Tomorrow will mostly be about the ISM report with a sprinkling of the ADP Employment report mixed in. The Bear Gap from yesterday still has a higher probability of playing out to the downside, so in the absence of news I would be looking for puts. However, there will be plenty of news. If the ISM is terrible, and the market sells off, then expect another news bogey from the Plunge Prevention Team on Thursday. If the ISM beats expectations then the market will probably go back and test the highs from last week.
I won't be on VC tomorrow. I will give you a schedule update later. I may not be able to do much in the way of intra-day postings tomorrow, but it should be just a one-day thing. I will give you my outline for the day pre-market after we get all the economic data.
Tuesday, March 31, 2009
End of the Quarter
Yesterday I warned that if we had a sharp down day we would get a news bogey today. Barney Frank is the clever news bogey designed to prevent a plunge du jour. See if you can spot the template: #1 Barney gets himself on CNBC. #2 Barney talks about how there should be some flexibility in mark-to-market accounting for the banks (changing from present valuing of assets to some future value of assets, like deciding what an asset might be worth in.....say five years versus its present value. The idea is sound, but the irony is that mark-to-market all started with the Enron scandel, so this is an about face for all the haters of big business that picked up votes from the "downtrodden little guy" because they stuck it to the big corporations).
Pre-market futures are up a bit on the news.....I think everyone should get their turn on CNBC. I want to be on CNBC, how about you? Would you like to be on CNBC? CNBC is good, CNBC is our source for all things new and important in the business world. By the way, the first volley shot by Congress over easing mark-to-market accounting came on March 12, so Barney's using an old template, which means it may lose a little of it's effectiveness. If the market sells off a little more after the Googley-Eyes finish getting high off the manufactured news, then expect another news bogey tomorrow because Barney wasn't able to "do the job." The silly thing in all this is that the selling has more to do with the profit-taking competition at the end of the quarter amongst fund managers (after such a sharp run-up in March) than it does anything else right now. It's getting kind of nuts, watching these folks toss out bogeys every time the market has a blip.
Alright, so news bogeys are really not that hard to predict once you get to know the playing field.....Onward with the day.
Refer to yesterday's Market Wrap at the end of the posting for the chart and the numbers. If the Googley-Eyes get keep the momentum going this morning all the way into the open, then look for a gap test on the SPY around the $80 area. By the way, aren't you glad you're doing a lot of short swings. Yesterday was a dead-ringer for a breakaway gap and continued selling today. And yesterday's earliest entry was at the gap, right around $80. So for anyone holding full positions overnight, this morning will probably return them all the way back to the starting place yesterday, and leave them with nothing for all that effort and time. All because of a news bogey. Isn't it fun?......For those of you who took profits as you went, you have a chance to watch the chart construction early in the day and decide if you want to lather, rinse, and repeat with a fresh set of puts.
Another day, another news bogey, we'll see if this rolls over after a gap test or not. It's the last day of the quarter, so there will be some fundies who hope the market stays up, there will be some fundies who don't want to take the risk and they'll lock down end-of-quarter results, and there will be some fundies who get all googley-eyed over the news and buy it. Another day, another news bogey.....
10:38 am MT: If the market is going to roll over after the gap test, it will probably be right here. The SPY (market) just threw an Evening Doji Star on the 30m charts right at the $80 that I speculated on pre-market.
If the market pushes back through resistance, then look for the 80.25 - 80.50 area. If it rolls over then it's probably headed down to the 78.75 area. The Bear Gap from yesterday will probably hold, and the market will probably continue to consolidate, but as always, you have to watch those news bogeys. The put setup off the gap test is not an extremely high probability scenario given the battles at the end of the quarter, the Googley-Eyes with their news bogey, and the potential (that fund managers are well aware of) for more news bogeys. So don't look for a big trade right here, keep anything you do small for now. It may clear up a bit later in the day, but I won't be surprised if we have to get through the ISM tomorrow to get the next general consensus.
