Video Update

Another video update. Talking about the SPX and US Dollar.

Let me know if it's not working. Please rate and comment too! Thanks!

Market Update - 2/26/2010

My alternate count from yesterday seemed to play out today. One of my counts was that today would be a choppy day, but it could go a little higher. The SPX bounced around in a 10 point range today, finding resistance around 1107 and support around 1097.

The wave counts are not as clear as I would like for them to be for an impulse wave down. I don't want to have to force in the waves. It doesn't feel right when I am forcing in waves for a impulse.

The only way I can count this for now is that wave (i) of the next down leg is a leading diagonal. This is rare for wave 1's, but still possible.

If this count is right, wave (ii) should have topped today, and we should continue down come Monday.

But if we can count a leading diagonal on the downside, there is also a potential way to count this in a bullish way.

From the lows, it seems that we can count this as an impulse LD up as well. At this point, I highly doubt it because we really haven't had a day where the internals have supported a new uptrend. We'll see how this plays out though.

The daily chart seems as if it wanted to roll over again, but we have once again stalled.

For most of November and December we were in a range between ~1085 and ~1110 on the SPX. We seem to be trapped here once again.

Breaking out on either side will determine the trend.

I will have more over the weekend, and I will try another video if I can find the time. Thanks!

Market Update - 2/25/2010

Very volatile day today. We had some nice selling early in the morning. We kept going down until we hit our support level of 1085 on the SPx, the low was 1086. After that, the SPX chopped around in a 5 point range, before breaking out and rallying hard into the close. The recovery pretty much erased the entire down move from the morning. However, we found resistance at our pivot of 1105, making our high around 1103.

So these pivots seem to be playing a big role right now. If we can break back over 1105, things will be bullish. If we get back below our low of 1086, we may get some further selling.

I have 2 alternate counts for now. One suggests that we sell off tomorrow, and the other says we have a choppy day tomorrow, but in the end go higher.

Bearish count:

We came up pretty strong in the late afternoon today, but it can still be counted as a corrective wave.

Bullish count:

We came up in an impulse, and we could continue higher.

Regardless of what happens, it is key to watch those pivot points for now. 1105 on the upside, and todays low of 1086 on the downside.

Sorry for the short post today, I am in a rush. Check back later in the evening, I will have more charts. Thanks!

Market Update - 2/24/2010

Yesterday I had said that 1105 was the key pivot to watch for if we had any up move. It seemed to have served as a level of resistance today, as expected. We had trouble breaking this level a few times today. And of course, we closed right on it. Perhaps it may gap up tomorrow, because that seems to be the trend lately. Close on resistance, and gap it up the next day...

For the bearish count to play out, we really cannot break above 1110. If we break 1110, we may still be in Minor Wave 2. If a new downtrend has started, 1107 needs to hold tomorrow, and we need to close below 1100. Here is a chart.

1110 is a must hold for the bears.

Here is an up close view.

As you can see, the wave down was very easy to count, as it should be with impulses. The bounce back up looks like a real pain, as do most corrective waves. Because of the difficult nature of the wave count, I am leaning towards that this bounce is corrective, and not impulsive. Impulse waves are very clear.

If this plays out, the target to complete the triple zigzag is around 1107-1108, but not much higher.

If we do come out and break 1110 and 1112 tomorrow, 1115-1117 and 1120 are the key pivots to watch. On the down side, watch for 1100 and 1095.

Market Update - 2/23/2010

We got the confirmation I was talking about yesterday. I said yesterday that in order for Minor Wave 2 to be over, we needed to be down a convincing amount today, and that's what happened. But I am still not as confident in this count as I would like to be

I have a few counts that I want to go over first.

Count 1: Today was the start of Minor Wave 3. But we ended some type of wave 1.
Count 2: Today was the end of wave (iv) of [c] of 2, which means we will break over 1112 over the next day or so.

Here is a chart on that count.

