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.

Market Update - 10/27/10

Despite us being down nearly 15 points on the SPX, there was really no selling pressure throughout the day. Internals at the low were about 3.5:1 - not at all bearish. It is only natural that the market then came back up. The volume also picked up slightly during the reversal back up.

I have highlighted 2 patterns here. Both look very similar, and I expect another pop up still to come. The highs at 1196 should be tested, we may even break slightly over and get to 1203.

The 1173 pivot I mentioned yesterday also held. The low was 1171, but the market was at that level for just 1 tick. As long as we remain above 1173, the trend is up.

The Dow seems to be bouncing off of this trendline on the hourly charts.

The horizontal line at the top is the April highs - the very important level on the Dow.

The SPX might be challening the open gap between 1202 and 1197.

That entire area is resistance.

Market Update - 10/26/10

We are still tracking this ending diagonal on the SPX. There is a contracting diagonal within a larger expanding one. Both could potentially be longer term bearish structures.

I still expect one more pop to test the current highs at 1196, we may even get to 1203.

Breaking below 1173 and 1159 could be bearish though, so any downside move would have to hold over those.

The key throughout the next few days will be the Dow. If we get an up move, we have to see how the Dow reacts to its April highs. It nearly broke over it yesterday.

Any up move in the markets must remain below 11258.01 on the Dow for this bearish structure to hold, if not we could possibly a run towards 11,500.

Market Update - 10/25/10

Hopefully you had a chance to watch my video from yesterday.

Short post today, but I wanted to go over the SPX 5 Minute chart real quick.
We could get 1 more pop up tomorrow to get a wave [5] of v. It seems like we only have 4 waves in this contracting triange.

1196 and 1203 are the upside pivots while 1184 and 1173 are the downside pivots.

On the daily charts, the candlestick today is extremely beasrish. It is a gravestone doji.

We also have another gap up now that is probably going to get filled.

Market Update - Video (Oct 24)

I apologize for posting this so late. YouTube took a long time to upload the video. Hopefully the quality is fine!

If the YouTube embed doesn't work, please watch it here:

http://www.youtube.com/watch?v=ckoDJPf9lgY&feature=player_embedded

Market Update - 10/22/10

We failed to break over the 1184 area today. We tested it early this morning and then backed off. Most of the day was spent going sideways in a very tight range.

We could get a quick pop on Monday morning. The sideways action is not bearish, it looks more like a set up for a pop on Monday.

1189 and 1195 will be the key pivots on the upper side of things. 1171 and 1159 are the key downside pivots if we make it down there.

Last weekend I talked about how I believed that this was not a new up trend. Another good arguement for that is the amount of gaps we have beneath us.

We have about 5 pretty significant unfilled gaps in this rally, usually this is unhealthy for a market. The gaps down there are left open for a reason.

I will try to have more over the weekend, perhaps another video.

Market Update - 10/21/10

It is hard to count 5 waves down from the top despite having a pretty nice reversal down today. But so far it looks like just another 3 waves down which means we could still have another high coming.

1190 was nearly hit today, the high was 1189.43. Yesterday I mentioned 1190 as the key upside pivot, and we seemed to have had a pretty nice rejection from there. We reversed about 18 points down from there.

So 1190 is still the key. If we can break over the 1182-1184 area tomorrow, we could get another test of 1190. A break below 1171 and 1168 could give the bears some momentum.

Watch those pivots as they will be key to the next market move. We are at a very critical point right now. A break of the downside pivots could claim a top in this market, but a break of the upper targets could send us all the way back towards the April highs.

The daily candle stick today is a long legged doji, which implies indecision.

Market Update - 10/20/10

As I said yesterday, I didn't want to be too early in calling a top. Also 1177 was the key pivot today, I had said that if we broke over the bearish count would be eliminated, and that certainly is the case today.

So I guess we have to back to the drawing boards and look for possible wave patterns that could be playing out.

In my video last weekend I said 1190-1195 was possible, and now I think we could get there if we break over 1184. So for tomorrow, 1184 is the key pivot to watch for. 1159 is the key downside pivot.

