QQQ Hits Resistance

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today they decided to start breaking the pivot we are at to the upside a day early starting a decent short squeeze upward until the QQQ hit the underside of its upper blue channel line which caused it to roll over and sell off into the bell (top right chart).  At the same time, AAPL got turned back down at the lower line of its red channel (lower left chart).

In the bottom chart I have applied large moving averages that work well for intermediate term swings in the market.  I mentioned yesterday that the market is at a large pivot point which is actually the intersection of the orange and brown lines above.  What they are trying to do is repeat the layup they executed back in early July to take the market back up to the 8/2 peak.  These large moving averages can take as many as 5 days to get a clear direction break which would give them a window to roughly next Thursday to make it happen.  If they fail in pushing the orange line up from the brown line and instead the orange crosses down thru the brown we will likely begin the middle stage of the correction and possibly drop another 3-5%.

As of yesterday's open the correction from the 8/2 S&P high has produced a total fall of just under 5%.  Also, yesterday morning's low clearly marks the end of the first leg down in a correction.  It looks like they want that to be the only leg and are working to use this large moving average convergence to try to take the S&P back to the 1710 level.  

One thing that also figures into the equation is that in early September the markets have a long running history of starting a clear and definitive move upward or downward regardless of how choppy and erratic the summer trading was.  We now have the situation where next week's seasonal launch upward or downward starting point is coinciding with the intersection of these 2 moving averages.  If all goes well, the month of September will look similar to the month of July.  If they can't draw in enough buyers then they are not likely to sponsor an upward move on their own and another 3-5% drop will likely be in the cards.

Trade well my friends

Alan

Tractor Program Runs Until Nasdaq & AAPL Hit Resistance

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today the tractor program was turned back on at the open causing the indexes to trade slightly upward in a very narrow tube channel.  This tractor program ran until the Nasdaq & AAPL hit resistance.  

• Looking at the upper left corner 120min chart of the Nasdaq we see that it rose until it hit resistance and turned back over at the underside of the lower line of its blue channel.

• In the lower left corner 120min chart of AAPL we see that it also hit resistance at the underside of the lower line of its red channel.  

This week could be choppy as the indexes are at a major pivot point right now.

Trade well my friends

Alan

Market Becoming Sensitive To Any Bad News

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today we had a big gap down as the channel push downs I focused on yesterday followed through.  The drop was amplified by Syria worries.  This really isn't a fluke though because as the market enters its middle stage of a correction it becomes very sensitive to any bad news that hit the headlines.  Currently there is a list of worrying situations that will probably take turns appearing in the daily headlines:

• deteriorating breadth and other market internals
• worsening economy because of consumers pulling back exemplified by the dire outlooks in the Walmart, Target, and Macys earnings reports
• new home sales plummeting because of the spike in interest rates
• worries about the Syria situation
• the approaching debt ceiling fight
• worries of tapering beginning in the fall
• sudden rush to gold instead of equities
• AAPL finding resistance at the 500 level when earlier in the year this level was a support
• heightened fear of a flash crash because of HFT reaching the 75% level

The stock market's heightened sensitivity to bad news is one of the biggest reasons to get out of stocks immediately when the VIX gets to the 12.00 level, as I called out on my 8/2 blog, thereby, preventing yourself from exposure to anything the news media decides to put in the headlines that day.

Trade well my friends

Alan

Tractor Program Turned Off Mid-afternoon Today

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today, the powerful upwardly biased tractor programs that were placed on the market while it was shut down last Thursday continued to operate today until the Nasdaq, QQQ, and AAPL hit their upper channel lines (shown in red in the 120 min bar charts above).  The three then immediately rolled over which stopped the S&P in its tracks and caused it to roll over also (shown in bottom right chart).   Tomorrow will be interesting.

Trade well my friends

Alan

S&P Up To 50 EMA Line At Close

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today we had a continuation of the upward biased lockdown tractor program that was placed on the market when it reopened yesterday.  Not much can be made of today's trading as the tractor programs were strong keeping the indexes from having virtually any oscillation throughout the day.  

