NASDAQ, QQQ & S&P100 Charts Are Bearing Down Heavily on the S&P500 Recent Breakout

Following up from my last post where I focused on how the S&P head and shoulders neckline was going to hold, we have seen a blistering short squeeze since then that took all the major indices up to their upper channel line of their slowly descending channels.  

The NASDAQ, QQQ and S&P 100 ($OEX) have already turned over right as they hit their upper channel lines.  The S&P 500 however, popped above its channel line last week but fell back onto the upper channel line as the market shifted into major selling mode Friday.

Logic says the bearish situation of the first three indices, especially the $OEX (100 megastocks of the S&P 500), should outweigh the S&P 500 breakout and force it back down into its channel next week.  Considering the unusual price action in the SPY lately, traders know that anything can happen in this environment.

Trade well my friends

Alan

S&P Holds the Neckline

We may have just seen a successful test of the S&P head and shoulders neckline.  Last Thursday the S&P slipped through the neckline but closed back slightly above it for a bullish hammer then on Friday the market squeezed with 500k SPY blocks decorating the climb several times.  

Taking a look a the charts below, the first chart in the top row shows the Day 5 EMA line starting to be turned back upward by the Day 50 EMA line producing the hammer candle on Thursday and the sudden lift on Friday.

Taking a look at the second chart of the top row, we see the short term declining channel the S&P has been trading in for the past four weeks.  Some of the bulls have been arguing that this is a bull flag but the bears are quick to point out that four weeks is too long a time period for a bull flag.  

In the third chart of the top row, we see Thursday's hammer candle and Friday's strong candle above the neckline.

In the lower chart, we see the slowly declining 1.5 year blue channel making it very clear that the S&P has topped but just because it has topped doesn't necessarily mean the journey south is coming anytime soon.  A lot depends on if the current neckline shown in red continues to hold.  Looking at the previous two necklines or shelf lines we see the catastrophic falls that take place when these critical support lines give way.  No one even pretends to know what is coming more than a day out anymore, it has truly become a one day market, today is what today is and good luck trying to figure out what happens tomorrow or the next day.  Having said that, the momentum is with the bulls as along as we have a green close Monday.  A red close on Monday would take it back to a neutral bias.  A red close that finishes below the neckline on Monday would bring the bears back out in force.

Trade well my friends

Alan  

Nasdaq at Most Overbought Level in Two Years

In my April 6th article I wrote how the S&P 500 was grossly overextended and basically pressed against the ceiling on the Percent of S&P stocks above their 50 day moving average.  Tonight we are taking a look at the Nasdaq to see if it is equally overbought.  The chart below shows the percent of Nasdaq stocks above their 50 day moving average.  Friday the percent above 50 closed at the most overbought level in the past two years.  

With such overbought conditions, investors would do well to keep a close eye on their long positions.

Trade well my friends

Alan

AAPL's Situation Worsens

Well, we learned Friday that AAPL is cutting back production of its iphone due to slowing demand.  I guess AAPL forgot to tell us that when investors were buying the channel breakout a couple of days ago.  Looking back, it almost appears that someone had a powerful algo forcing AAPL to break out of the channel.  

Looking at the top left chart above, we see where AAPL broke above its 200 day moving average and then retreated back below it with the news.  In the top right chart we see how AAPL broke out of its steep declining channel but then fell back into it with the news.  Notice the two prior false breakouts marked with arrows and how AAPL is punished severely immediately after having a false breakout.  

In the far right daily chart, we see a bearish RSI divergence and lower in that chart a MACD sell signal has appeared.  Next, in the candles chart we see that a second bearish shooting candle was printed in the weekly candles for this past week confirming the previous week's shooting star reversal candle.  Lastly, the large bottom left chart, we see the weekly moving averages I have focused on in several articles as they continue to develop a bearish setup where the smaller red moving average finds itself up under the larger green moving average and is turned back down or deflected downward by the green moving average producing a power flush downward quite similar to the MACD sell signal in the day chart to the right.

The only thing that might save AAPL here is the continued nightly futures interventions by the prop the market coalition and their tractor program that has been strapped on the market this past week to keep it from selling any whatsoever from the high peak it reached from the short squeeze based upon the now known to be a false report of a Russian / Saudi Arabia oil deal.

