Mid Morning Update: S&P Rings the Bell

Stock Market Technical Analysis

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In the market today the S&P gapped up and quickly rang the bell at the September high as the VXX 5/50 juncture we have been following successfully completed the down cross.  Team Yellen now has the S&P all cleaned up and in its finest tuxedo for Tuesday's election (yes, Yellen is a democrat).  Looking at the chart above, the big question now is did the party just begin or just end?

Trade well my friends

Alan

Closing Charts

As we head into the closing, the VXX 5/50 EMA juncture (shown in top chart cluster at bottom right) which showed a down cross earlier in the day is now too close to call for the closing print.  If the market is positive tomorrow morning there should be no problem for the VXX to continue its down cross.  However, if the market is negative tomorrow morning, because these are EMA lines a large enough down morning could easily pull the tip of the red 5 line back up to a bounce position on the turquoise 50 line and bring in sellers.

Stock Technical Analysis

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Trade well my friends

Alan

Midday Update: VXX Down Crosses, Market lifts

The VXX 5/50 EMA juncture (highlighted in red in the bottom right corner of the top chart cluster) has now down crossed, producing the rally.

Stock Market Technical Analysis

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Trade well my friends

Alan

Mid Morning Update: VXX 5/50 EMA Battle

Stock Market Technical Analysis

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In the market this morning the fight is already on as to which way the VXX 5/50 EMA juncture will break (bottom right chart of top cluster highlighted in red).  It has already had false breaks in each direction.  This market isn't going anywhere until we see a clear down cross which would produce a market rally or see the red line being forced upward by the turquoise line which would cause a market sell off (red line is 5, turquoise is 50). 

Trade well my friends

Alan

After Yellen, Market Watching VXX

Stock Market Technical Analysis

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In the market Wednesday we had a FED statement that was decidedly less dovish or more hawkish depending on whether you are a bull or bear but everyone agrees that they have tightened their view. The afternoon trading was pretty much paralyzed as one key chart needs to resolve itself before traders and investors can see which direction the next market move will be.   That chart is the VXX (VIX Short Term Futures) with the 5 and 50 EMAs applied which I have highlighted in red in the bottom right corner of the chart cluster above.  The red line is the 5 EMA and the turquoise line is the 50 EMA line.  These two lines come to a juncture forming another EMA pivot for the market.  If the market is up Thursday, the 5 EMA line will likely start to cross down through the 50 EMA line allowing stocks to rise but if the market is negative we could have a "v" bounce begin at the line juncture which would cause a quick reversal downward in the stock market.  The bears are eyeing this chart closely and would be more than happy to take the market back from Team Yellen and the bulls.   

In the second chart cluster just above, the S&P is still inside of the bubble channel after Wednesday's drift lower.  Tuesday's low in the VXX held again today.

In the short term channel charts above, it can be seen that the S&P and NASDAQ have clearly started a new uphill channel and both got back out of their blue down hill channels in the last hour after a brief dip during the Fed statement.  The VIX (Volatility Index) and VXX are working within taller downhill channels.

The VXX 5/50 juncture will be key for the next couple of days in determining where the market will go from here.

Trade well my friends

Alan

Into the Close

Stock Market Technical Analysis

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No reaction to the FED yet..


Trade well my friends

Alan

Mid Morning Update: Market Waits for Fed Statement

In the market this morning, traders are sitting and waiting for the statement from the Fed coming this afternoon.  The charts below are updates from the situation we have been following the past two days with one notable exception.  The bottom right chart in the top chart cluster is a day 5/50 EMA juncture (5 red / 50 turquoise) that the bears have set up for a "v" bounce should Yellen's statement contain anything that the market really doesn't like.  This is the primary reason the market is flat in the hours before the statement instead of the traditional float up.  The VXX 5/50 setup shows that traders are keenly aware this market could reverse back down in a heartbeat if it gets spooked this afternoon.

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Trade well my friends

Alan

15 Minutes to Close, Indexes Break Out

Stock Market Technical Analysis

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Following up from last night & this morning's blogs about the breakdown on the VXX right before the bell yesterday, we now have the bulls running the market up full steam.  The Nasdaq broke up out of its multi-month downhill channel this morning & the S&P broke up out if its multi-month channel this afternoon.

