2/25/14

Markets were largely flat on Tuesday, with some very annoying price action. We ended up in the 1850's again on the S&P, but only to about 1853.

Lately, the strategy I've been employing has been my own attempt at eyeballing pivot points, more or less. I've now decided to use the 5-point system and see how it works out. The charts below have the levels on them, and I will probably be keeping the pivot point analysis to Weekly, Monthly, and perhaps Daily time frames due to the speed at which I trade.

The levels I have come up with so far, aren't too far from what I've guessed at, but I'm glad to have a more grounded approach.

Interestingly, the weekly chart with the monthly levels on it suggests we are heading for monthly R2, in the 1880's. Although, the daily chart makes the short term look a little less optimistic, so maybe 1858 was all we get this month.

S&P 500 Daily Chart

Weekly Pivot Points

R2 - 1859.03

R1 - 1847.64

PIVOT - 1836.11

S1 - 1824.72

S2 - 1813.19

S&P 500 Weekly Chart

Monthly Pivot Points 

R2 - 1881.68

R1 - 1832.13

PIVOT - 1801.29

S1 - 1751.74

S2 - 1720.90

2/24/2014

Monday finally saw the S&P 500 break the elusive 1850 level. The catch, however, is that Monday's close was below this level - however, that still makes for an 11 point gain.

It's definitely easy, and somewhat rational to consider the potential that this is still a topping pattern. However, considering how strong 1850 has been, and how long trading took place above it, I think it was a bullish symbol. The S&P daily chart looks like a completed bull flag.

I'm bringing my next key resistance down from 1870 to 1865, as the weekly bollinger band is now at this level. Looking at the hourly, daily and weekly cycles, none can really be called overbought, and the super-small time frames are pretty much oversold.

The whole week really comes into play here. That chart will look very bullish if this week closes above 1850. I'm expecting we open above that on Tuesday.

S&P 500 Daily Chart

S&P 500 Hourly Chart

2/21/2014

On Friday, the market started a bit strong, but eventually ended the day red. The daily chart on the S&P 500 is showing a bull flag that looks to still be forming. I wouldn't be surprised if Monday goes slightly red as well.

The S&P 500 could still be making a double top. Other indices look to be forming different patterns. The Nasdaq has already broken its high from January, but the Dow Jones Industrial, the Dow Transportation Average, and the Russell 2000 are all much farther from new highs than the S&P. It would be a weird neckline, but the Dow Industrial is starting to look a little head and shoulder-ey.

If Monday ends up being green, then I've got continued reason to expect more upside, but right now a reversal needs to be constantly considered.

The current trading range on the S&P appears to be between the recent low of 1824 to the 1848-1850 area. Either of these being solidly broken should lead to more movement
in that direction.

S&P 500 Daily Chart

2/20/2014

Thursday saw a significant portion of Wednesday's losses taken back with some force. After clearing the 1835 threshold (which seemed to take a bit of effort), we were back up at 1840. Aside from minor breaks above it today, 1840 still needs to be cleared.

S&P futures continued to rally after the close, and if the sentiment keeps up then we might see a pretty high open on Friday. If 1850 gets cleared, I am still using the weekly Bollinger Bands as a target of 1870. None of the three charts below are in overbought territory - in fact, they appear to be in the process of completing a cycle up towards that area.

Also, the channel from November 2012 is obviously still in play.

I'm still keeping in mind the possibility of a double top, so 1850 will really be key. If, for some reason, we break lower, we should see support around 1820/1825 and then 1815.

S&P 500 Daily Chart

S&P 500 Hourly Chart

S&P 500 Weekly Chart

12/19/2014

Wednesday saw a small net decline in US indices which, frankly, seems appropriate. The previous high on the hourly S&P chart was at around 1826.50, and the close was only about two points above it. If this gets broken, we can at least expect 1815 as another support. In the other direction, before this move down, the hourly floored a few times around 1835, so I think this can be treated as a resistance to break in order to entertain bullish thoughts again. Of course, we have been seeing resistance at 1840, and Wednesday saw an attempt at 1850 but stopped 2.5 points below it.

The weekly upper Bollinger band is getting yanked down a bit now - thoughts of a double top are entering my mind.

Interesting developments - looking forward to Thursday.

