Stock Market Technical Analysis Blog
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The stock market traded sideways today as the multiple support setups I focused on in Friday night's blog continue to hold the stock market. The top chart cluster is the same from Friday night but showing how today's trading is sideways on multiple support lines. Also notice that it is starting to look like those that switched from stocks to bonds may have gotten a little ahead of themselves as the bond chart looks to be slowing quickly. Stocks and bonds don't trade inversely by design, the bond market is simply seen as a safe place to put money when stocks are heading down for a while. Once stocks look to have bottomed the crowd pulls out of bonds and goes back into stocks where there are normally better returns. It's obvious that those that went into bonds are having pause as it looks like the powers behind the curtain may be able to stop the stock market decline at the multiple support setups shown in charts 1-4 above. Bonds moved up very little on Friday.
In the lower cluster a new weekly bar opened up on the triple index market direction set. Looking at the three focused in chart sections on the right side of the six year charts, we see first that the VIX is showing its red EMA line to be looking like it might be more likely to get pushed down by the green line rather than cross above it primarily because the VIX has fallen the past four trading days as shown in the daily VIX chart just to the right of it. In the center row, the stocks, we will have to call that red/green merge pretty much neutral. In the lower chart, the bonds, we see where there was a real transfer of money from the stock market to the bond market last week but it's already looking overextended bar-wise. No doubt most that have already switched from stocks to bonds for safe refuge are concerned they may have moved to soon for two reasons, one is the fact that the support shown in the upper cluster is continuing to hold in spite of the growing worries of the fiscal cliff and some investors cashing out for capital gains reasons. The other big concern for early bird bond buyers is shown in the bottom right corner chart, the weekly bars chart of AAPL with the sentiment EMAs on it. As you can see, AAPL's price bar is moderately overextended downward from both EMAs and if it gets some elastic pullback up action, AAPL could actually salvage itself with a red/green line bounce instead of a down cross. If this happens in AAPL over the next 2-3 weeks then AAPL would recover and those that went over to bonds will come back over to the stock market very quickly.
In the lower cluster a new weekly bar opened up on the triple index market direction set. Looking at the three focused in chart sections on the right side of the six year charts, we see first that the VIX is showing its red EMA line to be looking like it might be more likely to get pushed down by the green line rather than cross above it primarily because the VIX has fallen the past four trading days as shown in the daily VIX chart just to the right of it. In the center row, the stocks, we will have to call that red/green merge pretty much neutral. In the lower chart, the bonds, we see where there was a real transfer of money from the stock market to the bond market last week but it's already looking overextended bar-wise. No doubt most that have already switched from stocks to bonds for safe refuge are concerned they may have moved to soon for two reasons, one is the fact that the support shown in the upper cluster is continuing to hold in spite of the growing worries of the fiscal cliff and some investors cashing out for capital gains reasons. The other big concern for early bird bond buyers is shown in the bottom right corner chart, the weekly bars chart of AAPL with the sentiment EMAs on it. As you can see, AAPL's price bar is moderately overextended downward from both EMAs and if it gets some elastic pullback up action, AAPL could actually salvage itself with a red/green line bounce instead of a down cross. If this happens in AAPL over the next 2-3 weeks then AAPL would recover and those that went over to bonds will come back over to the stock market very quickly.
Alan
