12/29/13

With the S&P 500 hitting all time highs in the 1840-50 area over the holidays, it is worth looking at the long term charts and pointing out that we are potentially testing a top of a weekly channel that goes back to the 2009 lows. In the short term, the market does look a bit over bought. The daily chart on the S&P 500 actually has some divergence on the OBV which could be hinting at a decent retracement. The flip side, however, is that a bullish flag is forming. The weekly channel that goes back to the '09 lows is an upward trend., after all.

It's definitely tough to call now, but I can't help but continue to see signals of an overbought market in the S&P 500 for the short term. Other indexes look slightly stronger.

For tomorrow, 1835 is support after a breakout of a channel on the S&P Daily Chart. If we get decisively below this, the next stop would be 1800 - 1802. A good bounce off of 1835 however would be pretty convincingly bullish and set us up for 1880-1900.

I think 2014 will bring further gains. Retracement on a larger scale than recently seen is due, but that would probably still keep us close to or in the 1700's if you look at the weekly channel.

S&P 500 Weekly Chart

S&P 500 Daily Chart

12/19/2013

The S&P 500 should offer support at 1786 which is on the trendline from October. This new, shallower trend has a lower support of 1780.

We did see resistance at old highs today on the S&P so an ideal situation would be to break above this and truly solidify the strength of this end-year rally. I think we'll close the week with new highs - the S&P Daily has the MACD about to flip and volume once again favors the upside.

The Dow Jones Industrial Average isn't showing the same multi top symptoms on a closing basis. But its peak is quite in line with today's close. Then there's the DJT which has barely broken out of its falling channel (to be honest, I'm not entirely convinced it did). MACD indicators are strong, though.

S&P 500 Daily Chart

S&P 500 Hourly Chart

Dow Jones Industrial Average Daily Chart

Dow Jones Transportation Average Daily Chart

12/18/2013

It appears that Bernanke's words erased all semblance of uncertainty today, despite the fact that they actually stated some sort of change in the QE program. The so-called taper talks have so far led to a good news is bad situation in which signs of economic weakness, i.e. reasons to continue the pace of QE, caused the markets to rally on impending liquidity. Today's reaction appears to suggest that all this market needed was a rough date and a number. 

In the last 2 hours of trading, the S&P 500 gained around 30 points, driving it up near the highs at 1810. Technically, the uptrend from October lows is offering support around 1783, but I don't see this dropping below the 1800 level this week. If, by some chance, it does roll over significantly, then we are looking at a potential triple top on the daily chart.

I think we can expect 1820 by Friday, as 10 points over the next couple of days is not impossible. Also, 1850-ish marks the top of the big, big monthly rising channel. 

S&P 500 Daily Chart

S&P 500 Monthly Chart

12/17/2013

Today's trading session saw the falling trendline retained when the resistances were tested. On Wednesday, we have a bunch of levels to watch for on the DJT. There's still the rising channel from November offering support at 7060. After that, it's the lower support of the current falling channel which is at 6975.

On the hourly chart, the low hourly closes that make the neckline of the reversal pattern seem to be acting as support. If this is the case tomorrow, 7095 might hold it up. It'll be interesting to see how that plays out.

Volume is painting an interesting picture. The DJT has more sell volume than buy side recently. Also, the hourly MACD histogram looks ready to flip negative.

It is definitely worth noting that tomorrow is another so-called 'Fed Day'. Obviously, I personally believe whatever will come out is already priced in. The US indexes have been bearish the past week, so I'm curious as to what Bernanke comes out with.

Oscar Carboni points out some diamond flags occuring:
https://www.youtube.com/watch?v=dqZAWRO-K7I

Dow Jones Transportation Average Daily Chart

Dow Jones Transportation Average Hourly Chart

12/16/2013

After a pretty violent rally in the morning, minor gains were held on the US indexes. Interestingly enough, the downward channel that is forming provided resistance today across the leading US indexes. Tomorrow will be extremely telling for both the future of this current short term down channel, and the up trend from November. The Dow Transportation average, who seems to be leading a bit, has to break 7200 to cancel this down trend. A break and hold below 7050 spells more retracement.

Thinking about posting some individual stock charts for a while soon. We'll see how it goes.

Dow Transportation Average Daily Chart

Dow Transportation Average Hourly Chart

Dow Industrial Average Daily Chart

S&P 500 Daily Chart

S&P 500 Hourly Chart

Russel 2000 Daily Chart

7200

12/15/2013

After looking at Friday's price action, it's hard not to call for lower levels in the immediate term. Daily charts on the main indexes show bearish flags, as well as a lack of close above the neckline from what seem to be valid reversal patterns. The S&P 500 and Dow Industrial indexes have volume that favors the sell side - even the two-day flag on the DJT daily chart shows declining buy volume.

Oscillators aren't completely oversold, but they seem poised for their second dips into the area before signaling an oversold market.