S&P 500 Hourly Chart

S&P 500 Weekly Chart

2/14/2014

Trading on Friday saw some decent gains in the US indices, and they all look ready to at least test their previous, all-time highs. In fact, the NASDAQ has already taken out its old high, and the S&P 500 is likely to test 1850 tomorrow. Friday saw some time a couple points above 1840, so I think more upside is to be expected on Tuesday. This wave is strong, we'll see if it breaks the ceiling. If 1850 is broken, there's the upper weekly Bollinger at 1870/1875 that can be used as a target. If 1850 resists, there will probably be a little wave down to at least 1830, but I think 1815 is the support to break for anything major to occur.

S&P 500 Daily Chart

2/13/2014

Thursday saw around a 10 point net gain on the S&P 500, closing at 1829. It's above the high of the week, but resistance still remains at 1830. If that breaks, I think we're going to try to get above 1850
.
So far, 1809-1810 has been supporting the current price action, so we'll see if any moves are made to 1800. The daily chart has pretty well-validated rising channel that starts in June of 2013.

Friday's have been somewhat dynamic lately so we will see if that trend continues. I wouldn't be surprised, though, if Friday just stayed in the current range.

S&P 500 Daily Chart

2/12/2014

Wednesday saw the beginning of what will be a much needed corrective wave for the recent rally. The resistance point is actually sitting a few points below 1830, but I am still treating that area as the next key level. This correction is likely to test 1800. The rally has been very sever and a steep 25-30 point correction only seems natural, in my opinion. That being said, assuming it amounts to a flag on the daily chart, the upside breakout that may occur could be similar in its power.

I imagine it'll take at least the rest of the week to see how low this goes.

We are sort of approaching a moment of truth as 1850 is still looking very much like a top, and there is a tentative falling channel on the daily chart. Below the 1800 mark, at around 1775 is the 100 day MA, which would serve as an immediate downside target if 1800 is broken. Personally, I'm expecting a bounce off 1800 and a new high to be put in, but I won't discount the downside.

S&P 500 Daily Chart

2/11/2014

Another day of large gains on Tuesday as the market gained around 1%. 1815 was swiftly taken out by lunch time and we saw a top at 1823. It seems like a weird place to get stuck, and unfortunately for currently-bullish traders, there looks to only be real support 23 points away at 1800

We didn't see a lower open today - in fact, we opened a couple points above 1800 if I recall correctly. The hourly cycle appeared as though it was rolling over at the close. The daily chart doesn't look as overbought, but I think we can expect the next continuation pattern to form relatively soon.

The market really had some power today, so upside is likely to continue. If Wednesday continues to keep the candles green, then there should be a push to 1830-ish seeing as we already broke the low from mid January.

S&P 500 Hourly Chart

S&P 500 Daily Chart

2/10/2014

Price action on Monday was pretty muted maintaining a range between 1790 and 1798, however a push right up to S&P 1800 did occur towards the end of the day. Based on the daily and weekly charts, I do believe we will see continued upside...maybe test the current top. Tomorrow, however, may open a bit low. The smaller time frames look really overbought.

If that happens, it probably won't last very long and we will start making our way to 1815 on the S&P 500. Technically, the previous high of 1798.77 was broken and closed above, which could be the telling sign of more upward momentum. On the weekly charts below, I tried to draw channels that were on a closing basis as much as possible. On the S&P 500 and Dow this seems to solidify the trend - on the Nasdaq and R2k, it's a little more iffy.

Since the close on Monday, futures for the S&P 500 have continued to climb, +4.7 points as of this writing. We have, however, seen how this can change overnight.

S&P 500 Daily Chart

S&P 500 Weekly Chart

Dow Jones Industrial Average Weekly Chart

2/7/2014

Friday saw a pretty powerful move upward that got hung up right at 1795-1800. The jobs data coming in lower than expected apparently did not matter to the market.

Assuming we get above 1800 Monday, 1815 will once again become an important level to watch. The daily charts look like they could see more upside, and the market has not closed the below the channel on the weekly. The bullish momentum needs to keep the market above 1770, but I will not be surprised by a move towards that level.

S&P 500 Daily Chart

S&P 500 Weekly Chart

Dow Jones Industrial Average Weekly Chart

2/6/2014

The S&P at this point has recovered more than half of the most recent down wave. We broke 1770 today, and while there was difficulty staying above the level, a close at 1773 seems pretty solid.