10:45 am MT: The market is hanging between an Evening Star and a Bull Flag on the 30m charts. The desperate fundies want this pretty bad so they can close out their quarter with the best possible numbers. The realistic fundies are holding their breath and watching to see if any of their other realistic fundy buddies decide to cash in. It's an interesting balancing act going on right now. The news bogey worked. Again, don't try to get too aggressive with puts just yet, although I think the gap test will eventually run out of gas. I would be a nibbler at most right now and then add if the market starts to roll down. Also, don't try to make too much out of this day. As soon as Barney bogarted the market it was mostly over, that's why I spent all my focus on that event pre-market. Puts went from easy to more challenging, and trading went from higher volume to nibbling as soon as he got on CNBC (which, after all, was their whole purpose in the first place).
10:53 am MT: Bull Flag wins. Look for the 80.25 - 80.50 area next. If we get a one-candle failed signal, then you may have a put opportunity. If it pushes all the way to 80.50, then once again, don't get too aggressive.
11:12 am MT: I'm switching back over to the SPX since the gap push has gone far enough I don't need the SPY anymore to see it better. The current move up means that I'm going to use the 60m or 2hr chart for my base read for the next little while, and only use the smaller time frames to look inside the price action.
You can see the SPX bounced right in the middle of no-mans land. I call it turning in space. When a stock or the market turns in space it's usually because time ran out before price was finished, or because of news bogeys. I've seen a lot of space turns in the past year because of news bogeys, when the unexpected hit the market (although we've all gotten to where we expect the unexpected). The SPX is headed back towards 810, which it probably would not have even come close to accomplishing today without Barney's bogart. Technically the SPX was headed for 767 - 770, and that was a fairly high probability, to the point it was almost fait accompli.
I know I keep hammering on this, but those of you who have been keeping the trades to the very short term, and realizing the news bogey and market manipulation risks continue to be high, have seen a lot more consistency over the past year than those traders who held longer and then were frustrated with a whipsaw just like today. There have been periods of short trends in the past year, but short swing trades take advantage of those anyway. It's all the other days and periods in between that have cut up a lot of traders who tried to hold a position for several weeks (or even days) at a time.
If the SPX rolls over in the 805 - 810 area, and a roll-over pattern forms on the 2hr charts, then there may be a put opportunity, but I'm not really that enthusiastic about it today. Technically the SPX made a lower low on the 2hr charts, so the next move should be a lower high. However, enough news manipulation and we could see a Broadening Pattern, which is the single hardest pattern to deal with in technical analysis. I have seen more Broadening Patterns in the past six months on both the daily and intra-day charts than I've seen in several years prior. The Broadening Pattern is very difficult to accomplish without news. It usually takes some sort of news to push a stock or the market from a lower low back to a higher high. And of course, we've had a lot of "news" (real or manufactured) the past six months.
1:00 pm MT: The SPX pushed to 810 (810.48) as speculated. There were no put opportunities, as speculated. And the market has been quiet, as speculated. As we move in to the last hour, expect volatility to increase with some mini-whipsaws as fund managers try to throw a little lipstick on the pig on the last day of the quarter. Give your eyes a rest and don't bother watching it all too closely. I thought the day was over as soon as the news bogey hit pre-market, and it pretty much was. I held out hope for one good signal intra-day, but it lasted all of 10 minutes and that was it. There were little trades here and there, but the momentum disruption hit pre-market and that was that.
1:45 pm MT: There goes the end of quarter profit-locking. Some big funds decided to lock right about when this usually happens - the last 15 minutes. The SPX is rolling over on the 2hr charts.
Pre-market futures are up a bit on the news.....I think everyone should get their turn on CNBC. I want to be on CNBC, how about you? Would you like to be on CNBC? CNBC is good, CNBC is our source for all things new and important in the business world. By the way, the first volley shot by Congress over easing mark-to-market accounting came on March 12, so Barney's using an old template, which means it may lose a little of it's effectiveness. If the market sells off a little more after the Googley-Eyes finish getting high off the manufactured news, then expect another news bogey tomorrow because Barney wasn't able to "do the job." The silly thing in all this is that the selling has more to do with the profit-taking competition at the end of the quarter amongst fund managers (after such a sharp run-up in March) than it does anything else right now. It's getting kind of nuts, watching these folks toss out bogeys every time the market has a blip.
Alright, so news bogeys are really not that hard to predict once you get to know the playing field.....Onward with the day.