The weekly chart, however, points upward....I just don't think this retracement is over quite yet.

Dow Jones Industrial 4 Hour Chart

Dow Jones Transportation Average Daily Chart

S&P 500 Daily Chart

12/12/13

Major US indices are now nearly all exhibiting completed or almost completed H&S reversal patterns with all the drops we saw today. I've been focusing a bit on the Dow Jones Transportation since it seems to be leading the charge.

It appears to have completed a bear flag on the hourly and four hour charts. Fib. ret. levels are proving important within this index's charts. The upward trend line from the October lows is hinting at least a 50% retracement when considering where it's support will lie next week.

The oscillators on the DJT hourly chart are exhibiting a rollover lower than their recent highs. This, to me, is a clue to a little more downside momentum for this retracement. After all, if we are seeing H&S reversals, why would we stop just below the neckline?

This particular index shouldn't stray too high above 7050 in order for this to remain intact. The next fib. ret. line is a little below 6980.

Dow Jones Transportation Daily Chart

Dow Jones Transportation 4 Hour Chart

Dow Jones Transportation Hourly Chart 

Other indices are showing similar symptoms, they just appear to be a step behind.

Dow Jones Industrial Average Daily

S&P 500 Daily

12/11/13

Well, when you're wrong, you're wrong.

While this blog is meant to be a place to post and reflect upon my own analysis, it is also a chronicle of my progression as a self-taught technical analyst. Everyday I learn something new about how financial markets work and it grows increasingly fascinating. Today presented me with one of the most important lessons of all.

Declines of around 1% occured in pretty much all major US indices and this was easily predictable. I, however, suffered from a case of tunnel vision. It was only after I took a small loss that I realized my mistake was in not making myself aware of the other indices. Had I done so, I would have seen clear signals of potential trend reversal.

Kudos to Oscar Carboni for pointing out what I failed to notice:
https://www.youtube.com/watch?v=oi5zj6o9okU#t=337

Speaking of trend reversal!

There are double tops/h&s patterns all over the US indices and it's very compelling. I think we are setting up for a retracement of the wave from october lows. Tomorrow appears to have the potential for an early bounce before pushing downward some more. Strong resistance remains at the 1799/1800 level for the S&P 500 and 1775 returns as a key support.  This particular index appears to be forming a double top, but other falling indices are finishing up some H&S patterns and may yank it down.


S&P 500 Daily Chart

S&P 500 4 Hour Chart

S&P 500 Hourly Chart 

Dow Jones Transportation 4 Hour Chart 

Dow Jones Industrial Hourly Chart 

Russell 2000 4 Hour Chart

12/10/13

Today managed a minor pull back amongst the most recent upward thrust. I do believe this is minor and upward continuation tomorrow is highly probable.

The charts are definitely showing very strong support in the 1800 - 1802 range. This likely helped keep those with long positions from fretting too much. The four hour and hourly charts formed some classic bull flags and look poised to push upward within their channels.

On the daily chart, the shorter, yellow channel is offering tomorrow's support where we saw it today – 1800 - 1802. You can also see that the 5 and 20 Day MA's and 23.6% fib retracement are bunching up near this level.  For some reason I can't help but see this as a base for strong gains tomorrow, similar to Monday. Upside resistance tomorrow is 1820. I think 1820's are a definite this week. Tomorrow if we are lucky.

I think a reversal formation is pretty unlikely at this point, but it's still on my radar.

S&P 500 Daily Chart

S&P 500 4 Hour Chart

S&P 500 Hourly Chart

By the way, Netflix (NFLX) looks ready to gain

Netflix Daily Chart

Netflix Hourly Chart

12/9/13

Today was definitely interesting. What looked like a run to new highs turned out to be minor gains.

There is a channel from the November 7th lows on the daily S&P 500 chart that looks pretty solid right now. It's offering support around 1787 for tomorrow, and I see little chance of testing that. The flag on the hourly offers short term support at 1806.30, and breaking 1809.20 will break the flag's upper trend line - seems feasible.

The way we tested and failed the 1811/12 zone today has me a bit worried, as it's shaping up to be a pretty solid point of resistance. Tomorrow, the high around 1813 lines up almost perfectly with the middle speedline when drawn from November 7th. Holding above these levels tomorrow should really increase the likelihood of a run to the 1840/50 level.

The H&S pattern I've been looking for lately may be canceled, but we are still at risk for a double top if this new trend doesn't continue.

Presidents of the St. Louis and Dallas Federal Reserve banks both appeared in news articles today talking about reducing the amount of liquidity the Fed is injecting into the markets through QE. In recent months, this sort of thing as increased bearish tendencies and is something to be mindful of. However, with a drop to 7% for unemployment, the various voices of the Fed can at least point to a popular, non-granular piece of data for whatever it's worth.