Friday will see the release of the 'Employment Situation' report at 8:30 am. In the event of an open lower, the key level is obviously 1738-1735. For the upside, 1800 will likely be tested if the report spawns a rally. How the price action acts there will be pretty telling.

The weekly charts still look bearish, but we could really use a solid hold under the 1755-1750 area to negate the big trend from November 2012.

I am totally neutral until the open on Friday. This corrective up wave went a little higher than I had thought it would.

S&P 500 Daily Chart

S&P 500 Hourly Chart

S&P 500 Weekly Chart

2/5/2014

After a very small upward move to 1755 on Tuesday, the S&P 500 has been trading between near 1760 on the upside, and 1740 on the low as of Wednesday's close. All this is doing is simply building a bear flag that is likely to break this week. Given the speed and degree of the last two waves down, the next move down should settle nicely at the 200 Day MA, which is now at 1710.

There is a possibility of testing the 1765 tomorrow, but such a move should be factored in based on the daily channel.

If the post 1850 declines started a new Elliot count, then this next decline could be wave 5 on the daily, and potentially complete wave 1 on the weekly. The weekly wave 2 will probably test old supports around 1770-1800 (more like 1770 if we are going to break the channel from November 2012 - thus causing it to act as resistance) and retrace if it is simply a wave 2. Will be interesting to see what pans out.

The low for this sideways pattern is 1738 (almost exactly 30 points lower than the last flag), but a break below 1735 will seal the deal. Anything up above 1770 and I'd reconsider the bearish scenarios below.

S&P 500 Daily Chart

S&P 500 Weekly Chart

2/3/2014

Monday saw a significant decline of over 2%. After busting through the 1765 level on the S&P, the entire day saw declines, hour after hour. November lows were taken out swiftly thereafter. This is a clear breakout of the consolidation that was occurring, and measuring this breakout offers 1700 as a potential support, right around where the 200 day moving average is.

Hopefully (for those on the downside) Monday has set the tone for the week, and we will see 1700 before it's over.

Quite curious to see how far it goes in the coming months
.

S&P 500 Daily Chart

1/31/2014

So I need to confess - I got pretty excited when stock futures were showing the Dow opening -130 points or something like that. Unfortunately for me, and those who see some potential bearish opportunities in the indexes right now, the market recovered nearly all of its losses throughout the day.

Regardless of today's recovery, we have seen the S&P 500 test 1800 a few times this week, and it cannot get above it. As a result, the current bear flag appearing on the daily chart looks a little more like a rectangle now - the upper level being 1800, and 1770 being the lower end.

The Dow is the weird one right now, as it did clear its December low. Perhaps the appropriate support level would be 15580 - 15600 - at the 23.6 fib level of the wave from November 2012.

I don't really like the way the oscillators look on the daily charts. The hourly suggests downside, but the daily is not offering a high probability of a red day tomorrow. But I guess you could argue that we will enter dip two of the usual double dip into overbought/oversold areas. We'll see. I'm going to be skeptical.

The weekly looks to favor more downside in the weeks to come, but it may pull back upwards in the very short term before continuing the losses. I will probably question the downside if we get too far above S&P 1815.

Also to note on the weekly, there is a parallel channel from 2009 on the S&P 500. It was broken during October, and has just tested the resistance-turned-support. The low for the day made it through, but it did not close below it.

S&P 500 Daily Chart

 

S&P 500 Hourly Chart

S&P 500 Weekly Chart

Dow Jones Industrial Average Daily Chart

1/30/2014

US indices saw saw gains of around 1% on Thursday. There is likely going to be an attempt to make it to 1815 on the S&P but I doubt it will break through. We are already seeing a lot of resistance at 1800.

The hourly chart looks poised to move upward again tomorrow, but I'm not sure how much to expect. The bullish advances look weak for once, and we are kind of far from the 1815 S&P levels still. Either way, unless 1815 is broken, I'm not swayed by the upside....and even then I'd still be skeptical. The lows from December still hold as a support point to break for continued declines, after which I will target the S&P 1735-40 levels for confirmation of a push to the 200 day MA.