Trade well my friends

Alan

Bears Blink, Bulls Charge

Stock Market Technical Analysis

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Following up from my blog last night where I discussed how the drop in the VXX right before the close Monday might be a sign the bears were about to blink in the big EMA standoff, with the new trading day we see that is exactly what happened.  Looking at the top chart cluster we see that the S&P has begun to lift in its EMA setup and the VXX had its price drop below the pair of lines this morning, a precursor to setup failure.  In the lower charts above, the SPY has reentered its two year bubble channel this morning and the ADX shows that the buyers came in fast.

In charts 1 and 2 above we see that the S&P and NASDAQ both broke above their 50 day SMA lines this morning.  In the small weekly candles chart inlaid on chart 5, the S&P broke above the weekly center basis line of the Bollinger bands.  In the bottom chart we see how the VXX fell out of its uphill channel this morning.

In the short term channels cluster above, we see both the VIX and VXX dropped well out of their blue channels.  The NASDAQ actually broke out of its multi-month downhill channel.

The VXX drop yesterday before the bell was all the warning that was given that the standoff was about to break.  If you acted quickly on it you have already made good money going long.

Trade well my friends

Alan

Closing Charts

Stock Market Technical Analysis

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In the market today we saw day two of a powerful tractor program that they have clamped down on the SPY  & QQQ to keep the S&P and the Nasdaq in a tight slightly uphill range.  You can see the tiny channel that is drawn with pink lines in the lower chart cluster on the past two days of trading in the S&P and NASDAQ.  

In my midday blog today I discussed in detail each of these charts and nothing has changed with the closing print of these charts except for one thing that happened in the last thirty minutes of trading. Look at the VXX in the bottom right corner of the lowest cluster and you can see that it dropped out of its blue channel about twenty-five minutes before the close.  This could be the first sign that the bears may be the first to blink in this standoff.  My thoughts are that the bears are weary of these tight range tractor programs that are put on the market to control it when market conditions are critical. After seeing the tractor program complete two days of tight containment successfully, many of the shorts may begin to feel that even if Yellen turns off QE Wednesday instead of doing an extension that they may have their tractor programs locked so tight on the market that it won't drop regardless of the selling pressure.  These tractor programs are that strong and if traders see that stocks are not dropping in light of such a negative event then it follows that a short squeeze would be very easy to get started.

We will see...

Trade well my friends

Alan

Market Holding At Big Pivot

Stock Market Technical Analysis

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Following up from last night's blog where we were considering that there might be an intervention in the futures last night, it clearly did not happen and the market opened down this morning.  This lends a little to the argument that the Fed is saving its dry powder for the Wednesday afternoon Fed speech.  

Looking at the two upper charts above both showing the same large EMAs on the S&P and VXX, we still have a stalemate situation as the VXX is ready to lift and cause a market sell off but the Fed refuses to let that happen and has forced the S&P into the same pancake line setup as the VXX which is something that is rarely seen.  As I said last night, one has to drop soon.

Looking at the two lower charts above, I have inlaid the ADX active lines at the bottom of the SPY chart.  You can view the green line as buyers and the red line as sellers.  Here once again it shows we are stuck at a neutral stalemate waiting for the pivot in both indexes to break one way or the other. The focus chart in the bottom right corner is a zoom in on the SPY ADX and if you get your nose up to the monitor you can see that the red line is very slightly under the green line indicating the beginning of bullishness but the green line is falling also instead of turning up which indicates the buyers are backing off also at this pivot.  No clear indication either way.

Looking at the second chart cluster above, we see that in chart 1 the S&P is showing resistance at its 50 SMA.  Chart 5 shows the S&P has found resistance at the lower line of its two year bubble channel.  Also, I inlaid a weekly candle chart at the corner of chart 5 that shows the S&P has resistance at the center basis line of the weekly Bollinger bands.

Looking at the third cluster above, the short term channels, we see the trading action is coming to a standstill as traders wait for the big EMA pivot situation on the S&P and VXX to resolve itself.