On this chart I have highlighted some downdays during the topping process of previous highs.

You can see that we have some down days followed by up days that take back basically the entire up move, and more.

The USD had a nice push up yesterday, but the move is looking more like an ABC rather than an impulse.

We could get a test of the lows and perhaps a new one. Perhaps the USD has not bottomed.

Market Update - 10/19/10

Today was certainly one of the most bearish days we have had in a while. I don't want to jump the gun and call a top, but we do have a possible impulse wave from the top. 5 down followed by 3 up followed by what looks like an extending wave iii. However, for the bullish side of things this can be counted as an a-b-c.

The price action tomorrow could determine which path this market may take. For the bearish count to hold, 1170-1173 must hold. A break over 1177 will eliminate the bearish counts.

On the downside, it would be nice to see a break of 1155-1157.

Yesterday I had said that 1175 and 1166 were the key downside pivots. We did break them both and closed right on 1166.

If we continue to break down, 1155 is the next key pivot area.

The USD was up about 1.77% today, I might have been right about the bottom on that. Check out the charts of the day for my charts on the USD and more. I will update those in the next few minutes.

Market Update - 10/18/10

As I talked about in my video yesterday, Apple earnings would play a big role. Apple is currently down $20 in after hours trading and IBM is down about $5. And with Bank of America reporting tomorrow morning, we could be in for a wild ride tomorrow.

This wedge we are tracing on the 5 minute charts is still playing out. If the futures turn around again like they did last night, 1190 could be in the works.

1195 is where the trendline would be hit tomorrow morning.

However, if the futures can continue this down move into tomorrow morning and continue throughout the day, 1175 and 1166 are the key downside pivots. Tomorrow is a key day with all of these big earnings, it will be important to how the market reacts at those pivots.

I will update the charts of the day soon, which includes Apple and the XLF.

Weekend Update - Video

This is my first video in a long time, hopefully the settings are still the same from the past. If it is not working, please let me know. Also, watching in full screen HD might display everything much clearer.

Market Update - 10/14/10

The move down today was pretty convicing, and it can be counted as an impulse. However, the move after hours is a little too bullish for my liking. Perhaps a sharp wave ii could be in play.

I have the down move today labeled as wave i. Which means wave ii is now upon us. We could have a deep retrace.

Yet, I am cautious and fearful at the same time. Wave ii could retrace back to 1180, but anything higher will take out the bearish counts.

Here is the count on the 1 minute. It doesn't look like a perfect impulse, but it does work.

1180 could be tested tomorrow right off the open, the futures seem to have gotten a boost from GOOG.

Let's see what happens tomorrow. It should be an interesting OpEx.

Market Update - 10/13/10

We have broken 1173, we have broken 1178. Both of the key pivots that I expected the SPX to stay below have been taken out. The way I see it, if we take out today's high... 1200 might almost be a given. In order for this bearish wave count to stay in tact, we have to stay below today's high of 1184, in my opinion.

The bears have been pushed to the absolute limit here. There are a lot of bearish signs out there now. First off, this ending diagonal has had a HUGE throw over, which is bearish.

We need to quickly take out 1155 for the bears to take control. I would love to see it happen this week, but we might have to wait until OpEx passes over.

The second, and perhaps the most important bearish signal is the VIX. The low today on the VIX was 17.90. Anything under 20 on the VIX is a sign of major complacency, especially the way the market has been moving lately.

We had a couple closes below the lower bollinger band, and we seem to have a long green bar today, despite gapping down. The VIX is setting up to have a violent move up, which obviously means the markets should tank.

On the SPX daily, we have also crossed into the area of the April topping process. There is a lot of supply up here from before the crash, and there may be a lot of people who were caught long looking to get out.

The candle today isn't a very bullish one either. Close to a shooting star, but not quite there. A long shadow at the top is bearish though.

For me, seeing the VIX in the 17's makes me feel more bearish than I have been in quite sometime. Again, the high from today must hold. If it does, and we see some selling pressure along with a rising VIX, this market could see another big down move. 1184 is the big number for tomorrow, if we get there.

Charts of the day will be updated soon.