Trade well my friends

Alan

A couple of good reads

http://www.zerohedge.com/news/2016-04-15/saudi-prince-drops-friday-night-bomb-no-deal-without-iranwe-are-selling-every-opport  See my Tuesday 4/12 blog post

http://www.zerohedge.com/news/2016-04-15/fed-sends-frightening-letter-jpmorgan-corporate-media-yawns

Focusing on the SPY Top

The trading world is watching the SPY this morning as it is the last barrier of reason on the stock market.  

Trade well my friends

Alan

Pro SPY Traders Agree with VXX Traders

While the iron grip tractor program has forced all the retail stock market indices (S&P, Nasdaq, Dow) out of their multiyear declining channels the past 3 days, pro traders are largely ignoring this as they go by their own chart, the SPY ETF.

Today's high finally hit the upper channel line on the SPY and should close with an overextended shooting star candle that just kissed the line and pulled back.  This is likely why the iron grip tractor program seems to be losing its grip on the retail indices.  The pros on Wall Street will be fighting to maintain the downtrend line on their chart, the SPY.

Trade well my friends

Alan

VXX Believes 3 Day Iron Grip Tractor Program to Force Channel Breakouts is About To End

While the tractor program that has been locked on the market for 3 days has been hugely successful in forcing the stock indices to break out of their restraining channels, the breakouts haven't gone very far and it begs the question of what happens next if the VXX traders are right with their chart indicating the tractor program may be about to be turned off.

Trade well my friends

Alan

XLF Up Against Double Resistance

The XLF financial ETF had a big day yesterday but finds itself up against the upper line of its six-month declining channel this morning.  At this juncture you can expect them to put lipstick on some really foul bank earnings.

Trade well my friends

Alan

Midterm Channels Projecting Market Pullback

The S&P 500, Nasdaq, and USO have maxed out in their midterm channels as the VIX is basing at the 13.75 level which has projected stock market tops for the past four weeks.  The USO was stopped dead in its tracks after the Saudi Arabia oil minister denounced yesterday's oil deal rumor which had triggered the algos into a blind buying frenzy on the USO and stocks Tuesday and fueled a continuing short squeeze higher today.

Trade well my friends

Alan

USO December Support Level Becomes Resistance

The USO continues yesterday's late afternoon reversal downward while this morning Saudi Arabia's oil minister Ali al-Naimi threw water on the hopes of oil producers taking action in regards to crude output at the Sunday meeting in Doha.

He was asked this morning about the possibility of this action happening and said " forget about this topic".

Trade well my friends

Alan

Is Russian / Saudi Arabia Deal a Game Changer for Stocks or a Ruse?

The stock market ripped higher Tuesday as oil took off on a monster squeeze from the moment a Russian news agency reported that a Russian diplomat said that Russia and Saudi Arabia had reached a deal ahead of this week's OPEC meeting.  This news / rumor / prepackaged algo spiker was effective in triggering an outrageous short squeeze in oil and the accompanying squeeze in stocks.  

The algos are set so tightly to oil news now that they have no need for confirmation they will just buy the rumor then sell the news come Monday if we find out this weekend's OPEC meeting that the news was true.  Either way it is a risky trade as if it's true, the sell the news exit is Monday and if it is not true, oil will take a nasty turn back down and take the stocks with it.  

The charts below show where the indices are in the channels after Tuesday's short squeeze.

Trade well my friends

Alan

S&P Establishing a Steep Declining Channel

The S&P 500 continues its topping process even though oil has been squeezed relentlessly the past few days.  Monday we had a two point confirmation of the S&P market top that is textbook.  First, the third lower high was printed in the newly developing declining channel shown in red in the chart below.

Also, in the same trading day the S&P closed outside of its transition channel shown in blue.  These two together provide textbook technical confirmation that a new leg down has begun.  This is also where technicians pull out the Fibonacci scale to mark the token bounce points on the downward path.  The first benchmark Fibonacci line is the 38% retracement which is at 1974.  Swing traders wanting to catch the flip in the options montage when we catch a solid bounce will be watching for that 1974 Fib number and/or the Percent of S&P stocks above their 50 day moving average to reach the 40 level as I discussed in my April 6th blog post.  

Don't look for smooth natural trading for the next couple of months, I expect constant interventions in the overnight futures which will produce very choppy charts.

Trade well my friends

Alan

AAPL Rejected by 200 Day Moving Average & 1 Year Declining Trendline

AAPL's bearish situation has worsened considerably recently as it tested its 200 day moving average and the upper line of its one year declining channel a week ago and was rejected by both simultaneously.  Since then AAPL has traded lower for five days giving confirmation of the rejection as can be seen in the two upper daily charts shown below.

