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