Bulls Hammer the Beardicat Zone

The Naz pre-market futures were down sharply until JPM beat (lowered) earnings expectations. The "beat" cut the Naz pre-market losses in half and boosted JPM up over 3% in pre-market trading. The JPM earnings will probably hold the market up a bit out of the gate. In addition, December PPI didn't fall quite as much as expected, which means that pricing power at least held up a little (which was good for producers and raw materials last month).

On the negative side, the trend that I told you last week that would be followed more closely this earnings season than in past earnings seasons is layoff announcements. MOT announced another 4k cuts on top of 3k that was already announced. The stock is up slightly pre-market since firing employees is like printing money, but the macro trend of rising unemployment is what traders are concerned with. In addition, Weekly Jobless Claims came out worse than expected at -524k vs. -503k.

All in all, the pre-market futures - especially on the Naz - have come way back, which means the open is not going to be as bad as expected. The market indexes are floating in space between resistance and support, which would normally have me targeting support. I'm mitigating that a little bit because of the Broadening Pattern on the market. Nevertheless, the market could still slough down a bit more early in the day before it finds a resting spot.

Here is a chart of the SPX:
(click on image to enlarge)

Here is a chart of the Dow:
(click on image to enlarge)

The SPX has a clear target of 816 - 820, but the Broadening Pattern will have me keeping a sharp eye on the 830 area for an intra-day reversal. Because of the way this is lining up on the SPX and the market, the Dow could find a resting spot anywhere between 7,950 - 8,150 with the upper areas around 8,100 - 8,150 being areas I would watch closely.

Price action looks like it will slow a bit out of the gate from what it was indicated earlier. It's possible to get another intra-day leg down early in the day if the Bulls start wringing their hands over the jobs data, but I'm not looking for a big momentum day today like yesterday. Remember, traders will let this go so far and then they'll probably start wondering if INTC can play the game "correctly" just like JPM, which is to warn and then beat lowered expectations.

One final note: I won't be in VC tonight or tomorrow. If I get a chance I will do intra-day updates.

7:42 am MT: Intra-day Update: The market just broke to new lows, so that 830 initial target on the SPX that I gave you above is still in play.

7:49 am MT: Intra-day Update: There's 830 on the SPX.....

Here is an updated 60m chart of the SPX:
(click on image to enlarge)

Normally this would be a no-brainer for the purple circle at around 820 coming out of that kind of base. We'll see if we get a wiggle at 830 first.....

7:57 am MT: Intra-day Update: There's our wiggle (bouncing) off 829 - 830. If the construction of the consolidation on the 5m charts forms correctly, then this could be an entry for a put and a possible move down to 820. Just remember, however, that the downswing on the Dailies is getting pretty long in the tooth.....so exercise good risk management here.....

Here is an updated 5m chart of the SPX:
(click on image to enlarge)

So far, this is playing out just as I wrote up pre-market. The market has sloughed off out of the gate, and the SPX has hit the first 830 target area and then paused. We'll see what happens next.....

8:10 am MT: There's the next leg down after the wiggle. This is where I'm very curious to see if the SPX hangs around a bit. A SPY entry on the put I suggested above went +65 cents in about 5 minutes. Now is when I would be watching for the "hanging around" price action for a bit.

Here is an updated 5m chart of the SPX:
(click on image to enlarge)

I'm taking off for a while now. Remember that we are potentially getting into the last leg down on the intra-days as it pertains to the Daily chart downswing. We'll see what happens next, but the SPX is headed towards the 820 area, which is probably going to be a pretty solid support, at least for the day. We shall see.....

5:30 pm MT: Market Wrap: And there you have it.....the Bulls Hammered the Beardicat Zone for the 7th time.....They might as well hang a "Beware of the Bulls" sign at milepost Dow 8,000.....Every time but once in the past 4 months that the Bears get the Dow down to 8,000 - 8,100 the Bulls pound 'em. I spoke about volatility increasing at the beginning of this week, and volatility we have had.....

If you know ahead of time that you're going to get Mr. Toad's Wild Ride in the market, then you can dial it down to your short swings and still trade profitably. There are some who would warn you sternly "do not seek the treasure" because "they thought the market was a toad!".....but you can see from the put entry I suggested above (live, in real time) and the 820 area that I spoke of as a hard support (well before the SPX held at 817.04, which was right in the zone) that you can seek the treasure, even in this type of market, if you know what you're doing.

Beware those who tell you that you cannot swing trade this market:

Do not seek the Teasure.....We think the Market is a Toad!

Here is a chart of the Dow showing the Beardicat Zone I first spoke about over two months ago. Notice the giant volume once again.....
(click on image to enlarge)

After the close, INTC played the earnings manipulation game to perfection.....the Banks would be so proud.....INTC's profits dropped 90% in the 4Q, but that still "met" the market's expectations after INTC warned last week.....INTC is currently up almost 4% in after-hours trading.....The Hammer on the market today is likely to the carry through to the 860 area on the SPX and the 8,350 area on the Dow. We shall see what happens tomorrow.....I will post again in the morning....thank-you and goodnight.....