Opening Smackdown

Stock Market Technical Analysis Blog

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In the market today we had a smackdown opening that climbed part of the way back up as they tried to get the SPY back into the descending blue line channel in chart 2 above.  

In chart 1, the orange / green downcross continues to follow thru.  The next couple of days will be pretty dynamic and unpredictable with the debt ceiling deadline tonight.

Trade well my friends

Alan

Slow Decline Continues

Stock Market Technical Analysis Blog

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In the market today we had the pivot break to the downside although beit a slow motion move as seen in chart 1 above where we see the orange line is now below the green line, but with a mostly neutral candle for the day.  In charts 2 and 4 the S&P lost its last line of support, the orange diagonal line.  A lot going on next week, maybe if the decline continues they can keep it going down slow.

Trade well my friends

Alan

S&P Stuck At Pivot

Stock Market Technical Analysis blog

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In the market today we had a decent up day with an opening blip and also a midday blip upward but neither managed to trigger the pivot (shown with the merged orange and green EMA lines in chart 1).  Also in that chart you can see that today's candle is pretty much neutral.  

Looking at chart 2, we see the narrow blue line channel continues to contain the market but note that in the early afternoon we did slip down thru the orange line briefly.  In the last thirty minutes the S&P moved back up above the orange line.

Looking at chart 3, we are still modestly overextended from the 100 day EMA but not far enough above it that we can't move up back up for 2-3 days if the chart 1 pivot finally breaks upward tomorrow.  

Looking at chart 4, we see how the S&P is still refusing to give up the orange line, the last line of defense.  

Trade well my friends

Alan

Crucial Market Juncture Here

Stock Market Technical Analysis Blog

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In the market today we closed slightly in the red as we had a third day of prop, chop, and drop, rinse and repeat, giving us a tiny slightly downhill channel shown with blue lines at right edge of chart 2 above.  Also note that in that same chart there is a last line of defense diagonal trendline, shown in orange, that can also be seen in chart 4 below it.  

Looking at chart 4, we finally slipped thru the center line of the mother channel with the orange diagonal line holding it at the bell.  If that line is pierced tomorrow it will cause the orange EMA to downcross thru the green EMA line in chart 1.  The combination of the two may  speed up the decline unless they intervene with a market rescue.  So far, they have managed to keep the decline slow enough to keep most shorts from piling on and also slow enough to keep most investors from becoming worried enough to sell. Left on its own, the market may very well continue to the lower channel line tomorrow but with Ben and Co operating in crisis support mode this week it's always possible he can start a wicked short squeeze.

Trade well my friends

Alan

Market Weakens A Little

Stock Market Technical Analysis Blog

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In the market today we had what was a flat day turn south in the final hour for small index losses. I would like to focus again on the SPY (S&P 500 trading ETF).

•  Lower left corner chart - SPY end of day sell down did hold once again at the center line of the mother channel

• Upper left corner chart - today's candle was neutral with the orange and green EMAs approaching a merge situation tomorrow, a pivot point

• Upper right corner chart - we see the tiny two day channel they are fiercely trying to maintain.  Also visible is the pre-Bernanke speech level shown with the horizontal red line.  That 171 SPY level, coinciding with 1710 on S&P is the level where I called a market top on 8/2.  That level is showing to be a fairly firm ceiling for the market excluding Ben's 2-hour bottlerocket short squeeze right after his speech which quickly reversed back down.

• Bottom right corner chart - we are still considerably over extended above the 100 day EMA line.

Tomorrow will be an important day as  we may see the merge of the orange and brown short term EMAs in the upper left corner chart which will then likely produce a pronounced move from that pivot point.  It's not clear yet which direction the pivot will go because as the market continues to get heavier the more Ben and Co. put upward pressure on it.  

Trade well my friends

Alan

Giving It Back

Stock Market Technical Analysis Blog

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In  the market today we had a modest sell down.  Focusing on the SPY this evening, I would like to first look at the upper right corner chart above where we can see that the SPY has already given back Ben's euphoria pop and then some (pre-speech level shown with horizontal red line).  Today's bottom was found at the center line of the SPY channel (shown in bottom left corner chart).  Looking next at the upper left corner chart, we have a hammer candle for today implying they are going to try to hold the sell off at that center channel line. A lot of confusion in the market now, we will have to see what tomorrow brings.

Trade well my friends

Alan

Midmorning Update: Bernanke's Bombshell - Buy or Sell?

Stock Market Technical Analysis Blog

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There is confusion in the market this morning after Ben shocked the market yesterday by trading long term stability for short term euphoria.  Some people think it its time to mortgage the house and buy in big, others are saying sell everything and run for the hills.  

