Major Institutional Activity After Hours Friday

After the market closed Friday the big players on Wall Street got busy.  There were a number of large institutional SPY trades which included three "twin" trades where Wall Street institutions make sure other large institutions know that it is them making the trade and not a large hedge fund.  The largest of the trades, the twin 2.95 million trades, are most likely Goldman and the third 2.95 million trade added later was an exclamation point.  The trades are shown in the after hours trade log filtered for 100k and above trades (shown below).

Were these trades by the big boys actually buys where they gained confidence in the fact that the SPY popped above its 200 day SMA Friday?  Or were they exiting after making an amazing eight percent on the SPY in the first three weeks of October?  

Trade well my friends

Alan

SPY: Half Off the Table

Following up from my Thursday 10/15 post discussing the short squeeze was over but there was a new buy signal with a successful back testing of the 50 EMA line, we have seen the SPY has run nearly four percent in seven trading days and has now reached short term overbought.  I decided to close half of the SPY position as the S&P has reached the upper line of its primary channel (the red line channel shown in the chart below).  

Click on image to enlarge

The fact that the S&P did hop back up into its horizontal black line channel with Friday's gap up is quite bullish and the primary reason I am keeping the second half of the position for now. The risk has become elevated here, however, as the market could just as easily gap down Monday morning as it could gap up.  If the stock market's central planning agency (the central banks) has decided to continue the squeeze, a positive close Monday would capitulate the most stubborn of bears caught on the wrong side of the trade.  A negative Monday close would draw in enough bears to cause a pullback.

  

The swing factor will likely be how many chasers become fearful that they have missed the boat and therefore, put in the late entry buy on Monday.  If the Fed and its associates see enough chaser buying, there will be tremendous temptation for them to keep this train running since it is so hard to get it moving again after it has stopped.

Another very important swing factor for the direction of the coming week is how the Nasdaq trades on Monday in light of the fact that it closed right at the lower line of its previous four-year blue line uphill channel shown in the lower half of the chart below.

Also noteworthy is the fact that the VIX printed a hammer reversal candle as it touched down to its lower channel line today (shown in the lower half of the top chart cluster).  While the VIX can stay at that lower line for some time, the possibility for a negative knee jerk reaction dictated that at least half of the position be closed because of this possibility as most traders have considered this rally highly suspect and their gradual short covering has kept it going.

Then as the market looked done, Draghi's comments perfectly timed put the icing on the cake.


Trade well my friends

Alan

S&P and NASDAQ Long Term Bull Market Still Intact

Although the S&P 500 and Nasdaq did fall out of their 4-year channels as I focused on in my previous article, their 6-year channels saved the day and are showing strong support for a continued move higher through year end.  Taking a look at the S&P and Nasdaq charts below, we can see that the S&P's double bottom was fiercely supported twice at the lower line of its 6-year uphill red channel.

click on image to enlarge

The Nasdaq quickly bounced well away from the lower line of its 6-year uphill red channel.  The precision and ferocity of support at the lower line of these 6-year uphill channels contradict all of the calls of the past couple of months that the bull market has ended and the bear market has begun.  The bear market will not begin until the S&P and Nasdaq fall below the lower lines of these 6-year channels then have a back test of the underside of the lines fail and then start dropping again.  For the time being, however, the trend is still upward.

Trade well my friends

Alan

VIX Closes Below Key 432 EMA

The market started off modestly today and appeared to be going nowhere until midday when the VIX passed down through its blue 432 EMA line shown in the lower half of the double chart just below.

click on image to enlarge

The VIX 432 EMA line as I have highlighted numerous times through the years is the definitive divider line that buy and sell programs use.  Below the line is bull territory and above it is bear territory.  As it passed down through the line midday today the market took off on a rip all the way into the closing bell.

Comparing the two charts, you can see every time that the VIX has up-crossed the line it has wreaked havoc on the S&P.  Looking at the S&P in the upper half, there is obviously good money to be made before we reach the upper line of the new downhill channel.  

Taking a look at the next chart cluster below, we can see that the channels chart of the VIX shown in the lower half shows that the VIX has plenty of room to fall also before it gets down to its lower line.  

Is this the beginning of the year end rally which is so desperately needed this year?  That question won't become clear until we see what happens once the S&P does reach the upper line of the new downhill channel.  Nonetheless, we recently completed a "W" bottom causing a strong short squeeze last week and then the S&P sat down on its 50 EMA yesterday and with today's rise it concludes a successful retest of the 50 EMA after crossing above it last week.  With the VIX back on the bullish side of the 432 line and the S&P pushing up from its 50 EMA line, we have the first bullish setup that looks to produce a tradable upside move since the S&P  fell out of its 4-year uphill channel on August 20th.

Trade well my friends

Alan