Looking next at the two lower charts which are weekly bars.  The chart on the left shows the two moving averages that started the big up leg in AAPL with the red crossing above the green back in November of 2013 and then it shows the end of the run with the red crossing down through the green a couple of months ago.  Since that recent down cross AAPL's price has been climbing as the make the stock do the opposite algo kicked in.  Now, however, we have a situation where the smaller red moving average is up under the larger green moving average whereby if AAPL goes a little higher again such as another test of the 200 moving average and the upper channel line in a new weekly bar and then stops, they will have inadvertently created a powerful push down situation as the chart could start showing the red moving average being deflected or forced downward by the larger green moving average.

Not to add insult to injury but AAPL printed a weekly shooting star candle this past week as shown in the bottom right corner chart.  Barring a major intervention, AAPL could go a lot lower.

Trade well my friends

Alan

An Interesting Article on Oil

http://www.zerohedge.com/news/2016-04-10/iraq-latest-announce-record-oil-production-why-just-beginning-supply-glut

Stocks & Oil Indices At Major Resistance

As the stock market closed another week of trading, we found the S&P 500, Nasdaq, QQQ, XLF, XLE, and the USO still stalled at major trend lines.  

The exceptions are the VIX and VXX which are sitting on major support.  Expect sudden moves in both directions to be coming soon.  The reality is that the prop the market coalition cannot afford for all these indices to rollover at the same time as it would be damaging to the stock market in both the short term and long term.  Keep an eye out for interventions in the overnight oil futures sessions.

Trade well my friends

Alan

Float Up Friday Hits A Snag

The S&P 500 is experiencing another float up Friday where they went ahead and gapped it up at the open to make sure they get a green day using a oil squeeze early on as I mentioned was likely last night.  One hour into trading the rally appears to have hit a snag.

Trade well my friends

Alan

Another Float Up Friday?

A lot of rising channels failed this week.  The charts below are 195 minute bar charts showing two months of trading.

The first two rows are the key stock indices where we see that all but the QQQ have lost their rising channels.  The bottom row shows that the TLT (bonds) and gold became maxed in their channels Thursday.  The TLT needs a pullback tomorrow as does gold and if this happens this would allow a window for stocks to rise tomorrow and with Friday being the thinly traded session where the prop the market coalition is highly effective in squeezing oil and with the USO pressing against the upper line of its declining channel, it looks like we are set up for another classic "float up Friday".

Trade well my friends

Alan

S&P Percent Above 50 Day MA Still at the Ceiling

There was a big squeeze in stocks Wednesday that was triggered by an even bigger squeeze in oil as the prop the market coalition seems to have abandoned their effort to decouple stocks from oil after some days without success and instead built a fire under oil futures knowing that just as soon as they moved a minimum amount up that it would trigger a storm of buying by the algos that now run the market and are tuned tightly to every tick up or down of oil.  This sudden intraday move up in the stock market may make some people wonder if a new wave higher is beginning but it is only a new wave higher if starts either from the 40, 20, or 10 level of this key market navigation chart.  A couple of days ago it was at 92.20 and today it is at 91.80, still tight against the ceiling and nearly 20 points above the red danger line which is at the 73 level.

If you study the chart for the entire year of 2014 you can see that every time the percent above 50 day MA got up to the red line the market started a leg down.  However, just as important notice that the reversals back up happened when the S&P percent above 50 got down to the 40 level, the most bullish level for the market to turn back up.  A couple of times it had to go deeper, for instance in early October 2014 when the market went on down to the 20 level before it could start a new leg up.  In uptrending markets as in 2014, the 40 level is pretty safe to buy in at and it has worked well.  In downtrending markets such as 2015, the level for which the market can start a new leg up is either the 20 or 10 level.  Notice that last summer it pegged the 10 level before a new leg up began and just three months ago in January it pegged the 10 level once again.  In downtrending markets the 20 and 10 levels are key but with the prop the market coalition manipulating the market on a daily basis it is pretty likely that the 40 level will become the effective turnaround point even though the market is downtrending.  So, 40 is the number to look for a sustainable up leg in the market.

