Declining Volume Giving Market Pause

Stock Market Technical Analysis Blog

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In the market today momentum came to a halt as traders ponder the continuing declining volume. No one is sure if the Fed is willing or able to drive the S&P to retest the 1850 resistance level without investors joining in.  Everyone knows a good portion of the daily volume we do have is short covering but take that out and there isn't a whole lot of volume left which indicates no new long-side buying is taking place, simply the Fed buying and shorts buying to cover.  They might be able to keep it going but the past week and a half has been a 45 degree downhill slope in declining daily volume and the past two days have only been about two thirds of the 10 day average volume.  This doesn't mean that the market rally will stop, however, only that this is the Fed's market and Yellen is wanting to make sure her name is in all caps at the top.  

Trade well my friends

Alan

Fed Day Squeeze

Stock Market Technical Analysis Blog

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In the market today the now routine Fed day market driver program was turned on early as has become the pattern when the Fed chief speaks.  They let it run into the afternoon causing serious pain to the shorts and then the squeeze was on.  It all looks good except the volume has been anemic.  It looks like the question of whether Yellen is carrying over Ben's PPT technicians or starting out with her own appointments has been answered.  Today's market drive was orderly, powerful, and relentless showing no signs of newbies at the wheel.

Trade well my friends

Alan

Market Ekes Out Small Gain Ahead of Yellen

Stock Market Technical Analysis Blog

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In the market today we had an all day tug-of-war at the S&P's 50 EMA line until finally late in the day it crossed above it.  The VIX, VXX, and TLT traders refused to acknowledge it as they are looking for Yellen to push the happy talk tomorrow but still say she is going to take away another 10B in stimulus disappointing the stock bulls.  We will see...

Trade well my friends

Alan

Day 2: A Big Day

Stock Market Technical Analysis Blog

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In the market today we had a strong up day for the second day.  They are turning the titanic and it is indeed turning and fairly quickly.  

Looking at the charts:

• Cluster 1: most interesting is chart 8 which we will be watching to see if the VXX drops down into its longterm downhill channel Monday or Tuesday.

• Cluster 2:  once again, the VXX  (VIX futures) stands out as they are showing resistance to going lower.  Also, chart 9 the bonds shows the bond traders aren't sure the stocks will still be rallying next week.  

• Cluster 3:  Most interesting is chart 2, S&P, where we see today's trading closed at its orange 50 day EMA line.  Also, notice that in the TLT bonds chart they are preparing a red/ green 5/10 layup to welcome traders back over to their playground should the S&P not break thru that 50 day EMA line on Monday.

• Cluster 4:  key charts are VXX where we see it set down on its orange 50 line at the close.  Also notice the TLT bonds are showing support at its blue 20 line.

The Fed cannot let up on this drive next week, it's all about momentum and if they lose it it will be difficult to regain it.

Trade well my friends

Alan

So Far So Good...

Stock Market Technical Analysis Blog

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In the market today the lower lines of the short term channels of the stock indexes shown in charts 1-6 did provide a bounce which kept the red EMAs from piercing thru the green EMA lines and if we get another up day tomorrow we could start to see the tip of the red lines level out and possibly start to curve up a little into the bell if it's a big up day.  

Notable tonight is chart 7 & 8 where we saw large pullbacks in the VIX & VXX.

Most important thing is...we do need tomorrow to be an up day.

Trade well my friends

Alan

Market Holds At The Pivot

Stock Market Technical Analysis Blog

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In the market today we had a slight down day as the fed continues to work behind the curtain to turn the market upward.  In the six market indexes, charts 1-6, we see that the lower line of the short term channels are still holding the market as the Fed continues to try to turn the market upward by having the smaller red EMA line start bouncing up from the larger green line instead of piercing down thru the green on all the indexes which would cause a fierce sell off.  The S&P, Dow, Russell 2000, and XLF all have their red/green EMA lines merged ready for a big break either up or down.  Note that the Nasdaq & QQQ are about one to two days behind the other four. These last two should make contact tomorrow and the full merge happen Friday morning, assuming the market is at least sideways tomorrow and opens at least flat on Friday.  Once all six have their EMA pairs merged, a tremendous move will follow quickly depending on whether the red bounces from the green or pierces thru. 

The charts at the far right are the VIX and VXX volatility indexes and below that the TLT bond index.  The VIX is still being contained by its channel while the VXX is still moving up.  Realize however, that the VXX is the futures trading entity for the VIX and often gets overdone in both directions. The most interesting chart of the group is the TLT because it shows that the bond traders are quickly exiting their positions for the past two days anticipating the Fed will succeed in their effort to turn the market upward which would cause the bonds to dive.  Historically, the pro bond traders get it right far more often than pro stock traders.  

While the market is still vulnerable for the next two days even if the red EMA starts to turn upward by Friday afternoon it does look like the Fed is still in control and could possibly be holding the S&P, DOW, and Russell 2000 where they are until the Nasdaq & QQQ complete their merge either late tomorrow or Friday.  Once that is done buckle your seat belts, the market is staged to breakout of a powerful pivot point leaving either the bulls or the bears very unhappy.

Trade well my friends

Alan

The First Bounce

Stock Market Technical Analysis Blog

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In the market today we saw the first oversold bounce since the S&P peaked by losing a four week struggle at the 1850 resistance level.  While it was nice to see the market climb instead of just gapping up huge this morning we really needed to get a little higher to shoulder some of the burden of producing lift tomorrow.  

Looking at the charts: 

• Chart 1: showing the trade entry EMAs improved today on the stock indexes but they really needed to climb higher in the afternoon instead of leveling out. 
• Chart 2:   the nasdaq, was bounced today from its lower mid term channel line.
• Chart 3:  the S&P, we see that Bernanke's last line of defense, the 108 EMA was lost yesterday causing the huge sell off.  We are now holding at the lower line of the short term channel that I inlaid with a small chart.  You can also see the position trade set up - a layup of the red/green position trade EMAs which is bullish but we really needed the S&P to climb into the bell which would have started the small red EMA to lift.  With the red going into the green line at this steep of an angle it's going to take one massive pullup effort over the next two days to both keep from losing the lower trendline and to force the red to start lifting up from the green line instead of piercing down thru it.  It can be done and has been done many times but with the way the market levelled out in the afternoon there is now no room for error.
• Chart 4:  Same situation on the DOW, in the inlaid chart, the smaller red EMA is coming in really steep and didn't get any help from the afternoon trading.

This morning's trading was encouraging considering the principal driving force in the market has been replaced with a new chief.  The afternoon trading, however, raises concerns for the next couple of days.  If the red crosses down thru the green in the small inlaid chart on big chart number 3 of the S&P, the lower short term channel lines will not likely hold the market by themselves.   This will be a really close one.

Trade well my friends

Alan