Market Update - 11/5/2010

Short post today as I am in a rush, but I will have more over the weekend. I want to try to do another video if I can. I'll try to give a bullish and bearish argument over the weekend as we are at a critical junction at this point.

Just 2 charts today, showing the daily wave structures. These are 2 possibilities I see right now. Both are bullish, one being more bullish than the other.

The first one is the more bullish one. We have a 5-3-5 up move from the March 2009 lows, and we are in the middle of Minor wave 3 of Intermediate C. This could take us to at least 1234 before a small wave 4 pullback, then we go towards 1285 to close out the year.

The second possibility is that the up move from is an A-B-C as well, but with wave B being an expanded flat, basically crossing over into wave A territory. Wave B ended at the 1010 low and we are now in wave (C).

1234 is also the target for this, but we could get a larger pullback in this... perhaps even a change of trend.

Bottom line? Well 1234 is the next major upside pivot. Either way, we could get a pull back towards 1200 if we get closer to this pivot and get rejected.

Check back over the weekend for more stuff!

Market Update - 11/4/2010

Basically everything made a new high today. Dow, SPX, Nasdaq, FTSE, DAX, Oil and Gold. We have basically blown through every single pivot point in 1 day. 1202, 1208, 1215, and 1220. If it means anything, we do have another resistance level at 1235, but I don't think the market knows what resistance means.

Wave counts? Well there are none right now. I am going to have to re-study the charts and see what makes sense at this point. Even for bullish measures, this move was a bit too extreme. I think the majority expected the 1215 area to hold... even if it was for just 1 tick. But no, the market sliced through it like a knife in warm butter.

So we have made new highs for the year and we are up about 109 SPX points since December 31, 2009 and about 210 SPX points since July 1, 2010.

We have some fib resistance at 1234. This entire area where we are in right now is the pre-2008 crash area. Right around the time before the collapse of Lehman.

But hey! Oil is once again approaching $90 a barrel! This is amazing news for the economy. Just ask the "9.6%" of people who are unemployed. I'm sure they love paying $3+ a gallon for gas.

In all seriousness, Oil is at some heavy resistance and is on the verge of a break out. If Oil is to break 90, we could see another run for the upper trendline, somewhere around $95 maybe.

VIX was crushed, down about 14% in two days... USD was hammered as well. Gold made new highs, up about 4% and Silver was up just over 5%

The one thing I find amusing is that the rally from the Marck 2009 lows to the Jan 2010 high was in anticipation of Quantitive Easing 1 to work. So doesn't releasing Quantitive Easing 2 mean that QE1 was a total failure? Why would there be a need for QE2 if QE1 had worked? Just saying...

Markets rising on hope or fear don't tend to end all that well. I don't need technical analysis to tell me that. Just looking at history is enough for me. Japan in the 90's ring a bell?

Here is my view on market sentiment, this is something similar to what I've seen in headlines over the past 3 years. Market psychology is an amazing concept... and comical at the same time.

Anyways, the Unemployment numbers come out tomorrow. I don't expect it to move the markets much. We will probably chop around tomorrow and continue to perhaps 1234 on Monday. Good luck trading!

Market Update - 11/3/2010

We made new highs for this rally on the SPX, but not the Dow. The Nasdaq Composite broke over its April highs. There is some divergence between the indices now. The Dow is still about 43 points away from breaking its April intra-day highs, while the SPX is about 22 points away. So the SPX is a lot further away.

I still believe the SPX could test 1203 and fill the gap from early May. However, the Dow would have to remain weak or else it could break the April high.

The SPX did manage to break and close above 1196, so the next pivot is 1203. Breaking below 1183 and 1177 will be bearish.

The Fed announcement to purchase over $600 billion in US Treasury funds should have an impact in all financial markets. The initial reaction was volatile, but I still think that the trend over the next week or so could set the trend from the rest of the year.

Here is the chart of the 10 Year Treasury Note:

It seems to be following this channel almost perfectly, there are a lot of people calling for a bond bubble.

On the other hand, here are the 10 year treasury yields, the interest rate on the 10 year note.