Now look at the upper chart where we are still way above the red danger line.  It is almost comical that oil is being used to try to start an up wave when the S&P is already tight against the ceiling.  The percentage of stocks above 50 day moving average has been the most reliable indicator of "where" we are at in the cycling market and is also indicative of how desperately the prop the market coalition needs to keep the market from selling any at all.

Trade well my friends

Alan

S&P Hanging On By A Thread

The S&P 500 finds itself in a precarious position this morning.

It has now failed twice at its upper horizontal channel line (shown in black).  

Trade well my friends

Alan

NYSE McClellan Oscillator Drops Below Zero

The NYSE McClellan Oscillator is a technical indicator and it serves best as a simple measure of when the market goes from bullish to bearish.  When its value crosses below the zero line as it did yesterday, the big players in the market turn bearish shown by today's big gap down.  

This indicator alone cannot be used to determine a market top but when used in conjunction with the Percent of S&P stocks above 50 day moving average and the S&P's current GAAP PE and whatever the leading sector is for the market which is currently oil leading the market downward then you have the four components necessary to be conclusive that a market top has been reached.  These other three components are shown in the charts below.

 Trade well my friends

Alan

Percent of S&P Stocks Above 50D MA Points to a Market Top

Another way to detect market tops besides the S&P GAAP PE Ratio is the percent of S&P 500 stocks above their 50 day moving average.  The upper chart below is a two year line chart on a weekly time frame showing percent of S&P stocks above their 50 day moving average and the lower chart is the S&P index in weekly bars.

If you look at the top chart and note each time the percent above 50 reaches the top red line, that point corresponds directly with a market sell off beginning in the S&P chart below.  The eight above 50 percent peaks in the top chart produced the eight market rollovers shown with red marks on the S&P chart.  The eighth one is where we are right now.  

Bulls should be very careful here.

Trade well my friends

Alan

Are the S&P 500 Stocks Cheap?

There are some permabulls out there this weekend pushing the idea that the S&P 500 is cheap at this juncture.  The following chart shows S&P's current PE using GAAP accounting (not Proforma, mickey mouse, etc).

Every investor should decide for himself if that chart says cheap or insanely overpriced. 

Trade well my friends

Alan

Oil Starting Next Leg Down

The price of oil has been retreating the past few days and it is important to know if it's a move starting from daily chart moving averages or weekly chart moving averages as the latter is a much more serious situation.

It can be seen that this is a weekly chart moving average push down that is beginning (using the USO chart since it has liquid options).  Looking at the top two charts, the left is the regular view of the two moving averages showing the smaller red moving average being pushed down by the larger green moving average on weekly bars.  The chart to the right is a focused view of the same chart.

The lower two charts show that it is not only a weekly moving average push down but it is also a weekly upper channel line failure that is pushing the price down.  The chart to the lower right shows a focused view that I converted to daily bars for a more precise view.

How much lower oil will go again no one knows but a new leg down has already begun.  As everyone knows oil has been leading the stock market up and down by its nose for some time now because of the detrimental effect on banks should oil companies start filing for bankruptcy.  On Friday there was a large drop in oil that rattled the stock market in the morning but it was quickly driven up in a fierce short squeeze as the prop the market coalition took advantage of the thinly traded Friday to attempt to decouple the stock market from the price of oil.  Then in the afternoon when most Wall Street traders are already gone for the weekend they turned up the heat because they were essentially unopposed on an empty playing field.  Whether or not they can make this one day decoupling stick will be the big question on everyone's mind next week.  If they can, it is very possible that the indices may break up out of their restraining one and two year channels.  If they can't make the decoupling stick then the stock market will likely follow oil lower once again.

Trade well my friends

Alan

Indices Close Friday at Major Resistance

The S&P 500, Nasdaq, QQQ, and XLF all four were squeezed right up to major resistance Friday afternoon.  The S&P and QQQ are in virtually the same situation as they are both up against their one-year and two-year upper channel lines simultaneously.  The Nasdaq is up against one major channel line but it is a clearly defined and well honored two-year channel line.  The XLF was rejected by the center line of its two-year channel recently and it is now caught in a steep short term declining channel shown with green lines.  

Next, taking a look at how Monday is looking I posted the sixty minute bars chart below.

We can see that the S&P closed Friday at the upper line of the new channel being established (shown in blue).  Considering the S&P is maxed out in this channel, it suggests that Monday will bring a pullback for the S&P.  

