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

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

SPY Almost Across Quadruple Barrier

Stock Market Technical Analysis Blog

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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

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 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

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

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

The Bulls, Day 2

Stock Market Technical Analysis Blog

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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

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

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

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

Anatomy of An Intervention

Stock Market Technical Analysis Blog

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This evening I would like to look at a closeup of the SPY intervention that happened during the night, something that happens fairly often.  The top chart above is a five minute bars chart showing trading in all sessions from noon yesterday through tonight's afterhours close.  Looking at last night's afterhours close we see a 138.09 final print.  Moving sideways to 4AM EST this morning, we see the witching hour begin.  Since late January of 2009, 4AM to 5AM EST has been reserved for the PPT to secretly help the stock market when it is in a sell mode and to really get a bull run going when they have control of the market.  Looking closely from 4AM to 5AM you can see that there were six tiny trades made on ridiculously low volume, some only 100 shares.  I have marked these with six short red marks.  Using those six trades they moved the SPY nearly $0.75 higher, the equivalent of a seven point move on the S&P 500.  This intervention activity happens on average twice per week.  Once they are finished at 5AM EST the regional exchanges begin making trades with the various ECNs through the ARCA routing system for the purpose of setting the precedent on which direction they want to open the premarket trading  session at 8AM EST and the regular session at 9:30 AM EST.  When the PPT knows that the various institutions will be taking the market lower with the new market day, they come in and raise the SPY sometimes as much as a full dollar between 4-5AM so that when the regular ARCA trading begins at 5AM and the pulldown agenda begins it will affect the market less because the price will be coming down from a higher level after it has been raised during the 4AM intervention session.

Now that we have taken a closeup look at the intervention, let's take a look at why this was not enough to help the stock market today.  Looking at the lower row of charts, the first chart on the left is the daily bars chart of the VIX with 5/10/20/50 EMAs.  With today's opening bar the VIX red 5 EMA was sitting on top of the blue 20 EMA line.  Through the middle of the day it was still sitting there but not starting to lift from the 20.  By midday the SPY started slipping through its 50% Fibonacci line and also its 200 day EMA line shown in the next two charts on the bottom row.  As this happened, the VIX daily 5 EMA started lifting from the 20 EMA line and this triggered sell programs as it happened and the more the market dropped bigger sell programs were triggered.  To finish the day with an ugly close instead of an ugly open.

Alan

UUP Dollar Index

Stock Market Technical Analysis Blog

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This evening I would like to focus on the UUP Dollar Index.  The UUP is truly the 800lb gorilla in the room.  It tosses the SPY, AAPL, VIX, Nasdaq, and the bonds around like they were rag dolls at will.  The UUP is a tightly scaled index though, it is shown in chart four above.  A decent move in the UUP is .01 and a strong move is .02 and a huge move which we rarely see is .03.  Looking at the UUP we see that it has essentially been at its upper line of its two month uphill black line channel for the past week.  Looking at chart six, the bonds have been at their upper black channel line also. Having both of these perceived as maxed out to the topside has allowed the SPY, Nasdaq, and AAPL to trade somewhat sideways just slightly downward for the past week stabilizing at major support I focused on in Friday night's blog.

The oddball in the group is the VIX in chart five.  Under all logic it should have stayed sideways at its upper black channel line for the past week as it trades in unison with the UUP and bonds.  Yet the VIX has been falling the past four days, raising eyebrows among traders and investors.  The general consensus has been that the stock indexes will hold at these major support levels (I focused on in my Friday blog) or rather it HAS to hold at these support levels.  With the market holding at these levels so far the VIX is reflecting an easing in fear in the market even though the UUP and TLT are still creeping upward but again they are at their upper black channel lines.

This morning the bulls came so close to turning this market around.  At the open the UUP gapped up to 22.22 but started falling quickly allowing stocks to start a rally.  Over the next two hours the UUP started falling unusually fast, falling from 22.22 to 22.18. a rarely seen .04 move downward.  The bulls seized the moment and stocks started lighting up knowing that if the UUP drops just .01 more it will break down out of its tight red line 1 week channel (marked with a red arrow in chart 4 and the close up chart #7) to be a marker for the UUPs trip back down in its black line channel and a likely stock market santa rally kick off.  Also, at that very moment the VIX was sitting precisely at the intersection of its black. blue and red channels.  If the UUP were to drop just .01 more the VIX would break down out of all 3 channels at the same moment and automated buy programs would have lit up like plugging in an Xmas tree.