I thought a couple of index charts might help in making this crucial decision.  The top two charts are the mid term channels of the S&P and Nasdaq.  The two lower charts have the 100 day EMA line applied.  When a market is overextended, it can be measured by how far it is currently above its 100 day EMA line.  

Trade well my friends

Alan

This Article Sums It Up Nicely

The following link is to an article on Minyanville that reflects my feelings one hundred percent about Bernanke's heavy handed interventions in the market, disrupting normal cycles.

http://www.minyanville.com/special-features/random-thoughts/articles/Ben-Bernanke253A-The-Other-Side-of/9/18/2013/id/51819

Helicopter Ben Soars Like An Eagle

Stock Market Technical Analysis Blog

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In the market today, Ben let us know that the economy and stock market can't make it without the entire $85 billion monthly steroid injection.  When the surprise no taper announcement was made the S&P jumped 15 points higher, without one trade going off, and then squeezed another 15 pts higher to scald the massive short interest. 

The world is asking why did Ben back off, once again the answer lies in the VIX chart. Looking at the lower left corner chart above we see that the Sentiment EMA juncture that was ready to start lifting today and cause a second leg of correction to begin was instantly broken to the downside as the S&P jumped 15 points higher without a single trade taking place.  Job well done Ben

No market manipulation there  ;)  

Trade well my friends

Alan

Pre-Ben Propping

Stock Market Technical Analysis Blog

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In the market today, they shifted into full propping mode to prepare the market's reaction to Ben's taper decision tomorrow.  As I mentioned before, the VIX and SPY trade inversely and normally have opposite mirror images of each other.  This morning the VIX started climbing and continued to climb which just was not acceptable to the boys so they started heavy hand forcing the SPY upward in lock step with the VIX thru the day until the final 15min when they both dropped.  The SPY and VIX trading in the same direction is the easiest way to detect intense manipulation as shown in the intraday SPY and VIX charts at the top above.  This type of manipulation tells traders that the move upward is not real and caution should be taken.  

If the market seems genuinely okay with the amount of tapering announced tomorrow, it's possible they could start a short squeeze on Thursday morning as everyone is anticipating the market to at least have a bad knee-jerk reaction to tapering becoming official and many will be shorting heavily.  If we continue to go sideways tomorrow and If the market feels stable after the announcement tomorrow, I may be looking to re-enter on Thursday morning.  Key word being IF.  

Trade well my friends

Alan

Huge S&P Gap Up Doesn't Drop VIX

Stock Market Technical Analysis Blog

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In the market today we had a huge gap up in stocks because of Summer's withdrawing his name from the new Fed chief race.  If he had been appointed it was widely believed that he would have been toxic for stocks because of his more hawkish stance on the speed of tapering.  Considering the tremendous load this news removed from the stock market, the VIX should have cratered downward inversely of the S&P's monster move up.  Instead, the VIX closed in the 14.40 area where it spent most of the afternoon Friday.  The VIX's failure to move lower in proportion to the S&P move up is a warning sign that the S&P is a little too frothy at today's closing level.  

While they could still, of course, come in and juice the overnight futures higher I decided to go ahead and close the SMV Model Portfolio SPY trade, with an 11:53am tweet today, for a 3% gain from Friday 8/6. I marked this exit with a red dash above today's bar in the top right corner chart. Also, another concern for the market is  that in the lower left corner chart above, the VIX was at the sentiment EMAs red/green line juncture Friday and after today's monster move up in the S&P and removal of a huge market burden of a possible more hawkish new Fed chief, the red line still did not cross down thru the green which is really what the boys were hoping to happen with the perfect timing of Summer's announcement.  We are now still in the situation where the red line could bounce up from the green, triggering a second leg down in the correction.

The name of the game is to take the easy money and let the daredevils play at the frothy elevations. If the market doesn't pull back here it at least needs to go sideways for 2-3 days before I would consider re-entry.

Trade well my friends

Alan

SPY Sideways At Resistance

Stock Market Technical Analysis Blog

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In the market today, we had another sideways day at the S&P 1688 resistance level I focused on earlier in the week.  Looking at the SMV Model Portfolio trades chart in the upper right corner we see that the SPY is up two percent from last Friday's red/green line layup signal in that chart.  Monday may be another sideways day if they do as much propping as they did today.  Then Tuesday is the big taper or no taper Bernanke speech.  Next week will be an interesting week.

Trade well my friends

Alan

Part 2

Stock Market Technical Analysis Blog

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I had a reader ask if I could point out only the positive influences on the market and not mention the negative technicals that I see.  I would like to remind my followers that I am here to help those people who have had bad experiences with financial managers and want to learn how to manage their money themselves.  