If we continue down tomorrow, my second count will most likely be out of play. If we get a small bounce tomorrow, we'll need to see where it takes us. 1105 needs to hold on this bounce, if not, we may still be in Minor Wave 2.

Over the weekend, I talked about a potential head and shoulders on the daily SPX chart. So far, it looks in good shape.

It looks like the right shoulder is complete, let's see what happens if we make it to the neckline.

Not a lot of charts today, but at this point in the wave structure, we just need to watch the key pivots. Breaking below today's low of 1092 is bearish, and if we do break 1083-1085 tomorrow, then a next downtrend could be confirmed. 1105 and 1110 need to hold to the upside.

Let's see what tomorrow brings!

Market Update - 2/22/2010

Very dull day today. Tight range in the SPX. We were basically hanging around 1110 for most of the day. Like I said in my video over the weekend, watch for this level to be a place where the market should stall, if not reverse. It seemed to back off a little bit into the close, but I wouldn't read much into this, yet.

So since we did not have a big sell off day, and I am going to revise my counts to my alternate I talked about. Nothing much has changed, just the degrees get bumped up by one.

In this count, I am looking for a high for Minor Wave 2 around 1115-1117. Just as long as we don't close above 1110, we should be fine. But if this count plays out, watch for 1115 intra-day.

The alternate count is ovbiously that Minor Wave 2 has ended, and the down move today into the close was the start of wave 3. We need confirmation of this tomorrow.

Other than that, the RSI and MACD are both diverging, just like they should be.

Most RSI and MACD highs occur in a wave 3 of a move, since wave 3 is the strongest. With wave 5 being weaker, you may see prices making new highs, but the RSI and MACD don't always confirm, since internally wave 5 is weaker. Seems to be the case here.

On the longer time frame, I wanted to show you this interesting chart on SPY.

This channel is coming from the highs back in October of 2007. We broke above it, and this recent down move could have been a backtest.

Only thing that doesn't seem right is the volume.

If the volume picks up to the upside, it will be very key to watch the highs around 115.

Weekend Update - Video

I thought I would do something new by posting a video this time. I have never posted a video before, so I'm new to this. :) I hope the video quality/sound turned out to be okay.

Please feel free to leave a comment about the video. Feedback is welcomed!

Market Update - 2/19/2010

The market seems to be very resiliant right now. It is shaking off all news, and is trying to climb higher. Despite the FED raising its Discount Interest Rate, the market continued to rise higher. The ES futures were down throughout the night, but started to rise after the CPI numbers this morning.

Yesterday, I posted a chart showing how wave 2's at the start of a new downtrend are usually sharp. Certainly this is what we are experiencing currently. We have retraced more than 61.8% on all major indices.

However, the SPX is finding some resistance in the 1110 area. 1115 is another level of resistance.

If we can break over these levels, we may get another push higher.

Even though we tagged these resistance points, the market really didn't back off very strongly. Perhaps it may consolodate more and then rise.

On the smaller time frames, we are currenrtly a little overbought.

The RSI seems to be diverging a little, but nothing to major yet. The MA's are firmly pointing up.

I will have more charts over the weekend.

Market Update - 2/18/2010

We got those slight new highs I was talking about yesterday. I was expecting somewhere around 1104-1105 on the SPX, the high was around 1108. So we slightly broke above that resistance level. The Nasdaq also got to my target of 2239, making the high at 2243.

This wave that has been forming the past week or so has been a real pain to count. But that's what corrective waves do. They shake out all the weak shorts before going back down.

As I have said a few times in the past, corrective wave 2's at the start of a new downtrend have a tendency to be sharp, and have a deep retrace. Usually 61.8%. Here is what Minute wave [ii] looked like back in late October of 2007.

We could be getting a similar pattern.

Currently, the 61.8% retracement level on the SPX is around 1109. Let's say 1110.

The move up at the end today certainly caught a lot of people by surprise. If the momentum carries through, we could get up to this level tomorrow.

The Nasdaq has already hit it's 61.8% retracement, but it hung around that level when it got there.