Unfortunately the UUP's next trade was .01 higher and stocks immediately took pause. Looking at the focused view of UUP in chart 7, we see that an hour later the UUP ticked back up another .01 causing stocks to start drifting lower.  In the last hour the UUP ticked from 22.20 to 22.21 causing stocks to roll over hard.

We came so close for the bulls but that last penny on the UUP just wouldn't happen.  I could tell by how heavy the Q chart servers became in those moments that a lot of bulls were preparing to go in big, as it was their best shot for over a week.  Now we are back into a bearish situation for tomorrow's open because into the close the UUP popped back above its upper black channel as shown in chart 4.

Without an overnight intervention in the SPY we are now set up for a potentially nasty open for stocks.

Alan

Support Continues To Hold

Stock Market Technical Analysis Blog

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The stock market traded sideways today as the multiple support setups I focused on in Friday night's blog continue to hold the stock market.  The top chart cluster is the same from Friday night but showing how today's trading is sideways on multiple support lines.  Also notice that it is starting to look like those that switched from stocks to bonds may have gotten a little ahead of themselves as the bond chart looks to be slowing quickly.  Stocks and bonds don't trade inversely by design, the bond market is simply seen as a safe place to put money when stocks are heading down for a while.  Once stocks look to have bottomed the crowd pulls out of bonds and goes back into stocks where there are normally better returns.  It's obvious that those that went into bonds are having pause as it looks like the powers behind the curtain may be able to stop the stock market decline at the multiple support setups shown in  charts 1-4 above. Bonds moved up very little on Friday.

In the lower cluster a new weekly bar opened up on the triple index market direction set.  Looking at the three focused in chart sections on the right side of the six year charts, we see first that the VIX  is showing its red EMA line to be looking like it might be more likely to get pushed down by the green line rather than cross above it primarily because the VIX has fallen the past four trading days as shown in the daily VIX chart just to the right of it.  In the center row, the stocks, we will have to call that red/green merge pretty much neutral.  In the lower chart, the bonds, we see where there was a real transfer of money from the stock market to the bond market last week but it's already looking overextended bar-wise.  No doubt most that have already switched from stocks to bonds for safe refuge are concerned they may have moved to soon for two reasons, one is the fact that the support shown in the upper cluster is continuing to hold in spite of the growing worries of the fiscal cliff and some investors cashing out for capital gains reasons.  The other big concern for early bird bond buyers is shown in the bottom right corner chart, the weekly bars chart of AAPL with the sentiment EMAs on it.  As you can see, AAPL's price bar is moderately overextended downward from both EMAs and if it gets some elastic pullback up action, AAPL could actually salvage itself with a red/green line bounce instead of a down cross.  If this happens in AAPL over the next 2-3 weeks then AAPL would recover and those that went over to bonds will come back over to the stock market very quickly.

Alan

Support on SPY & AAPL

Stock Market Technical Analysis Blog

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The Stock Market finally found some stability today primarily because of technical support that SPY and AAPL reached.

• In chart one, we see that the SPY reversed today after touching down on the 50% Fibonacci retracement line yesterday.  
• In chart two, AAPL also touched down on a longer term 50% Fibonacci line today.  
• In chart three, AAPL reversed up today after touching down on the black 200 day EMA line yesterday.  
• In chart four, AAPL's price bar found support today on the gold 324 day EMA line while the pink 50 day EMA is poised to bounce up from the rose colored 108 EMA line just above in that chart, a powerful combo setup.

All this points to the stock market having found at least a short term bottom here.  

One problem though, the bonds shown in chart five have already taken off to the upside and are claiming victory over stocks.  Either stocks or bonds will have to give in and turn down as they trade inversely 98% of the time.  Next week we will see who the winner turns out to be...stocks or bonds.

Alan

Multi - Year Channels

Stock Market Technical Analysis Blog

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Short blog tonight.  I posted the multi-year channels of the seven most important symbols above.