This current action is most likely the formation of a bear flag on the daily chart. Looking a tiny but more into the future, this could end up as a H&S pattern.

Only the S&P charts below, as the story is largely the same on the other indices.

S&P 500 Daily Chart

S&P 500 Hourly Chart

1/29/2014

With a pretty low open (Dow -100 pts) and a bit of drama after the FOMC minutes, all major US indices lost over 1% as they pushed toward support dictated by the December 2013 lows.

When I look at the hourly charts, given the very bearish formation and oscillators that, frankly, look like they want to drop more.

For the wave from November 2012, the first descending fib level is at 1730 on the S&P, so I think if the lows from December are broken, that is a potential target.. RSI on the weekly charts doesn't look very tired at all.

I'm still waiting for a break below the December lows, however going for the downside at the close yesterday would have proved profitable.

Dow Jones Industrial Average Hourly Chart

Dow Jones Industrial Average Daily Chart

Dow Jones Industrial Average Weekly Chart 

S&P 500 Hourly Chart

S&P 500 Daily Chart

S&P 500 Weekly Chart

1/28/2014

As expected, the S&P and the Dow (and pretty much all other US indices) rose moderately on Tuesday. I am surprised to see that the flags I drew on yesterday's posts look like they should be pennants/triangles at this point. However, the gains were weak today and Wednesday is bound to bring drama via FOMC minutes. This, coupled with lower volume from Tuesday, has me thinking the market is waiting to react to the impending remarks about US monetary policy.

Wednesday could see a big rally to 1815, but the next upper fib level from October 2013 is around 1800-1802. This may or may not give the bulls trouble on Wednesday. While there seems to be minor resistance in the 1795 area, a break above it is likely tomorrow.

I'm still using the horizontal supports of 1760 for S&P and 15,700 for the Dow. The completion of what looks like a bear flag should culminate in a drop below these levels, at least to the 1740's on the S&P.

While it does appear the FOMC minutes will be used as an excuse to rally, there are rumors of removing another $10 billion of QE per month. This has the potential to swing the market in either direction, so Wednesday could be more of a toss up than some realize. I really dislike speaking too much to news/policy events and their effects on markets, but the fact has been that these Fed days are prone to light-speed swings, around which I would exercise caution.

S&P 500 Daily Chart

S&P 500 Hourly Chart

Dow Jones Industrial Average Daily Chart

Dow Jones Industrial Average Hourly Chart

1/27/2014

After declines earlier in the day, Monday's price action in the S&P saw a tiny bit of recovery only to close 8 points lower than it opened. The sell off is very aggressive right now, and the weekly looks like it's spelling more doom in the months ahead. That being said, I think after a lower open on Tuesday, we'll see a bounce toward old supports like 1800 - 1815. The hourly has built a pretty obvious bear flag that I think will either guide the bounce tomorrow or break and open the door for a blow below 1760.

There's a similar story on the Dow Jones Industrial - the bear flag on the hourly held at the close....but barely. 

The bears seem to have a decent grip on the market. If this continues the next logical support area to watch is the low from December on the indices - 1767.99 on the S&P, 15,703 on the Dow.

There is some Fed action on Wednesday, so the middle of this week is bound to be rocky, but it's unlikely the bulls will regain control this week. 

S&P 500 Daily Chart

S&P 500 Hourly Chart

Dow Jones Industrial Average Daily Chart

Dow Jones Industrial Average Hourly Chart

1/24/2014

While the Dow hinted at it last Thursday, Friday saw the sideways channel on the S&P decisively broken, along with multiple support points for all other US indices. Markets lost between 2% and 3% for the most part across the board. Watching how this market reacts to support points on its way down will be be key.

It looks like the markets will test the lows from December - although the oscillators suggest they may bounce off it for a corrective wave. On the S&P, this is 1868, but I'd seek a break under 1865-60 . On the Dow, 15,700 is due to be tested.

The Russell 2000 still has some fib levels to break for the wave up from December low of 1100, as well as a channels support from October 2013. This index may not retrace 100% of the late December they way the others are hinting at.

The weekly charts suggest more downside after a bounce. And oscillators are classically double peaked in overbought territory on the monthly.

S&P 500 Daily Chart

Dow Jones Industrial Average Daily Chart

Russell 2000 Daily Chart