Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Friday, August 29, 2014

Late Friday Afternoon Entry Signal

Stock Market Technical Analysis Blog

click on image to enlarge

In the market today we had a decent lift that climbed into the bell.  After being flat for the past four days, we decided to take a small long position in SPY right before the close today.  We had been looking for a little more sideways action to show that S&P 2000 area is becoming a base but we felt like Team Yellen is likely to gap the market open on Monday as they have done for the past three weekends.  Whether or not we move higher beyond a gap on on Monday will be a dynamic situation.  Considering Team Yellen chose to put the burners under the market late this afternoon when they know that 90% of the Wall Street pro traders close out and call it a day at noon on Fridays, makes us believe they will come in again at 3am Monday and open the SPY considerably higher to produce a regular session gap up.

This is a high risk trade considering we are still greatly overextended from the 108 EMA line but nonetheless, this Friday afternoon to Monday morning routine they've been working is where they have their best success when trying to ratchet an overextended market higher.

Looking at the charts above:

Chart 1:  S&P 60 minute, shows our trademark entry signal was produced in the closing hour today.  Not a good layup entry signal but it's enough to work with.

Chart 2:  the S&P found support yesterday at its upper red channel line and today's low found support at the horizontal blue line.

Chart 3:  the VIX after failing to stay above the horizontal black mother channel line yesterday, found resistance at the line again today creating a pocket it might be able to trade sideways in for a few days.

If the S&P follows thru on Monday with a gap up we will be looking for a solid intraday retest to add to the long position.  If it doesn't gap up, the small position was worth the risk considering we are looking at a repeating Friday / Monday pattern.

Trade well my friends