S&P 500 Daily Chart

S&P 500 4 Hour Chart

S&P 500 Hourly Chart

The aforementioned articles:

http://www.usatoday.com/story/money/personalfinance/2013/12/09/bullard-hints-at-early-taper/3922293/

http://www.reuters.com/article/2013/12/10/us-usa-fed-fisher-idUSBRE9B810020131210

12/9/13 - A case for the bulls.

Going into today's trading session was definitely tricky, but building upon my post from last night it's hard to deny upside. In fact, as I write this, the SPDR S&P 500 ETF Trust (SPY) jumped about 10¢.

The below chart is the S&P 500 30 min because Google doesn't have an hourly scale. This is the same channel I pointed out on the hourly chart in my previous post. We've broken the top, and have not tested the trend line today. If this remains the theme for the day, the bullish case looks good.

S&P 500 30 Minute Chart

Also, for some truly educational viewing, I recommend checking out the latest video from Oscar Carboni.

12/8/13

Friday saw an interesting end to the week. From my perspective, its difficult to make a call. I think if there is more upside to be had tomorrow, it really needs to remain above 1800. The 1800-1802 area is offering support on the hourly charts, based on the upward pointing flag.

S&P 500 Hourly Chart

While I attempt to make most decisions based on technical analysis, we can't ignore why this rally occurred. Positive economic data, coupled with the holiday season may spell one more nice wave up.

I think it's worth mentioning the monthly chart. I've put a trend channel over the entire S&P 500 index, and the 1850 mark is going to be key (if we get there). This point represents hitting the top of the this tentative super long term channel. If it bounces off, significant downside could occur next year - potentially below 1600. If we break through, the possibilities seem endless.

S&P 500 Monthly Chart

Hopefully we are seeing the beginning of a big push to the 1850 mark at least.

On the daily, I'm looking at fib retracement from the Nov 7 low. We are seeing price action react to this a bit, and the 23.6 level is around 1800, which is serving as support.

If we are seeing an H&S reversal pattern this should roll again soon, although the daily chart below looks bullish to me.

S&P 500 Daily Chart

12/5/13

And down we continue to go. Today saw steady downward trends on the short term charts and we closed way below 1790. The current trend line on the daily chart is quite steep, creating a resistance level of 1789/90. Anything above this should worry those playing this wave.

Still watching the speed lines. If anything, today relieved whatever buying pressure existed, and made room for a run down to the next support level.

Right now, support still seems to be the 1775 - 77 area. However, if this level is passed decisively there is opportunity for a drop to 1770/69.

As far as the upside - it's losing credibility for the near term. However, OBV is on its side, and there's the tentative H&S. Tomorrow would be an ideal reversal day to begin forming the right shoulder. Also, yesterday's low seems like it was a bounce off the 50% fib retracement level of the wave from the low of November 7th. Today we stayed above it. This could be a warning that this trend may reverse as soon as tomorrow or Monday.

A trend in motion, tends to stay in motion indeed.

S&P 500 Daily Chart

S&P 500 4 Hour Chart

S&P 500 Hourly Chart

12/4/13

With some downward pressure today, especially in the hours preceding the 2pm mark - which is when the Fed released its Beige Book - the S&P 500 is showing some signs of increasing weakness.

Charting speed lines from the November 7th low of 1746.20 to the last high of 1813.55 paints an interesting picture. Today's had trouble penetrating the first speed line resistance, and has neither reached the next line nor breached it.

Off the bat, I read this as slightly more weakness to come tomorrow, although a bounce off of that second speed line is totally possible. 

The trend line for the current down wave is pretty convincing on both the 4 hour and Daily charts.

Tomorrow, 1775.60 will be the resistance level set by the second speed line. A bounce as low as 1774.30 will maintain the tentative channel's lower resistance. Upper resistance set by the current down trend appears to be 1795.

S&P 500 Daily Chart

Potential reasons for at least a bounce do appear to exist. The neckline mentioned in a previous post around the 1775 level may have been established with today's low. It has the slight upward trajectory often found in a head and shoulders pattern. If this pattern is forming, the right shoulder may start forming this week.

S&P 500 Daily Chart

OBV still falls with the trend, however the regular volume bar graph shows some sell side increases over the past couple days.

Might see a drop near today's lows tomorrow, and then a bounce up. If it breaks the current downward trend line it will throw a wrench into things for short positions. All of what has happened in the past few days feels like more than a minor pullback. Although, liquidity is plenty via QE, and this seems to continue to have a hold on the market's psyche.

S&P 500 4 Hour Chart

S&P 500 Hourly Chart

-TWW

12/4/13 - Something is up (or should I say down)?

Weakness appears to be increasing despite the rally this morning. The double test of 1800 on the 5min S&P 500 chart failed, and there is steady downward trajectory. This level was also tested a couple times yesterday before falling.

I tend to subscribe to the school of thought that the market prices in any news event via those close to the issue before the public reacts. That being said, we are due for a beige book release from the Fed today. Could price action be hinting at the contents?


S&P 500 5 minute chart courtesy of Google Finance