 minute bars chart of the VXX (VIX Futures), you can see in the last hour when the euro comments hit the newswire there was a huge sudden spike in volatility with a corresponding market selloff.

As I mentioned in last night's blog, any bad news on the Euro will reverse any rally in its tracks and sure enough, we got it and the market went from nicely up to slightly in the red by the close.  Classic summer trading along with the euro mess...no wonder so many traders won't trust anything now.  Now we will be depending on WallStreet and/or the PPT to pick up the ball to get this thing going again or we will look back and this will be seen as a two day speed bump in the journey South.

Alan

Monday, May 21, 2012

5/21/12 Dressed Up Ready To Dance

Stock Market Technical Analysis

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The major indexes today had a synchronized structured bounce that would constitute a major bottom if we were not under the heavy cloud of the euro zone situation.  In the top left corner we have the weekly chart of the XLF (Financials ETF) showing a red weekly 5 bouncing up from the pink weekly 50 as the price bars are overextended enough for a snap back up.  This is a huge pivot point for the financials. 

In the second chart on the left, the weekly chart of the VIX, as last week ended the 5 closed up at the underside of the 50 line and was turned sideways trying to turn downward from today's big short squeeze.  If this 5/50 pushdown follows through it could mark the beginning of a major move up in the market, key word if.
In the bottom chart on the left, the weekly chart of the VXX (VIX Futures), we see an underside pushdown situation developing there also.  Another marker for a sustained rally if it follows through.
On the right side, the daily charts, the top chart S&P 500 is showing the obligatory 5/200 bounce beginning.  The second chart down the right, the daily QQQ shows the 5/150 bounce beginning.  The bottom chart, the daily AAPL shows the 5/100 bounce beginning.
Also noteworthy for the bulls, the QQQ had two 349.65k paired institutional entries after the bell along with one 2m share super low block at 60.87 nearly 1.50 under the current afterhours trading price, another institutional entry.  Afterhours, the SPY had a 6.28m block along with 3.71m block.
Not forgetting the UUP (Dollar Index) which got itself substantially overextended on the daily chart late last Thursday afternoon and is now looking very toppy.
Completely disregarding the euro zone situation that currently has its grip on the market, this structured bounce has all the bells and whistles of a very sustainable move up in the market but backing off to take in the reality of the euro mess which has put the vast majority of traders in a show-me state of mind not wanting to trust anything anymore this bounce point will be whatever they make it to be if they can.  We saw similar synchronized structured bounces last summer only to see everyone go in for two days, volume dry up, then everyone bail back out.  Most traders will remember last summer well and feel fortunate to just have survived it.  The sentiment is far too weak to bring in real, aggressive sustained buying day after day.  Have no doubts about it, today was one wicked short squeeze.  If WallStreet and PPT work together though they could definitely turn this into a sustainable rally but only if they continue to sponsor it everytime the volume starts to dry up. 
We will just have to see what they can do with it now that they have a starting point.  It should be quite tradeable but anyone looking more long term should monitor it closely on a day by day basis as the market can change entirely upon any bad euro zone news.
Alan

Thursday, May 17, 2012

5/17/12 Index Channel Failures

Stock Market Technical Analysis
Click on image above to enlarge

The markets had a really ugly day today as we had major channel failures on the Nasdaq, S&P, and Russell 2000.  Each of the channel failures can be seen in their respective charts above.  I also added a chart of AAPL as it is approaching the center line of one of its secondary channels. 

Alan


Wednesday, May 16, 2012

5/16/12 Gapped and Lost It

Stock Market Technical Analysis

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At the day's open the stock market gapped up modestly bouncing from the S&P's closing on its 150 EMA yesterday.  Shortly though, the selldown continued as two things happened in the charts that are shown above. 
 
 
In the top chart, the VXX (VIX Futures) crossed above the pink 50 Day EMA line and the UUP (Dollar Index) shown in the bottom chart rose up into its great bear channel shown with brown lines which is not a friendly place for the stock market.  If you look closely you can see that the UUP broke out of the horizontal pink line channel in the past two days also. 


