Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

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.


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