Stock Market Technical Analysis Blog
I closed my SPY trade this morning at $122.10, from my Oct 5, 9:00 am buy at $112.06, +9%. I am not going to do a stocks to bonds switch yet in the retirement account as the stock market trend is still upward. It's just that after making nine percent in nine days on a SPY trade and it's a Friday, I feel like it's time to go ahead and take profits on the trade.
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In the above charts, the NASDAQ had its third gap up opening in a week and has was a little too overextended from its gold 5 EMA line at the open. The bonds did not make a lower low with this stock market gap up. I marked a floorline on the TLT bond chart to show it did not make a lower low.
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In the above chart, the 401k stock trade is still good as long as the NASDAQ doesn't breach the heavy black line channel I have drawn in, and/or the bonds break above the heavy descending black line. If the NASDAQ did drop out of that channel I may have to do the stocks back to bonds switch in the retirement account, but for now it is fine.
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In the above chart set the NASDAQ chart is one of the three reasons I closed the SPY trade this morning as the NASDAQ has hit its upper blue channel line and where I would prefer to sit out for a bit and wait and see if it can actually break out above the blue uphill channel. The NASDAQ has been leading the SPY and DOW in this rally.
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In the above chart set the VIX may be trying to find support at the center line of a long term uphill channel which gave me pause tradewise.
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In the above chart shows the second reason I closed the SPY trade. The QQQ has reached its upper blue channel line which has been the dominant index channel with the QQQs having lead the way up through all the shaky movements in this nine day rally. If the QQQ keeps climbing it will confirm the steep red line uphill channel as the new channel but it has to get above the upper blue line first. If it does get above it I will be looking for another entry for another trade going long.
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In the above chart set the third reason I sold SPY is that the Advance Decline has established a third point in the top line of a downhill channel shown with the red lines. While there may still have been more money left in the SPY trade, after nine percent in nine days I felt it was time to take profits and if the market sets up to go higher to re-enter at the next setup.
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In the above chart set two key items are that the NASDAQ did gap up into its summer horizontal black line channel today which is good but the VIX (volatility index) reversed this morning upwards at the center line of its long term black line channel we dropped down into a couple of days ago. You can also see on the TLT chart that the bonds are trying to establish another floor line.
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In the above charts we still see their intentions for a big year end rally especially in the NASDAQ.
In the retirement account the last "bonds to stocks" switch signal on the morning of 10/5 is still good and it would take some major chart damage to the NASDAQ to cause me to flip back to bonds. The overall trend is still up for stocks.
Alan
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