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