Trade well my friends

Alan

S&P Longterm Bear Market Signal Still In Play

Back in my March 6th blog, I wrote about how the S&P 500 monthly bars chart with a 10 and 20 moving average is widely accepted as the universal indicator for longterm bull markets and longterm bear markets.  Since then the prop the market coalition has forced the biggest stock market squeeze in history.  Today being the opening of a new monthly bar, it is time to re-examine that chart below.

The up crosses and down crosses of these two moving averages are widely used by Wall Street and institutional money managers to mark the beginning of longterm bull markets and longterm bear markets.  

On March 1st the down cross appeared and the make the market do the opposite effort was initiated.  Looking at the closeup view of last month's down cross in the focused view on the right, we can see that the monster short squeeze has pulled the tip of the red line up from a thirty degree downward pitch that it showed back on the chart in my March 7th article.  After the opening of Friday's new bar, the red line is horizontal underneath the green line which is impressive for one month of movement but the way the chart works, it is still a longterm bear market until if or when the tip of the red line appears above the green line.  It's that simple.  

Considering there is a bad earnings season beginning next week (top line revenue-wise but expect estimate beats as the bar has been guided so low that they are in danger of tripping over it), it's obvious why the market had to be forced as high as possible before this begins.  

The normal down cross progression can be seen in the previous two longterm bear market down crosses.  It will be interesting to see how these lines interact in the next few months after being artificially altered.  

Trade well my friends

Alan


Two good reads:

http://www.zerohedge.com/news/2016-04-01/inside-janet-yellens-diary-stunning-discovery-two-phone-calls-saved-world

http://www.zerohedge.com/news/2016-04-01/godfather-technical-analysis-nails-correction

S&P Confirms Failed Backtest of 5 Week Short Squeeze Channel

The past two days the market has been watching the failed backtest of the S&P 500's five-week short squeeze channel.  Today's negative opening provides a third day of confirmation that the biggest Stock Market short squeeze in history is over.

Trade well my friends

Alan

USO Head & Shoulders Topping Pattern Nears Completion

Lately, every permabull out there has been promoting every possible reason that oil will keep climbing from here and take the stock market higher with it.  The reality is that the USO chart is projecting a different outcome because of the head and shoulders topping pattern that has just about reached completion.  

There have also been multiple sources showing that the net long exposure to oil has actually decreased during its big move up confirming that it was essentially all short squeeze.  

Trade well my friends

Alan

A good read

Below is a link to an interview with former Dallas Fed President Fisher where he speaks frankly on the current state of the Fed.

http://www.zerohedge.com/news/2016-03-30/former-fed-president-living-constant-fear-market-reaction-not-how-you-manage-central

Yellen Gives In To Bearish Charts

The indices will be breaking out of multiple restraining channels this morning as investors are thrilled to see how Yellen showed on Tuesday that she is still market index dependent and not economic data dependent.  In her speech she confirmed that she is willing to say whatever it takes to keep the stock market high even making a 180 reversal from the hawkish stance she was pushing just two months ago.

Trade well my friends

Alan

Yellen Shifts To An Even More Dovish Stance

Today the overriding news is Yellen's shift to a more dovish position and then we saw the markets lift quickly as that is exactly what the market wants to hear.  This was a substantial move for one afternoon but what is critical is how much affect it had on the daily charts.

I posted two clusters of the key charts below with their midterm channels shown.

Looking at the cluster above, the S&P did not break through its downtrend line.  The NASDAQ stopped right at its one-year support / resistance line.  The QQQ, the leader of the day, did breakout of its declining channel but has yet to get through its corresponding one-year support / resistance level.  The XLE (energy ETF) didn't get much help from the late afternoon short squeeze.  The VIX and the VXX dropped some but they are still near their lower support lines.

Looking at the second cluster, the IWM is still lagging.  The Dow still has not breached its upper channel line.  AAPL closed right at its neckline of its big head and shoulders it recently fell below.  The XLF is in trouble as many are starting to short the banks in anticipation of their stock prices being hit if oil prices turn back down.  The GLD and the TLT both have genuinely bullish setups with lots of room to move higher.

Trade well my friends

Alan

Another good read

The article is titled "Is the S&P 500 Rally Finally Over?"
under Opinion / Stock Markets at:

Investing.com

Tonight's good reads

http://www.zerohedge.com/news/2016-03-28/its-official-oil-surge-was-driven-biggest-short-squeeze-ever

http://www.zerohedge.com/news/2016-03-28/q1-gdp-crashes-06-latest-atlanta-fed-estimate

Examining the 12 Year VIX Channels Chart

The VIX Volatility Index has found support at its 2-year lower trendline (shown with a brown line in the weekly bars chart below).