There was no sign of a reversal.

The Dow has also hit it's 61.8% level.

But once again, there was no sign of a sharp reversal.

It seems like the SPX is lagging behind a little bit. If the SPX is going to play some catch up, it will either get strong and pull the Dow and Nasdaq up with it a little, or on the way down, it will not be as weak.

The US Dollar is continuing to show it's strength despite the equity market being strong. Here is an updated wave count on UUP.

It seems to have a bullish set up, it just needs to get above its wave i highs to start heading up again.

Market Update - 2/17/2010

Very tight and light trading day today. The markets didn't do much. The SPX hung around 1097-1100 for most of the day. So far, this action is actually very bullish. It seems to be consolodating for a potential move higher.

The extreme bearish count from yesterday gets tossed out now. I will stick with my count I had on the Nasdaq, and call this recent move up a Minute Wave [ii]. Like I said yesterday, the down move seemed to small to be a Minor Wave 1.

Here is the updated count:

Not much has changed, except some degrees of the waves have been changed and/or moved around. But overall, it remains the same, and that is that we may have some sort of potential wave 3 coming down in the days to come. But according to this count, I am expecting a slight new high tomorrow. Perhaps 1104-1105. However, if we break this level and hang above it. We may go a lot higher before we may come down. Breaking back below 1090 will be bearish according to this count.

Also, you can see that the SPX hung around it's 50% retracement level all day.

The Nasdaq has virtually the same count.

If the Nasdaq leads the way up tomorrow, it may reach it's 61.8% retracement at 2239. But I'm afraid if the Nasdaq gets strong enough to reach this level, the SPX may break 1105. So it will be key to watch how the Nasdaq reacts as it approaches this level.

Despite all the bearish wave counts, there is one bullish technical pattern that could be forming. And when I say bullish, I mean extremely bullish.

If this Inverse H&S pattern plays out, it will take us to new highs. The target is somewhere around 1155-1160 on the SPX. It will be very important to watch the SPX as it approaches the level where it could make that potential right shoulder. If we bounce up sharply from there, we may break the neckline and head straight up. Just keep an eye on this pattern for now, as it is still developing.
Again, if this H&S pattern plays out, the over daily SPX count may change to this. With a final target of 1200.

But remember, this is all speculation. How many time have we seen a head and shoulders pattern actually work? I wouldn't worry until we actually form that right shoulder and break that neckline. The past few H&S patterns have all failed to do that.

Market Update - 2/16/2010

The SPX breached some resistance levels today. Most of the day was biased to the upside, with very small down drafts in between. However, all of this happened on extremely low volume. The lowest we have seen since the holidays. Despite the low volume, the internals were pretty firm. Just about 10:1 up at the close on the NYSE.

After reviewing possible counts, I have now come up with 3 scenarios. Actually, all 3 of the scenarios are pretty much the same, except the degrees of the waves are slightly different, thus they have different targets.

First, I'll give the bearish one. This count has been pushed to its limit.

It suggests that today HAD to be the top. If we go any higher tomorrow, I will cancel this count out. Tomorrow needs to be down for this count to be right.

The second count, is the one I favor the most right now. It seems the most logical. It is on the Nasdaq.

This suggests that we are in Minute wave [ii], and not minuette wave (ii). Since wave [ii] is one degree higher, it will be slightly more powerful, and so far, it has been. As you can see, we are sitting right on the 50% retracement line. It could go higher, but it could also turn back south at any time.

The third count is another one that I do not favor much.

It suggests that we are in Minor Wave 2. Minor Wave 2 is stronger than wave [ii] and wave (ii). However, to me this doesn't seem right because Minor Wave 1 is very small in this count. But it could still be right, but I wouldn't count on it for now.

The Nasdaq count seems the most logical to me like I said earlier. But with it being OpEx week, the market will do crazy things. But hopefully, we will have our answer within the next few days. The key pivots to watch for are a break above 1100 and a break back below 1085. Both these pivots will decide the next move.