Market Update - 10/11/10

We had a pretty nice reversal late in the day today, however it quickly recovered in the last 10 minutes. We had incredibly low volume today. Also the VIX was crushed on a day the SPX closed flat, closing below 20 for the first time in a very long time. VIX below 20 is a bearish sign.

You can see the rollover at the end on the 5 minute charts. If this is to continue, we need to break 1150 real soon.

1167 and 1173 remain key pivots to the upside.

On the daily charts, we printed a pretty bearish candle. It is a perfect doji, it is also shaded gray on the ToS charts.

We obviously need follow through, but this could possibly play out to be a very bearish candle.

The EURO is also showing signs of rolling over.

The last few candles make it look like it's set to fall.

Market Update - 10/8/2010

We keep squeaking out new highs by a few points, but the market is showing some signs of it being tired up here. Also, we are in a zone of heavy resistance now. 1167-1173 is a pretty heavy resistance zone.

We had a quick peek over the trendline, but it got pushed right back down. I would not classify this as a break out. The channel is still in tact.

1170 could be in the works, we'll have to see the futures action on Sunday night.

Short post tonight, but I will have more over the weekend.

Market Update - 10/7/2010

We made new highs once again today, however we remained below 1164. Yesterday I said that there was a possibility for us to challenge it, and we did right off the open today and quickly reversed down. So far resistance has been held. The down move was impressive, but it's hard to count 5 waves down. Until we can get a decent looking impulse down, the trend is up.

We hit the upper trendline again, but did not break it. 1170 could be next if we try to touch it again.

But remember, 1173 is the line in the sand for me. If we break much higher than that, it could be trouble for the bears. Also, we need to break below 1150 to get some sort of confidence in a possible change of trend.

We also put in a perfect topping candle on the Euro today. It will be tough for the Euro to break to new highs I feel.

Watch for it to possibly reverse down pretty hard, taking the markets with it eventually.

Market Update - 10/6/2010

In order for us to be more confident about the current highs holding, we need to start impulsing down in 5 waves. So far, we have just a big messy wave down from yesterday's high. However, the Nasdaq and the Russell did show more weakness today, which may be a good indication since the Nasdaq was leading for most of the way up with stocks like AAPL, AMZN, NFLX, etc etc.

We seem to be turning down from this upper channel line, but like I said above, it is not an impulse. However, breaking below 1150 would be a good start.

1164 remains the key pivot to the upside, I have a feeling we could challenge that tomorrow.

On the daily charts, today looks like an "inside" day. Very low voume with a very small range.

Days like this are typically followed by a continuation of the trend.

The Euro finally tagged the 61.8% fib retracement today. It is also stuck in the middle of my target range.

I expect the Euro to put in some sort of a top here, expect some volatility in the Euro. In turn, I expect the USD to not be too far from its bottom either.

I will update the charts of that day in a few minutes.

Market Update - 10/5/2010

Looks like labeling yesterday's low as wave iv was right. We rallied all the way back to the upper trendline of this channel we are in. I was expecting a retest of the highs, but we got it quicker than I expected. In fact, we squeezed out new highs by about 5 points on the SPX.

On the shorter time frame, this looks like a perfect place to top. We have tagged the upper trendline of the channel for the 3rd time in what seems to be a classic short squeeze.

On a day like today, you would expect market breadth to be amazingly bullish, but in fact it was just a lousy 13:1 at the close, nothing too special. Just about 230 million shares traded on SPY, 216 on the Dow... again nothing too special.

It seems like we want to get back to the Crash candle, I don't expect it to break by too much. Some indices already have, but the SPX has not. Perhaps some divergence could be playing out. Remember, this is a Wave 2. It is supposed to feel bullish. Remember Primary Wave 2?

The line in the sand is 1173, if we break this we will probably get a run towards 1200 pretty quickly. But I think the top is closer than most expect. Unemployment numbers are this Friday.

A few weeks ago I posted a chart on the Euro... it is in the range I was expecting.

Just a little more and I think the Euro should turn lower again, sending the USD back higher. Yes... I am expecting the USD to go higher despite it being hammered lately. Check out the USD chart on the chart of the day panel.