This has been a firm line from which stock market selloffs have begun.  The only time the VIX has dropped below it was last summer which triggered the mini crash as the VIX then reversed and rocketed up to the 54 area.  The VIX's most recent touch down to this line was in late October where it slowly started climbing producing another market selloff.  This week's close on the VIX will be important as it will likely determine whether the VIX gets a stick bounce from this line or it begins a sideways consolidation pattern or base.

Trade well my friends

Alan

Overnight Futures Ramp Watch

With sell signals everywhere on the indices, I am expecting for them to step in and put a ramp in front of the overnight futures open this evening or when volume gets thin during the night.  

Trade well my friends

Alan

Bull Flag on TLT Bond ETF

Taking a look at the TLT 20-year bond ETF, we see what is undeniably a very bullish chart.  The top chart below shows daily bars and the lower chart shows weekly bars.

The most notable aspect is in the daily chart where we see a bull flag that just started breaking to the upside as more and more investors seek the safety of the bond market.

Trade well my friends,

Alan

Excerpts of an article by Randy Forsyth at Barron's admitting that the stock market is not about the economy anymore but rather anticipating and chasing Fed manipulation of the market.

http://www.zerohedge.com/news/2016-03-26/its-not-economy-stupid-barrons-admits-its-bullard-market

Two Good Market Reads

http://www.cnbc.com/2016/03/24/bofa-warns-slowly-tightening-fed-may-hit-earnings.html

http://www.zerohedge.com/news/2016-03-25/there-no-word-describe-energy-forward-pe-multipe-now-charts

Trade well my friends 

Alan

AAPL Pulls Back at Major Resistance

Taking a look first at the lower chart below, a 10 year weekly bar chart of AAPL, we can see that AAPL's year-wide head and shoulders pattern on top of its upper red channel line was triggered a few months ago taking AAPL back down into its large red channel.  AAPL has now risen back to the neckline from which it dropped and printed a shooting star weekly candle as it touched it this past week.  This week's pullback qualifies as a failed backtest of its red upper channel line and also as a failed backtest of the year-wide head and shoulders neckline plus additionally, a failed backtest of the down cross of its benchmark moving averages (shown in the top left chart).

Next, taking a look at the top left chart, we see two large benchmark moving averages that have taken AAPL up and down throughout the years.  The beginning of the up leg is visible in the chart with the red crossing above the green back in the Fall of 2013.  Looking at the right side of the chart, we can see that four weeks ago the red moving average down crossed through the larger green moving average signalling the end of its bull run.  The candles chart (top right) shows the weekly shooting star candle that printed this past week.

It will take a major intervention by the Fed on the broad market to help AAPL out of the situation it is currently in.

Trade well my friends

Alan

Put / Call Ratio Gives Sell Signal on Stocks

In the market Thursday we had a gap down opening from the weight of the S&P 500's one-year downtrend line I focused on in my previous article.  As we closed Wednesday the king of all market navigators, the equity Put / Call ratio, started to show a sell signal on stocks that confirmed with the trading of Thursday's two 195 minute bars.  

In the chart below, I have the two benchmark moving averages applied that have yielded a 98% accuracy going back many years telling investors when to buy and when to sell stocks.  When the smaller red moving average crosses above the larger green moving average the Put / Call ratio gives a sell signal for stocks and when the red crosses down through the green it gives a buy signal for stocks.

The top chart is where I have marked in each up cross and down cross with vertical lines colored to show the effect on stocks and then continued the line down to the S&P chart below it to show the direct effect on the S&P.

In the six months visible in the upper chart, you can clearly see the equity Put / Call ratio with these large moving averages is an accurate indicator of where the market goes next.  Note that in the past four weeks we have had three moments where the red line almost crossed above the green line (marked with yellow bars) but was turned back down allowing the stocks to continue climbing.  

On Thursday, however, the red line clearly crossed well above the green line for an official Put / Call sell signal on stocks. During the day the Fed's PPT had their market rescue algo running in high gear which dragged the market up a penny at a time to basically flat at the close.  This direct intervention could not pull the red line back down as it continued higher into stock sell signal territory with the afternoon's 195 minute bar.  This Put / Call sell signal on stocks is directly tied to the S&P being rejected by its one-year downtrend line I focused on in my previous article.