I feel like it would be appropriate to post the double sentiment EMA cluster I have put up several times through the years.  The top chart is the S&P 500 and the lower is the VIX.  If you look at the VIX chart, you will see that each time the smaller red EMA line crosses above the green EMA line the S&P starts selling off at exactly that same point.  Also notice that when the red line in the VIX crosses down thru the green line, the market rallies.

I have demonstrated visually with the vertical red lines representing corrections and the vertical green lines representing market rallies.  What I want to call attention to is that in the VIX chart, the red line is threatening to bounce up from the green instead of crossing down thru it.  In both the S&P and the VIX, anytime the red line bounces from the green instead of crossing thru the green the market move in that direction is amplified.  

I call out the technicals I see for those who actively manage their money, meaning those who buy in and sell out of the SPY ETF 1-3 times per month. You should be watching the market closely tomorrow and Monday.  The S&P is at a pivot and is very close to starting a second leg down of the correction.

Trade well my friends

Alan

Head and Shoulders Forming

Stock Market Technical Analysis Blog

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In the market today we had a modest down day as the 1688 resistance level held.  Following up from last night's blog, we see that the right shoulder has begun its downward move.  Bernanke & Company were in the market heavy today, fighting it but they are going to have to do better to break this formation from continuing.  We will see.

Trade well my friends

Alan

AAPL Blows It

Stock Market Technical Analysis Blog

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In the market today, we basically had a sideways day as most of the leadership stocks become exhausted.  AAPL, however, was a different story.  In the past month it has enjoyed a big run up in anticipation of inking a deal with China Mobile and the introduction of a really low price phone.  When they pulled back the curtain at the event yesterday, smiling investors began puking as neither materialized.  At the open today, AAPL was punished severely to the tune of a five percent drop.  

Looking at the above chart of the S&P 500, I feel like it would be appropriate to bring attention to the fact that the S&P closed at 1688 which is exactly the number of the late May peak.  If they can keep the market going higher tomorrow and break through that level then the rally is still in business but if it pulls back tomorrow the automated trading programs will start plotting 1688 as the top of a right shoulder of a huge head and shoulders top formation.  

It wouldn't take much for the boys to make the needed adjustments higher in the S&P futures overnight to keep head and shoulders pattern alerts from popping up tomorrow.  However, if they don't bump the S&P over that 1688 level then the path of least resistance will be downward.  As early as tomorrow evening stock market news site technicians could be posting the above layout for discussion.  

Hopefully we will hop right over that level and keep right on going but if we don't, a head and shoulders analysis will become a burden on the market.

Trade well my friends

Alan

We Have Lift

Stock Market Technical Analysis Blog

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In the market today we had a big up day as the orange/brown lines of the lift setup we have been watching the past week began its lift (top chart of upper cluster).  Looking at the lower chart of the top cluster, we see that the S&P has plenty of room to run with the boys obviously wanting to take it back up to the 8/2 S&P 1710 peak.  In the lower chart cluster bottom chart, AAPL gapped up today starting its lift also, from the layup setup of the red and black moving averages.  

All in all, a really nice start to take us back up but be aware that they did take the Advance/Decline to the rafters by the close today and with this much movement in one day, the bears will be aware that tomorrow will likely be their only chance to trip up this rally using the market breath pullback that is likely tomorrow.  After tomorrow, if the bears have no luck in reversing today's lift, they will likely end up having to cover their shorts the following days.  

Trade well my friends

Alan

Market Getting Twitchy

Stock Market Technical Analysis Blog

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In the market today we opened slightly green and closed flat but had a wild ride in the early morning.  Shortly after the open, Obama talked about Syria and the market dived in minutes (shown in the top, upper right chart of the S&P) and as it fell the VIX shot back up to the blue 432 line (shown in the upper cluster, lower chart) where they jumped in fast to stop the selling and defend the 432 line from being crossed once again giving us a bungy cord ride back up to where it started.  The rest of the day was pretty much sideways action in the tractor program tube they started on Wednesday.  In the last hour, however, we had somewhat of a sell down much like we did yesterday which is very troubling as the market needs to ramp in the last hour and close at the high of the day if buyers are indeed willing to go in on the layup setup being constructed (upper cluster, top left chart).  You can feel the intraday sentiment having drifted from slightly bullish to slightly bearish in the past two days and has been emphasized by the closing hour selling.  

In the lower chart cluster of AAPL, we see that it took the hard dip with the market but also recovered leaving its layup lift setup (shown with the red & black lines) and its bullish trendline stance still intact.  We already know that Obama will address the nation again on Tuesday, leaving Monday to probably be a disorientated day in the market.  We will just have to see.

Trade well my friends

Alan

Part Two - AAPL

Stock Market Technical Analysis Blog

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Just wanted to mention that on Friday AAPL will have a good opportunity to break through the 500 barrier and keep going.  Looking at the upper chart above we see that it is sitting nicely on its steep trendline.  In the lower chart we see that the light green EMA line is starting to push up from the larger black EMA line.  They should have some sort of news ready to paste on it,  if the lift starts.