Weekend Update - Dow, SPX and Nasdaq

This past week was a very choppy one for the markets. The SPX mainly bounced around 1060 and 1080, while the Dow tried its hardest to hold around 10,000. The Nasdaq was the strongest this week.

The reason the Nasdaq was the strongest is that because it could potentially be on a slightly different wave count.

This count suggests that the Nasdaq is in wave [ii], and has not yet started wave [iii], unlike the Dow and SPX. Regardless, it could turn down soon as the SPX and Dow start their next down move.

The SPX seems to have a bearish set up on most time frames. The wave counts suggest that the room to the upside is running out, unless we get a very strong move to the upside. Here is the current wave count:

This count suggests that we should be lower on Tuesday.

There are currently 2 bearish patterns on the SPX Daily chart. The first is a very simple Bear Flag.

The target cannot be seen on that chart, but it measures out to the 1018 area. This area has been huge resistance before, and I expect it to be our next target.

The second pattern is extremely bearish.

There is a potential head and shoulders pattern playing out. I know these have failed in the past, but it could still be in play.

The target is around 940. If this plays out, we could drop very fast once we breach the neck line.

With this recent down move, I find it very hard for the markets to climb back up. We have a lot of overhead resistance now.

As you can see from this Dow chart, all of the broken support is now resistance.

It will be interesting to see how this week plays out. There are a lot of bearish set ups. Let's see if they play out, or if the bears get caught again. The key will be watching the futures/forex tonight and throughout Monday, as these markets are open since they are traded internationally.

Market Update - 2/12/2010

Another volatile day again today. This entire week has been very choppy. It seems as if wave (ii) is topping in a complex way.

Yesterday I said 1060 was the number to break on the SPX. We made it to 1062 then bounced sharply. So far, 1060 is doing a good job as support. However, 1080 held as resistance. So for now, the SPX seems to be in this 20 point range. Until this range breaks, it's hard to determine the direction.

Here is a chart on SPY.

As you can see, the topping pattern we are in now may be similar to the one a few weeks ago before the initial move down.

There is also a potential head and shoulder on the Dow.

The target is around 9800. We have seen these patterns fail in the past, but if we break below the range, this may play out.

I will have more charts over the weekend. Also, this is a long weekend since there is no trading on Monday due to Presidents Day. So please check back later in the weekend for more charts.

Market Update - 2/11/2010

My alternate count on the Dow played out almost perfectly today. Yesterday I said we could have one more move up to somewhere around 10150 on the Dow. We hit 10161.

The triple zigzag is probably over now. In terms of price, we have retraced nearly 61.8% on the SPX. The Dow broke slightly above its 61.8% Fib retracement. Time wise, wave (ii) has lasted about 4 and a half days, while wave (i) was 2 and a half days. Time wise, it should be over. And price wise, it has very little room left to the upside before we start getting some major overlap.

So if you look at it that way, today should have been the top. We basically need to be down a convincing amount tomorrow to confirm this wave count.

Here is the SPX count so far:

We did breach the channel by a little bit, but we did hold support at 1080, which was a more significant level.

Here is a closer look on the Dow.

The topping pattern looks a lot like the one we had for wave [ii]. Ovbiously, wave minuette (ii) is just a smaller version of minute wave [ii]. So the topping pattern should be similar.

The 1060 level is the number to break on the downside. Breaking back below 1060 will lead to more downside. For the upside, 1080 needs to continue to hold. But there is also key resistance around 1085.

Tomorrow should be interesing!

Market Update - 2/10/2010

Another choppy and volatile day today. Big swings in both directions. A sell off in the morning, and a recovery in the afternoon. This type of choppy action points to some sort of corrective wave pattern.

Corrective waves are the hardest to count. The waves on the smaller time frame tend to get choppy, so it distorts a lot of the patterns. But I have a few scenarios that may play out.

This first one suggests that today was the start of wave (iii). The internals didn't support this, but it could still be in play.