Trade well my friends

Alan

S&P 500 Failing at Major Resistance, VIX Rising From Major Support

In the market Wednesday we saw an increasing pullback from the S&P which stopped its climb on Tuesday as it found major resistance at its one year declining upper channel line shown in the daily bars chart below.  

Looking at the lower half of the chart it can be seen that the VIX continues to rise from the major support of its 8- month lower channel line.  

Trade well my friends

Alan

Tonight's Best Reads:

http://www.zerohedge.com/news/2016-03-23/oil-hits-critical-choke-point-why-market-faces-round-rapid-stockbuilds

http://www.zerohedge.com/news/2016-03-23/peter-schiff-warns-fed-stuck-same-monetary-mud-2008

http://www.zerohedge.com/news/2016-03-23/one-most-accurate-forecasters-2016-sp-most-overbought-2009-sell

http://www.zerohedge.com/news/2016-03-23/why-bob-pisani-asking-if-fed-alarmed-market-complacency-big-problem-janet-yellen

QQQ & USO Up Against Double Resistance

Looking at the QQQ and the USO (which has been leading the QQQ in the big short squeeze) we see that both have stopped at double resistance at the same time.

The broad market has been locked down in a tractor program to prevent selling on this grossly overbought condition we have now.  A situation where the two leaders hit double resistance at the same time is normally not something that can be sustained very long.

Trade well my friends

Alan

P.S.  These are links to good analysis reads on the web tonight:

At Investing.com the article is under Opinion/Stock Markets and is titled Technically Speaking: Only 4% From the Highs

http://www.investing.com/analysis/technically-speaking:-only-4-from-the-highs-200122515

http://www.zerohedge.com/news/2016-03-22/just-3-charts

At Investing.com the article is under Opinion/Stock Markets and is titled Dow Jones vs Silver Trading Volume Says It All

http://www.investing.com/analysis/dow-jones-vs-silver:-trading-volume-says-it-all-200122401

A Few Good Reads While We Wait for the Fed to Finish Squeezing the Last Few Drops of Short Interest Out of the Market

The articles are:

http://ibankcoin.com/bluestar/2016/03/21/the-fed-just-blinked-history-suggests-that-it-is-not-good/

http://www.zerohedge.com/news/2016-03-21/bloomberg-explains-why-nobody-believes-rally

Trade well my friends

Alan

A Good Article on Stock Market Manipulation

The article is titled "Stock Manipulation? You Better Believe It"
under Opinion / Stock Markets at:

Investing.com

Trade well my friends

Alan

New Weekly Bar for the VIX

A Good Article On How Manipulation Chasing Has Replaced Price Discovery

The article is titled "Do Any of  the Current Rallies "Pass"?"
under Opinion / Stock Markets at:

Investing.com

Trade well my friends

Alan

VIX Set Up To Rip Higher

Tonight we will take a look at two weekly bars charts of the VIX Volatility Index.  In the top chart, we can see that the VIX is now sitting on its lower channel line of its nine-month rising channel which has been the VIX's launch point and market rollover point since last summer's mini crash.

Next taking a look at the lower chart, we see that the same moving average pair that set up in the last week of December and wreaked havoc on the market the first two weeks of January has now built the same lift setup again.  

With earnings contracting fiercely and companies losing their ability to manipulate their shares through buybacks and a two-year dome top nearing completion plus with the VIX set up to rocket higher, logic dictates that the market is about to rollover again.  Don't bet on the market rolling over just yet when you consider the absolute power of the tractor program that has been locked down on the market Tuesday and Wednesday keeping the market sideways and the fact that over the next five trading days the ECB, BOJ, and Yellen will have meetings and accompanying speeches making it very likely that they will jam the market higher possibly starting Thursday as the prop the market coalition knows that job number one is not to let the VIX start rising from its two setups above.

Trade well my friends

Alan

Stock Indices Lose Short Squeeze Channels

The S&P 500, NASDAQ, QQQ, and AAPL all lost their four week short squeeze channels late Tuesday.  The VIX & VXX broke out of their declining channels also.  

Trade well my friends

Alan

Earnings & Fundamentals

The following link is a clear analysis of the earnings and fundamentals side of the big picture:

Investing.com

The article Still Bullish About the Markets? Why You Might Want To Reconsider
is under Opinion / Stock Markets.