Alan

Selling Begets Selling Begets Selling

Stock Market Technical Analysis Blog

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In the wee hours this morning, after the world saw the election resolved without the possibility of a two month legal battle, the Futures were up, which didn't last long.  A little later in the early morning Europe's central bank president Draghi told the world that Germany's economy is finally starting to get pulled down from the euro zone crisis, something the world hoped would not come to pass as Germany's financial stability has been the glue holding the euro zone together.

Within minutes everything starting selling fast. CNBC didn't help anything as they ran the phrase "Post Election Sell Off" all morning to help the big dogs on Wall Street get a little revenge on the American voter for the coming regulation that they will be facing soon, ending their era of insane risk taking because they know that if they bet wrong the Government will have no choice but to bail them out, as was done in 2008 when Wall Street's greed nearly collapsed the entire global economy.

As the regular session opened AAPL opened below its 200 day EMA line and started tanking hard (shown in the upper chart cluster, bottom right chart).  The Wall Street media then started running banners that the sell off was happening because of fears of the fiscal cliff situation that is approaching.  Then the selling really kicked in.

To throw gas on the fire, the UUP (dollar index) opened up higher, wreaking even more havoc on stocks.  With 70% of all trading being done by automated trading computers now and the market at a big pivot on the weekly charts, the mood became a sell because everyone else is selling scenario and down we went.

Taking a look at the triple index market direction charts posted in the top cluster, we see that the sell off has brought the weekly bars sentiment EMAs to a complete merge on all three indexes.  A multi-month market direction will soon be established as we see whether the red EMA line starts up or down on the three indexes probably within the next two weeks.

Two potentially bearish situations began developing in the technical analysis today that are important.   I posted two charts in the lower cluster above to show these.  In the top chart, we see the sentiment EMAs on the XLF daily bars chart.  Over the past month everything has been selling down except for the big financials as shown in the XLF ETF.  Monday its two EMAs merged and yesterday we saw the lift start.  With today's route the merge twisted back down to a pending down cross situation, potentially ending the six month position trade.

In the bottom chart we have a bigger more critical situation developing.  Nearly four years ago in March '09, we saw investors enter AAPL at the up cross of the sentiment EMAs on its weekly bars chart.  AAPL has gone from 100 to 700 in the 3 1/2 years since.  Today's market route caused the current downward angle of its red EMA line to steepen and started many investors to question whether the red EMA will get turned back up by the green EMA line in the next couple weeks stopping AAPL's decline, or whether it will slice down through the green line, a major investor sell signal.

We are at really big pivot here.  AAPL is going to resolve its weekly chart sentiment EMAs merge at the same time the VIX, the Nasdaq, and the TLT bonds ETF are doing the same.

This could easily take one to three weeks to be resolved and then we should have the next stock market direction established.

Alan

New Weekly Bar Closeup

Stock Market Technical Analysis Blog

Click on image to enlarge

In the charts above I posted the triple index market direction cluster.  To the right of the triple index I added a small closeup of each of the three to make it easier to see exactly how the interaction of the two sentiment EMAs are working out on each index.  Obviously the VIX and the TLT (Bonds Index) are still neutral as the Nasdaq had its two EMAs come closer together with the opening of today's new weekly bar.  The Nasdaq is running one week behind the VIX and the TLT because of all the continued market propping the past few weeks causing its descent to slow somewhat.

Even though most traders and investors will be looking for the new market direction to establish itself the day after election on Wednesday, the weekly bars charts which filter out head fakes in both directions can't really give confirmation of a post election breakout either way until the closing of next week's bar.

Looking over at the three right side charts the top chart, the weekly 5/10/20 of the Nasdaq, is showing the tip of the red 5 EMA below the blue 20 EMA with the opening of today's weekly bar.  The powers behind the curtain must step in and drive the current weekly bar back up a great deal in the next four days to get the tip of the red 5 EMA line back above the blue.  If they don't charge this market the next four days, the VIX and the TLT will break out to the topside and it won't be pretty for the stock market.

In the center chart on the right, the UUP (Dollar Index), moved still higher again today which is bearish at first glance but it actually bumped up against a major resistance level technically which I don't have shown tonight.  If they stepped into the stock market now it would be the perfect time to do so to reverse the UUP.

Looking at the bottom right chart we see that the obligatory over sold bounce back did take place in AAPL today causing it to move back up slightly above its red 200 day EMA line which it slipped through on Friday.