If this count is right, tomorrow needs to be down. And we should probably break 1060 and 1055.

This next count, I have it shown on the Dow.

This count suggests that wave (ii) is a complex triple zigzag correction, similar to the pattern we had for Primary Wave 2.

If this plays out, we should have one more leg up tomorrow, which should end wave (ii). Maybe somewhere around 10150 on the Dow.

There is also a potential head and shoulders pattern on the SPX.

The target is around 1040. 1039 is strong support from the highs of August 2009.

The US Dollar was strong in the morning, but it faded as the market tried to rally.

Regardless, the wave pattern is still bullish. If the market sells off big tomorrow, watch for the US Dollar to rise.

Market Update - 2/9/2010

We got within 1 point of my target of 1080 on the SPX. We did back off about 10 points once we hit 1079, but it wasn't as impulsive as I would like for it to be. In fact, market breadth was quite the opposite. We had a big up volume ratio earlier today, and it hung around 10:1 most of the day.

At this point, I'm not too worried about the strong internals. The waves don't look impulsive to the upside, they looks corrective. It's been very choppy these past few days.

So for now, I will mark today's high as the end of minuette wave (ii). However, for this to be valid, we need to be down a decent amount tomorrow.

If not, it will be key to watch the upper line of the channel. It is hard to give the exact target of that channel since it is downward sloping, but just to be safe, keep an eye on 1080.

The 15 minute chart on the SPX is giving some bearish signals.

The US Dollar pulled back a little more than expected, but nevertheless, it has not broken any rules.

The target is still to the upside.

Market Update - 2/8/2010

Choppy day today, as the Dow finally closed back below 10,000. Looks like the sellers finally may have control of the market.

Most of today was bouncing up and down. Seems like a typical corrective wave. The current wave count has us completing subminuette wave b of minuette (ii).

If this wave count plays out, I expect quick move up in the days to come. Perhaps tomorrow? The target is roughly around 1080 for now. This should complete wave (ii), and we should start moving down big in wave (iii) of [iii].

But of course, the market always likes to surprise us, and lately it has been doing that to the downside. So just be careful if we breakdown. On any down move, it will be important to keep an eye on the internals. If we get a trending down day, it could trigger the start of wave (iii). The key level to watch for on the SPX is 1044.

The Dow broke some important support today.

The daily charts look pretty bearish. The next target could be the 200dMA @ 9500.

For the past few days, I have been keeping a close eye on the US Dollar.

According to the current wave count on the UUP, expect a very sharp move up to come in the next few days. It seems that wave ii is close to completing.

Weekend Update - SPX, US Dollar, Crude Oil and AAPL

Another down week for the SPX. 4 in a row now. The downside momentum seems to be picking up once again in the markets. This week was also pretty volatile, especially on Friday.

We hit a new low from this new downtrend on Friday, at the key pivot of 1044. On Friday, I posted a chart on how significant this level is. A break back below this level will be extremely bearish. We also broke some other support this week. All of this broken support should now serve as resistance, and I expect a backtest of it.

My first target is in the 1080 area. This area has been a good level of support for a while. We may get up to it on either Monday or Tuesday.

On a shorter time frame, the wave count also calls for a quick bounce back up to the upper channel line.

The US Dollar is contuing to run up higher. After looking at the chart of UUP again, here is an updated count. It is slightly different from the one I posted on Friday.

Basically, we should get a small little pullback, then we rip higher.

With the US Dollar showing strength, Crude Oil will naturally be weaker. Here is a chart of USO, the ETF for Crude Oil.

Pretty bearish chart. The bear flag channel seems to be breaking. If it breaks, Crude Oil will fall.

Also, here is an updated count on Apple. We may continue to move lower on it.

180 is the rough target for now.

Watching 1080 on the SPX will be important. If we break this, we may go a little higher, to perhaps 1090 then 1100. If we break back above 1100 this week, we may have to re-draw the bearish counts. But I expect these resistance levels to hold.