Looking at the lower left corner chart above, we see that yesterday's abrupt interruption of the QQQ's day 5/20 pushdown happened as the S&P was at the centerline its alternate black line channel.   At the bottom right corner chart, however, the market closed right up against the underside of its 50 EMA line.  Overall, not really telling us anything other than they really want to take advantage of this window and push the market back up to retest the 8/2 peak.  

Today the TNX really cooled down but the moment it turns back up the market will once again be at its mercy.

Trade well my friends

Alan

A Little More On The Shutdown

It looks like I'm not the only one questioning what happened today, ZeroHedge, a website often quoted on Stock Market news who shares my same distaste for market manipulation, interventions, and all around shady activities posted a blog about an hour ago with the same sentiments as my earlier blog http://www.zerohedge.com/news/2013-08-22/five-hours-later-nasdark-speaks-twas-glitch

That was close...

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today we had the Nasdaq system shut down for three hours.  Feel free to search the web as there are about twenty different explanations for what might have happened.  We will call the following explanation number twenty-one.  

The QQQ (Nasdaq 100 ETF, daily chart 1), which has been the strength leader in slowing this correction, had its red 5 EMA line cross down thru its blue 20 EMA line a few days ago with the red 5 line turning back upwards in the past two days and finding resistance at the underside of the blue 20 EMA line about 11:15am today.  This setup is the pivot point where a powerplay starts to the downside causing a big swoosh lower in the market as happened to Panera Bread (daily chart 2) with brown arrows showing the corresponding points in chart 1 (QQQ).  

Right at that moment, the TNX (10 yr Treasury Yield, intraday chart 3) popped up to 2.91 (I mentioned in my 8/20/13 blog that huge stock market sell programs are widely known to be set up to go active at 2.90 with the selling to be begin at 2.91).  Right at the moment that TNX hit 2.91 big sell programs kicked in, first taking AAPL (most widely held stock) down sharply in the minutes following (shown in intraday chart 4 above).  Minutes after that quotes started going haywire and a few minutes later, the Nasdaq system shut down stopping trading in all Nasdaq listed stocks.  Three hours later, shortly before the bell, the market reopened and climbed higher (really?).

For whatever reason the market was shut down, the timing of it was very fortunate as the day 5/20 powerplay to the downside was kicking in and it was quite possible the market could have closed down a staggering amount today.  

Trade well my friends

Alan

Fed Minutes Offers No Relief From 10 Year Treasury Yield

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today investors were hoping the Fed Minutes would shift the pendulum a little more to the dovish side but instead several members became notably more hawkish.  After a quick up and down roller coaster ride the market closed down considerably to show its disapproval of the minutes.  The end of day selloff dropped bonds below their floor line again and drove their yield across the danger line, shown in the upper chart cluster.  

In the lower chart cluster we see the continuing decline of this 2 1/2 week correction with the S&P now approaching a 4% loss from the 8/2 peak.  

Trade well my friends

Alan

Overnight Bond Market Intervention

Stock Market Technical Analysis Blog

click on image to enlarge

Looking back at yesterday's close where we had the 10 yr treasury yield close at 2.89 just .01 away from the 2.90 level where huge automated stock market sell programs are set to trigger, it was obvious that something had to be done fast.  Looking at the charts above we see that yesterday's bond yield closing broke us up out of the upper line of its 6 year downhill channel and looking at the lower chart of the bond index we see that the bonds also slipped down thru the floor line yesterday threatening to propel the treasury yield well above 2.90 for today which would have caused a market plunge.  

During the night, Ben and Company took action and bought bonds by the truckload all night driving the bonds up thereby, causing the 10 yr yield to fall back down to 2.83 by the open this morning pulling it well away from the 2.90 stock sell off trigger.  Today the stocks rallied nicely throughout the day as well as did bonds.  

The key question now is whether or not they can stop the prevailing pattern, shown in a report last week, that investors who are selling stocks after the 4 year + 125% bull run and are skipping over the flip to bonds trade and going instead directly to money market. Today's up move in bonds did not go unnoticed by investors but the up move will have to have some follow thru to keep stock market money going into bonds instead of money market.  The stronger the bond inflow, the lower the bond yield could fall which will allow the stock market to turn back upward at this point.  This intervention must have follow thru over the next few days to keep it from looking like just a blip in the overall picture.