Trade well my friends

Alan

S&P vs VXX Down To The Wire

Stock Market Technical Analysis

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Whenever a make or break pivot comes to a point on a Friday the odds normally favor the bulls as Fridays are low volume from the start and drifts lower throughout the day.  The Fed's SPY/QQQ stealth buying program is volume sensitive and as the volume drops its pacman style buying ramps up.  Friday afternoon it was in overdrive because the big pivot in the S&P versus the VXX EMA battle had finally come to a point where one or the other has to drop back.

Looking at the charts above, which  show the situation with both the S&P and the VXX having the same large EMA pairs set up virtually identical and both ready for a big lift.  In my midday chart post on my website blog Friday, I called attention to the VXX because it had its red line appear above the green line.  The S&P still has its red line hidden by the green line.  As you can see above they both closed that way.  Normally, in technical analysis you would call the VXX as the winner because its red line broke to the topside of the green line first.  However, the voraciousness of the Fed's buying program Friday was truly amazing and in the last thirty minutes the VXX price started falling suddenly into the close which would lend to the argument that the S&P will have its red line break to the topside of its green line to match the VXX on Monday.  This is about as close as a dead heat can possibly get and the stakes are high.  If you zoom in, the VXX should be the technical winner but Team Yellen has been driving the market with unbelievable tenacity the past week.  Which way the market is going to break seems too close to call even still plus, we have the variable of the upcoming Wednesday Fed speech where Bullard hinted that the Fed may take a turn to the dovish side with some sort of QE extension.

Looking at this chart cluster, we can see that in charts 1 and 2 the S&P and NASDAQ both closed right at their 50 SMA lines.  In chart 5, the S&P closed right at the lower line of its two year bubble channel and the VXX is still riding its lower channel line in chart 6.

Lastly, a look at the short term channels above shows the movement the past week.

The Sunday night Futures session will be a clue as to which way the market breaks as they were very actively buying S&P Futures the two nights prior to the reversal starting.  If they are in the Futures again tonight there is a good chance we will have a gap up in the morning.

Trade well my friends

Alan

Low Volume, Creep Up Friday

Stock Market Technical Analysis

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In the market today we are having a classic low volume, creep up Friday.  Looking at the upper cluster, the VIX and VXX are still maintaining while the S&P and Nasdaq creep higher.  Looking at the lower cluster, in charts 1-4,  I replaced the 50 EMA with the 50 SMA which is what's coming into play now.  Only notable change overall is in chart 6 where the red EMA has appeared topside of the green today.

Trade well my friends

Alan

S&P Climbing But VIX and VXX Not Falling

Stock Market Technical Analysis

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In the market Thursday we had a 3 AM SPY intervention that I detailed in my Thursday morning website blog post.  Throughout the day Thursday the squeeze was back on leaving us with closing charts I posted above.  The pink elephant in the room is whether or not there will be any new buyers coming into the market after the squeeze is finished.  

Looking at the charts above:

• Chart 1 & 2:  the S&P and NASDAQ got above their 50 EMA lines today

• Chart 3:  the VIX still closed above its 50 day at today's closing, it should have closed below it if traders felt this move today was going to hold

• Chart 4:  the VXX held tight today, not buying into the overnight intervention and subsequent short squeeze at all

• Chart 5:  the S&P tried but failed to reenter the two year bubble channel today

• Chart 6:  the big EMA setup on the VXX was not hampered at all by today's action, still setup and ready for a big takeoff

• Chart 7:  the VXX still holding that lower trendline and closed at the high of the day

Now taking a look at the short term channels of the four Indexes above.  

• The S&P chart shows that it is trying to maintain its upper blue line squeeze channel but keeps falling out of it

• The NASDAQ chart shows that it slipped out of its blue line squeeze channel going into the closing bell

• The VIX chart climbed back up into its primary uphill blue channel in the last hour today

• The VXX chart did the same, also reentering its steeper blue line channel

Putting it all together, there was a very successful intervention in the SPY at 3 AM and a surprisingly strong short squeeze today but looking at both sets of charts it appears that the VIX and VXX are just not buying into all of this.  A definite divergence as they should be falling hard but they are not. 