Trade well my friends

Alan

Market Down Crosses Provoke Record Short Squeeze

I am continuing my discussion from my two previous posts focused on the critical down crosses in the QQQ and the S&P 500.  As the March monthly bar opened and the down crosses became clearly visible the prop the market coalition shifted into crisis intervention mode and jammed the oil futures  and S&P futures in a hail mary short squeeze effort to see if what has already happened can possibly be undone.  While it was impressive market action, the NYMO has now passed the 104 mark where markets typically roll over and it's the highest reading for many years.  We will take a look at the chart below to examine how the monumental short squeeze extended the already in progress backtest effort on the QQQ.

In this QQQ weekly chart where we see the recent game over down cross and the current backtest climb.  Technically, the price bar has now reached its backtest point, the larger green line, but most had expected a line backtest where the smaller red line makes it back to the underside of the green line which now looks more in doubt as we are very short term overextended.  

Next, the S&P monthly 10/20 chart, the only longterm bear market / bull market indicator with a 100% accuracy record going back several decades.  We see that just as soon as the March bar opened it clearly showed the ominous down cross and the massive make the market do the opposite effort was on to keep investors in their stocks.  Nonetheless, the chart is what the chart is and the longterm bear market down cross has clearly happened and even if they took this market up 1% a day, every day, through the end of March it would still would not undo the down cross.  

Next taking a look at the psychologically important 2000 level where the S&P closed Friday, we see that this a major resistance level going back two years with the black 200 SMA line just above it making it an even stronger resistance level.  

Lastly, taking a look at the VXX (VIX Short Term Futures) chart we see that Friday it stopped falling at its lower channel line which is also its 200 day moving average line (shown with a black line).  This is double support to turn the VXX and VIX back upwards producing a market sell off.

When you closely analyze these four charts and the NYSE McClellan oscillator ($NYMO) nosebleed reading of 104, one must at least consider taking a cautious stance on what has transpired so far in March.

Trade well my friends

Alan

Backtest of QQQ Game Over MA Downcross is Losing Steam

Following up tonight on my last post where I detailed the importance of the QQQ's key moving average pair, I am reposting the updated chart below showing the sudden drop from the downcross and then the backtest that normally would have been the token event after such a key downcross.  As the drop happened though, it quickly appeared the retest might not happen so Fed hawk Bullard was ushered out with his verbal intervention (stating it would be unwise to raise interest rates anymore this year and hinted at the possibility of more QE) that was used to make sure the QQQ downcross did backtest.  It triggered the fiercest short squeeze of the past eight years.  Now, however, as can be seen in the chart below, the backtest appears to be losing steam and it's unsure whether the red line will actually make it back to the green line for the token backtest.  

Taking a look next at the twenty five year chart of the S&P 500 using Monthly bars, we see the two monthly bar drops after the S&P lost both channels.  The lower chart is a Daily bar view of the same chart.

This next double chart shows two starting points for a bear market.  The first chart shows the 9 month moving average with the blue line which is the equivalent of the 200 Day moving average line.  When a price bar crosses below this line the index has begun a bear market but it has not progressed far enough to determine if it will last a couple of months or a couple of years.

The lower chart shows the second stage of an early bear market and is probably the most widely passed around chart on the internet the past couple of months and surprisingly showed up on MarketWatch.com earlier today.  The red line is the 10 moving average and the green line is the 20 moving average.  When the 10 upcrosses thru the 20 a longterm bull market has begun and when the 10 downcrosses thru the 20 a longterm bear market has begun.  It is easy to see that by looking at the chart that how the next monthly bar, the March bar, closes will mean everything for the stock market.  With the new monthly bar opening Tuesday, it appears that we will be able to see the tip of the red 10 appear below the green 20.  However, the battle that is about to take place during the month of March between the Fed and the bears will likely produce the craziest price action we have seen in some time as each side exchanges short term victories.  The deal is not done though, until the March bar closes showing either the Fed having its way by keeping the 10 above the 20 or the bears succeeding and the bear cycle that is due begins.

Lastly, taking a look at the VIX with 60 minute bars we see the 2016 range for the VIX and that it is now positioned at the lower line as the March monthly bar is about to open.

As the month of March progresses expect multiple verbal interventions by the Fed.  Whether it will be enough to prevent the return of a natural cycle that the Fed looks intent to break is yet to be seen.

Trade well my friends

Alan