Trade well my friends

Alan

Part 2

Stock Market Technical Analysis Blog

click on image to enlarge

In the top chart above (10 yr treasury) we see that in the past few days it has broken up out of its downhill channel and also crossed above its weekly 60 EMA line to the danger zone for stocks which lies above it.  

In the lower chart above we see the VXX that has broken up out of its 6 yr downhill channel last week causing alarm.  

Trade well my friends

Alan

Market Correction Begins Week 3

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today we had another bout of selling taking the S&P to a loss of 3.75% from the Friday 8/2 peak.  The upper left corner chart shows an intermediate channel that might catch the fall.  The upper right chart shows how we slipped thru the lower line of the already descending correction channel, it also shows several possible support horizontal lines.  In the bottom left corner chart we see the alternative day chart channel shown in black lines.  In the bottom right corner chart there is the 50 day EMA that has failed.

Trade well my friends

Alan

Market Struggling At Lower Channel Line

Stock Market Technical Analysis Blog

Click on image to enlarge

In the market today we had a slightly down day as the S&P struggles on the lower line of its descending correction channel (shown in the top right corner of upper chart).  If the selling doesn't stop and it slips out of that downward channel there are several possible support levels shown with horizontal lines in the upper chart.  Also, a secondary channel is shown in black lines (lower left corner chart) that could also provide support if a serious selloff gets going.  

Right where it's at the market needs a classic Bernanke intervention.  We will see.

Trade well my friends

Alan

Head and Shoulders Pattern Triggers

Stock Market Technical Analysis Blog

Click on image to enlarge

In the market today, the huge head and shoulders pattern in the S&P triggered sending the market down 1.5% for a total of 3% down from my 8/2 blog correction call.  

• Chart 1: red line shows neckline of the head and shoulders pattern, the king of all market top patterns, with a big drop today as we broke thru the neckline.

• Chart 2: the 9 month uphill channel of the S&P shows that the head and shoulders pattern in chart 1 caused a drop out of the steep channel that has been taking it up.

• Chart 3: shows how we also fell thru the 50 day EMA line today

• Chart 4:  shows that today's drop took us out of the declining correction channel, which more often than not buys us time with sideways movement to get back to the channel but somewhat less likely this time as the selling was heavy all day today right into the bell.

• Chart 5:  shows how we caught the lower line of the channel from earlier in the summer.  Hopefully, that will hold and this will just be a 3% correction but if we slip thru that line, it's a long way down to the late June low (shown with the horizontal line).

Trade well my friends

Alan

Market Correction Day 10

Stock Market Technical Analysis Blog

Click on image to enlarge

Following up from my Friday 8/2 blog on my 2:30pm post where I said that there was an eighty percent chance of a correction after that day, we are now in the 10th day of the selloff with the S&P now down 25 points from that call.  Fortunately, it has been a stair-stepped and choppy downward move that has kept the losses from being even greater.  

There was always a possibility that Bernanke might drive the S&P up to the Friday 8/2 peak level to retest it but with every market push he has started in the past ten days there has been an overwhelming rush of big sell orders into any move up causing the continued decline.  We will just have to see how far this goes but most 401k holders are already down 1.5 percent.

Trade well my friends

Alan

VIX Hits 12.00

Stock Market Technical Analysis

click on image to enlarge

Things are changing quickly in the market.  Yesterday morning the market opened with about a week's worth of upward travel on the opening tick.  In the afternoon trading today the VIX took a sudden drop down to 12.00.  Looking at the chart above showing the S&P (top left) and Nasdaq (top right) and VIX (below) we can see that the VIX has hit 12.00 five times this year with four of these five producing selloffs leaving an eighty percent chance of a selloff after today.  The one time the 12.00 did not produce a selloff was back in March when everyone in the industry was fully aware that they were trying to run the market to achieve a best quarter in history, not allowing any selling to happen at all costs.  With this afternoon's 12.00 reading we have hit the key VIX number once again.

Granted the manipulation the last few weeks has been like nothing we have seen before which could lead you to believe we have simply topped and will just go pretty much sideways here for a couple of months.  Nonetheless, the statistics are what they are and eighty percent of the time we have hit 12.00 on the VIX this year, we have sold off for one to four weeks afterward.

Trade well my friends

Alan