Surprisingly enough, both the yields and notes closed positive today. Which almost never happens. The two are an inverse of each other, as bond prices rise, their interest rate drops and same goes for when bond prices fall, their interest rate rises. The Fed wants to keep these rates low.

Watch for those pivots tomorrow!

Market Update - 11/2/2010

Surprisingly enough, we did not make new highs today on the SPX and Dow. The Nasdaq Composite came within 40 cents of breaking its April highs. As I have been saying since last week, the market is at a very critical level right now. Despite the up move today, we are still in this "indecision" range that has been going on for nearly 2 weeks, and until we can get a close outside of the range, whether it be above or below, the market will be range bound.

The SPX really looks like it wants to challenge the 1202 area. If this was to happen, either the Dow or Nasdaq, perhaps even both, could possibly take out the April highs.

Going into tomorrow, 1196 and 1202 are the key upside pivots. 1177 is now the key downside pivot.

With tomorrow being the all important FOMC Announcement, you can expect the market to have some big time fireworks after the announcement at 2:15 PM EST. The market has been waiting on this announcement for months, because tomorrow is supposedly the Fed's announcement on Quantitive Easing part 2. A very big monetary policy issue which could send the markets flying in either direction. It is nearly impossible to predict how the market will react to it.

The way I see it though, the real reaction to all of this could come next week. With the Fed Announcement being tomorrow, and Unemployment numbers on Friday, the market may wait until next week to reveal itself. Either way, expect some violent swings tomorrow and perhaps later in the week.

A couple of weeks ago I posted a chart of all the gaps the SPX has unopened from this move up since August.

There are now 6 major unopened gaps that should not be there.

Market Update - 11/1/2010

For the past 2 weeks, we have experienced moves like we did today. The market is up or down 10-15 points and then it reverses and closes nearly flat. Again, like I have been saying for a long time now, this type of action usually occurs at tops. There is a lot of indecision here, and the daily candles certainly display that.

We seem to be in this triangle now, and it looks just about complete. If this is right, we could have 1 more push up.

My only fear is that if we approach 1200, the Dow might break the April high.

With tomorrow being election day and the start of the FOMC, expect some more violent swings. 1196 and 1200 are the upside pivots, while 1173 and 1159 are the downside pivots.

So far, we only have 3 waves down from the high... so it doesn't look like an impulse down, despite the down move being very fast.

Until we can get a decent 5 waves down that holds, the trend is up.

I have highlighted the closing range of the last 8 trading sessions. The range is only 7 points wide. So technically, in 8 days we have only moved 7 points.

However, we have been as low as 1171 and as high as 1196. Just by looking at the candles, you can see the indecisions. The bears are scared to sell and the bulls are scared to buy. Until there is a clear winner, expect this action to continue.

Market Update - 10/29/10

The market has basically stalled at this level. I think it is just waiting for next week, which it should. We have the mid-term elections and the FOMC announcement, followed by some key economic data coming out. The market probably won't make a move until mid next week.

Currently, we seem to have a triangle playing out with the action the last few days. If it plays out, we could get a nice pop on Monday.

As I keep mentioning, 1173 is the key downside pivot for all of this.

I will have more over the weekend and I'll try to do another video.

Market Update - 10/28/10

The market is still on course to what I have been tracking the past few days. We had a pop this morning and then gave up nearly 13 points, but found support right above the 1173 pivot. The low for the day was 1177. I still believe we could get a test of 1196-1203.

With the market having violent swings and reversals in all direction, the pivots become even more important now. If we can get a solid break above 1189, we could take out 1196.

However, if we get a decent sell off to break below 1173 and 1159, the market could pull back even further. As I have mentioned before, this sort of choppy action usually comes at tops. We had it in January and we had it in April.

Here is a look at the last 6 daily candles. As you can see, they all have long shadows on both ends but have small bodies.

This just shows the indecision in the market. We have had 12-18 point swings intra day, but the market only closes up or down 1-3 points. This is the tug of war between the bulls and bears. The winner will be determined by a break those pivots.

Keep an eye out for how the market reacts at 1189 or 1173. Also be sure to check out my charts of the day, the USD had a very interesting day today. Those will be updated shortly.