Trade well my friends

Alan

Critical Point Getting Close

Stock Market Technical Analysis Blog

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In the market today there was a quick pop in the first hour to see if they could get the S&P price bar to cross above the orange and brown lines in the top chart.  The price bar must cross above the lines before a lift can begin.  The opening pop failed to take the S&P price above the two lines and it started retreating wherein they immediately placed a tractor program on the index ETFs to keep the market locked down in a very tight sideways range the rest of the day which did help the VIX to retreat a little farther away from the 432 line shown in the bottom chart.

Ideally, in the last thirty minutes they would have broken the S&P upward for a quick short squeeze into the bell.  Unfortunately, we got a little bit of a sell down in the last thirty minutes which has fairly negative implications.  The S&P really needed to close at the high of the day.  

Looking at the positioning of the orange and brown lines we can see that the Friday thru Tuesday market action is going to be critical for a successful upward launch of the lift setup.  On Wednesday the market should either be lifting quickly or will likely be in real trouble if a down cross happens because the lines are so tight now, all depending on how they work the market these next three trading days.

Trade well my friends

Alan

Short Squeeze Saves the Open

Stock Market Technical Analysis Blog

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In the market today we had an open that dipped into the negative for a few minutes that actually caused the tip of the orange line in the upper chart to barely peek thru the underside of the brown line.  It showed only for a couple of minutes but, before big sell programs could kick in, they  jammed the market hard causing a fierce short squeeze allowing the market to have a big up day.  The results of today effectively counteracts the selloff from yesterday afternoon allowing the orange line to become exactly parallel on top of the brown line in the upper chart.  When we took the dip at the open, the VIX jumped back up and tested the blue 432 line and it held once again allowing the short squeeze to get legs.  

We are now in the second day of what would ideally be a five day generally sideways movement that begins to give the market consecutive lift days by Friday or Monday if the layup setup (in the upper chart) successfully completes and generates a move back up to 8/2 peak.

Trade well my friends

Alan

Okay, But Could Have Been Better

Stock Market Technical Analysis Blog

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In the market today we had a big gap up at the open and all seemed well until Boehner came out in the late morning and stated he would make sure the Republicans approved bombing Syria.  The market didn't like the increased likeliness of bombing Syria and the market sold thru the early afternoon but got back a good chunk of it in the last hour to close modestly positive.  

Looking at the lower chart above, we can see the VIX spiked above the 432 line on the Boehner comments but retreated to the safety of the lower side of the line in the afternoon, effectively retesting the 432 as resistance for the second consecutive day.

Looking at the upper chart, we had airspace between the orange and brown lines which is the safety margin that needs to be maintained in this stressful market environment for a few days before the lift begins.  Unfortunately, with the surprise comments on Syria, the strong pullback in the afternoon actually tightened the orange line against the brown which is not desirable until the 3-5 days of running parallel with some airspace between them.  Now, however, the pressure is on the boys to make sure tomorrow is not a down day, which would not have been a problem for it to be so, if we had held all of today's gains.  The two lines need to start to get airspace between them over the next few days.  If they don't, the S&P could easily find itself in jeopardy of a news triggered sudden down cross which would stop the laborious construction of the lift setup and turn the market upside-down.

Trade well my friends

Alan

VIX at 432 EMA Reversal Point

Stock Market Technical Analysis Blog

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Following up from Thursday's blog where I discussed the layup bounce they are constructing in the top chart above, we saw that Friday's sell down completed the compression of the two large moving averages and now they are ready to work the market lift.  Over the next few trading days we will need to see a series of up days mixed with flat days to keep the orange line parallel to the brown and gradually start lifting for a repeat of the early July lift that can also be seen in the top chart.  

The key item as of Friday's trading, however, is in the VIX where it successfully completed a hard test of the blue 432 EMA line which is the key pivot/reversal point for the stock market as I have discussed several times over the past couple of years.  Considering that the 432 held, the bulls should take control tomorrow.  Also, the third overriding factor is that tomorrow is the first day of the new trading season where Wall Street starts fresh with a new agenda giving us a clear up move or down as I also discussed in Thursday's blog.

With an ideal layup structure being constructed in the top chart and also, the VIX having held its 432 EMA line Friday, the odds are in favor of Wall Street's first direction move to be upward and which could take the market back to the 8/2 peak during this new month.  

I realize there are serious external factors hanging over the market which I discussed in detail last week but nonetheless, Friday's afternoon close should be the bottom of the correction and we will likely open tomorrow with a big gap up.

Trade well my friends

Alan