We are clearly in bear territory now and the market sensitivity to the worsening euro situation is likely to increase as the days go by.  To make things worse, the PPT's attempt to cap the VIX run at its 50 week EMA line was breached this afternoon and the VIX closed above it.  The most glaring thing missing from the big picture here is the PPT not gapping the market up huge every few days even though it would likely come right back down as they did continuously last summer.  If we don't have a big gap up soon, no matter how cheesy or ridiculous the cut and paste reason is for it, trading programs could start to accelerate on the sell side.  They need to gap the market up at least 1% one morning and paste anything on it to break the downside momentum before it gets carried away. 

Alan


Tuesday, May 15, 2012

5/15/12 The VIX Pauses, UUP Runs

Stock Market Technical Analysis Blog
click on above image to enlarge

Following up from last night's blog, the PPT did indeed defend the VIX from closing above the weekly 50 EMA line today.  We briefly crossed it but dropped back to close underneath in the afternoon.  Considering that the UUP (Dollar Index shown in the three charts above) closed at its high of the day after rising at a runaway pace all day, the fact that the VIX did pull back from its high of day shows that the PPT did indeed have some success today.  If they can make the 50 EMA on the weekly VIX a cap then it should slow down the UUP or possibly bring it to a stop.
 
Looking at the top right chart showing the daily UUP we can see there is a trendline that was met at the close today on this UUP run.  This might also help to slow the UUP to a stop even though there isn't much good news on the euro zone situation which has been causing the Euro to continue to fall and the Dollar to rise and the US Stock Market  to sink.
 
 
Glancing around at a few key stocks, AAPL had a Day 10/50 EMA down cross today which caused it to fall out of the slightly uphill channel it has been trying to establish a base in the past week.  This channel originated in 2/25/12 to 3/15/12. 
 
 
The S&P closed at its 150 Day EMA today which might very well lend a couple of days of support as the 100 Day EMA did last week.  The VXX (short term VIX futures) closed today right at its Day 50 EMA which should tend to be a major pivot over the next couple of days.  If it doesn't get above the Day 50 EMA this week the fear in the market should start to subside.  If we do cross above it and close above it, the PPT will need to pull out their plan B that they used so heavily last summer and simply gap the stock market open huge to prevent the sell off from escalating.

Alan

Monday, May 14, 2012

5/14/12 VIX At the Threshold

Stock Market Technical Analysis Blog

Click on above image to enlarge

 The three charts I posted this evening are of the VIX Volatility Index.  The top left corner chart is weekly bars with four EMAs.  The top right chart is daily bars with the same four EMAs.  The bottom chart is a daily bars trendline chart. 

Starting with the top left chart, we see that the week before last the red EMA started lifting from the green as it did in late July last summer which followed through with a horrendous market sell off which is visible in that chart. 

In the daily set, top right corner, in the past two days the red also being pushed up by the green line EMA.  A troublesome combination for the stock market.

In the lower chart, an even more troubling situation as the VIX has completed an inverse head and shoulders formation shown with the three green sideways marks.  The heavy red line is the VIX 21 threshold which is widely known as the turnaround point for either another rally in the market or the point where the market could lose it, was crossed above today and closed at the high of the day 21.87.  Taken at face value this is a dangerous situation as the inverse head and shoulders is a powerful formation with this one scaling out to where it could easily propel the VIX up to the 30 area.  There is a hopeful situation in this obvious volatility breakout and that is that the VIX closed just shy of its weekly 50 EMA today (shown with the pink line in the upper left weekly bars chart).

This would be an appropriate place for the PPT to step in and give the market some help.  The problem is that over the past week and a half, the PPT has sent its after hours projection markers showing the level they want to take the market up to.  Both attempts however, have produced little more than simply keeping the market from developing any steam in intraday sell offs. 

After the close today, the PPT once more sent out its markers in the after hours charts but at this point a lot of traders will be in a show me state of mind after their last two attempts to help the market just didn't help much.  Nonetheless, the PPT needs to defend the 50 week EMA line but it will only be by their hands as the market sentiment has deteriorated tremendously over the past week and a half.  Actually it has deteriorated enough to no doubt bring in a lot of fresh shorts to the market and we all know how the PPT loves to put on a scorching short squeeze on the market right at the eleventh hour when serious trouble is imminent.  We will just have to see if they have the ability to do so with the market being weighed down so heavily by the euro zone situation right now.

Alan