The most noteworthy thing this evening is the fact that the SPY has found support at the 108 EMA with six of the last eight trading bars including today.  Also, there is a major Wall Street firm that has been going in and out of the market at major pivot points for the past year with a 7.1M block trade on the SPY.  Today at one minute after the close, that trade came through again 7.1M SPY at 141.90.  This particular single trade has never been sent through when a new direction is showing yet.  The wall street firm that sends it through intends for the trade to be an absolute pivot point marker for those in the industry.  Considering the tremendous support the SPY is holding and also that AAPL got back above its 200 EMA line today, I have tilted slightly to the bullish side on stocks tonight but with caution because you can easily see on the triple index chart above that this pivot will be a real squeaker whichever way it goes.  Just about like the election itself.

Alan

Dollar & AAPL Sink Market

Stock Market Technical Analysis Blog

click on image to enlarge

Looking at the three left side weekly bars charts above of the VIX, Nasdaq, & TLT (20 year bond ETF), we see that the VIX and the bonds are as of tonight still merged to an absolutely neutral point as the Nasdaq had its two EMAs come closer together with this week's weekly bar.  With two of the three still in perfect neutrality, it will require at least another weekly bar, maybe two, to get the red line breakouts that will establish the next direction in the market.  An interpretation guide to the triple index shown on the left side above is located in the October 30th blog.

Looking at the top right chart we see the weekly bars chart of the Nasdaq where the bulls are intent on turning the red 5 EMA line back upward next week by pushing up from the blue 20 line.  If they succeed over the next couple of weeks in turning the red 5 EMA on the weekly back upward it should be plenty of lift for a year end Santa Claus rally.

With yesterday's strong show of support at this weekly 5//20 juncture the bulls appeared to be back in control but today the market was broadsided by two bearish events.  The first was that the dollar gapped up above its channel as shown in the right side center chart (UUP).  After the UUP has found resistance several times in the past week and a half at that upper channel line, it was pretty much a done deal that today it would start trading back down toward the bottom channel line which would cause the stock market to head upwards as they trade inversely.  Instead, the UUP gapped up well out of the channel at the open and continued to climb, a serious blow to the market.  I've shown in multiple blogs through the past years that anytime the UUP breaks upward out of a channel, the stock market has real trouble until the dollar comes back down into the channel.  They did try to counteract this UUP breakout by gapping up the Nasdaq this morning but selling came in immediately and accelerated throughout the day.

The second bearish event today happened in the early afternoon when AAPL got down to its 200 day EMA line.  The 200 EMA line is pretty much the last stand for the bulls and when it is lost even the most hardcore bulls tend to flip and go short.  The widespread expectation was that Wall Street could support it at that line at least for a day or two.  However, it sliced down through it like butter and heavy sell programs swamped the market into the bell.

The history of AAPL has been that after a nasty sell-off day it usually has at least a partial bounce back the following day.  With Monday being the day before election we will have to see if the obligatory bounce actually happens especially since the market took a real bruising from the surprise one-two punch of the Dollar & AAPL today.  If the 5 slips down through the 20 on the Nasdaq weekly chart in the top right corner instead of bouncing up from the 20, a Santa Claus rally will be a long shot without a major market intervention.

Alan

Santa Clause Rally?

Stock Market Technical Analysis Blog

Click on image to enlarge

The chart that I have posted above this evening is a four year chart of the Nasdaq showing weekly bars with 5/10/20/50 EMAs.  When the new weekly bar opened yesterday the tip of the red 5 EMA line had pierced down through the blue 20 EMA line and could clearly be seen underneath it. If this technical situation was allowed to continue it would have caused the stock market to suffer multiple weeks of downward movement into Xmas.

Today though the powers that be hit the stock market hard and drove it back up so far today that the flexible tip of the red 5 EMA line pulled back up to the topside of the blue 20 EMA line.  If they can hold the red 5 above the blue 20 through the middle of next week and then start lifting it by the end of next week the odds of having the traditional year end Santa Claus rally has been greatly increased.

The big variable of course is how the market reacts the first few days after the presidential election results next week.  Very few market participants if any will be placing big bets either way until they see the election results and the first few days of trading afterwards.

Nonetheless, seeing them support the market at the week 5/20 juncture at least for today is very encouraging for the bulls.

Alan