Trade well my friends

Alan

And 3 AM Magic It is

Stock Market Technical Analysis

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Following up from last night's blog where I showed how the VXX was setup to lift and cause another sell off, Team Yellen was ready this time and came in at 3 AM on the SPY (left chart) taking its price to a much more desirable number by 3:10 AM then holding it for a big regular session gap up and the subsequent short squeeze.  In the center chart we see the huge gap in the SPY compared to yesterday's close.  In the third chart they took the liberty of having the data feeds fill in the S&P with a solid bar making it look like it was a rally from the opening tick when in reality it was a monstrous gap up from 3 AM.  They hope you will forgive this minor tweak in the data feeds.

Compare this cluster to last night's chart and you can see how effective the 3 AM SPY intervention was.

Note that the VXX isn't sure it wants to go along with all of this.

Trade well my friends

Alan

VXX Setting Up Again

Stock Market Technical Analysis

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In the market Wednesday we had a number of technical situations develop as the short squeeze wound down and the market retreated.

• Chart 1 - the S&P climbed up to test its blue line 50 day EMA and was rejected by it

• Chart 2 - the NASDAQ climbed up to test its 50 day blue EMA line and was also rejected by it

• Chart 3 - the VIX (Volatility Index) found support at its 50 day EMA line today and bounced up from it

• Chart 4 - the VXX (VIX Short Term Futures ETF) found support at its 50 day EMA line and bounced up from it

• Chart 5 - the two year Bernanke bubble channel where after four days of climbing the S&P reached up to the lower line of the channel today for the token back test and was rejected by it

• Chart 6 - the VXX has a high quality lift setup ready to start with EMAs that are twice as large as the ones that caused it to rocket two weeks ago

• Chart 7 - the VXX found support and bounced up from its lower channel line today

Taking a look now at the short term channels of the Indexes shown in the charts above.  The S&P and NASDAQ were both rejected by their blue channels they were trading in before the market sell off. The lower two charts shows that VIX and VXX both found support and bounced up from the lower lines of their blue channels.

Putting it all together the market looks poised to start another wave of selling unless we have another overnight S&P Futures or pre-market SPY intervention by the Fed.  Speaking of the Fed intervening in the stock market, the headline story at MarketWatch.com today was a good piece on what's going on behind the scenes in the stock market.  The links to the article and another article it mentioned are Opinion: The world’s best market timers: the Federal Reserve and ‘Plunge protection’ behind market’s sudden recovery.  Here is a link to another article that came out last month:  The Fed's Plunge Protection Team on Real Money The Street.com which explains how Reagan set up what is referred to among traders as the PPT or Plunge Protection Team or as I often refer to the current PPT, Team Yellen.

The truth is that the stock market has slowly morphed over the past six years from an independent investment arena into a micromanaged component of the US economy. 

Trade well my friends

Alan

Midday Chart Update: Short Squeeze Looking Tired

Stock Market Technical Analysis 

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Yesterday's blistering short squeeze appears to be running out of steam.


Trade well my friends

Alan

S&P: Up and Over

Stock Market Technical Analysis

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The S&P was in total short squeeze mode Tuesday.  Looking at the charts above, Monday's closing left the S&P up against three major resistance lines.  Later, the overnight S&P futures sold down through the night which of course is not acceptable for Team Yellen, so they opted to come in at 3 AM and run the SPY up $2 from 3 AM to 6 AM which is the equivalent of 20 points on the S&P. They held the gap through the regular session open to cause the S&P to hop completely over all three resistance lines at the open triggering a blistering short squeeze the entire day.

Who wanted to deal with those pesky resistance lines anyway?  

Looking at the second cluster of charts above, the short term channels of the Indexes, I have zoomed a little farther out so that we can see the blue channels we were trading in before the market broke down.  The S&P and the NASDAQ got right up to the lower line of their blue channels at the close. The VIX & VXX both got down to the lower lines of their uphill blue channels.  This leaves all four Indexes at trendline pivots for Wednesday morning.  

Looking at the last chart above, the multiple channels of the S&P, we can see that the S&P closed right up against the lower line of the red channel which is the primary channel going back two years. Slipping out of this channel is what caused the market to sell off.  

They are obviously trying to get the S&P back into that channel, the so-called Bernanke moon shot tube.  The question is, can they patch that hole in the bubble?

Trade well my friends

Alan