Refer to yesterday's Market Wrap at the end of the posting for the chart and the numbers. If the Googley-Eyes get keep the momentum going this morning all the way into the open, then look for a gap test on the SPY around the $80 area. By the way, aren't you glad you're doing a lot of short swings. Yesterday was a dead-ringer for a breakaway gap and continued selling today. And yesterday's earliest entry was at the gap, right around $80. So for anyone holding full positions overnight, this morning will probably return them all the way back to the starting place yesterday, and leave them with nothing for all that effort and time. All because of a news bogey. Isn't it fun?......For those of you who took profits as you went, you have a chance to watch the chart construction early in the day and decide if you want to lather, rinse, and repeat with a fresh set of puts.
Another day, another news bogey, we'll see if this rolls over after a gap test or not. It's the last day of the quarter, so there will be some fundies who hope the market stays up, there will be some fundies who don't want to take the risk and they'll lock down end-of-quarter results, and there will be some fundies who get all googley-eyed over the news and buy it. Another day, another news bogey.....
10:38 am MT: If the market is going to roll over after the gap test, it will probably be right here. The SPY (market) just threw an Evening Doji Star on the 30m charts right at the $80 that I speculated on pre-market.
Here is a 30m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
If the market pushes back through resistance, then look for the 80.25 - 80.50 area. If it rolls over then it's probably headed down to the 78.75 area. The Bear Gap from yesterday will probably hold, and the market will probably continue to consolidate, but as always, you have to watch those news bogeys. The put setup off the gap test is not an extremely high probability scenario given the battles at the end of the quarter, the Googley-Eyes with their news bogey, and the potential (that fund managers are well aware of) for more news bogeys. So don't look for a big trade right here, keep anything you do small for now. It may clear up a bit later in the day, but I won't be surprised if we have to get through the ISM tomorrow to get the next general consensus.
10:45 am MT: The market is hanging between an Evening Star and a Bull Flag on the 30m charts. The desperate fundies want this pretty bad so they can close out their quarter with the best possible numbers. The realistic fundies are holding their breath and watching to see if any of their other realistic fundy buddies decide to cash in. It's an interesting balancing act going on right now. The news bogey worked. Again, don't try to get too aggressive with puts just yet, although I think the gap test will eventually run out of gas. I would be a nibbler at most right now and then add if the market starts to roll down. Also, don't try to make too much out of this day. As soon as Barney bogarted the market it was mostly over, that's why I spent all my focus on that event pre-market. Puts went from easy to more challenging, and trading went from higher volume to nibbling as soon as he got on CNBC (which, after all, was their whole purpose in the first place).
10:53 am MT: Bull Flag wins. Look for the 80.25 - 80.50 area next. If we get a one-candle failed signal, then you may have a put opportunity. If it pushes all the way to 80.50, then once again, don't get too aggressive.
11:12 am MT: I'm switching back over to the SPX since the gap push has gone far enough I don't need the SPY anymore to see it better. The current move up means that I'm going to use the 60m or 2hr chart for my base read for the next little while, and only use the smaller time frames to look inside the price action.
Here is a current 2hr chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
You can see the SPX bounced right in the middle of no-mans land. I call it turning in space. When a stock or the market turns in space it's usually because time ran out before price was finished, or because of news bogeys. I've seen a lot of space turns in the past year because of news bogeys, when the unexpected hit the market (although we've all gotten to where we expect the unexpected). The SPX is headed back towards 810, which it probably would not have even come close to accomplishing today without Barney's bogart. Technically the SPX was headed for 767 - 770, and that was a fairly high probability, to the point it was almost fait accompli.
I know I keep hammering on this, but those of you who have been keeping the trades to the very short term, and realizing the news bogey and market manipulation risks continue to be high, have seen a lot more consistency over the past year than those traders who held longer and then were frustrated with a whipsaw just like today. There have been periods of short trends in the past year, but short swing trades take advantage of those anyway. It's all the other days and periods in between that have cut up a lot of traders who tried to hold a position for several weeks (or even days) at a time.
If the SPX rolls over in the 805 - 810 area, and a roll-over pattern forms on the 2hr charts, then there may be a put opportunity, but I'm not really that enthusiastic about it today. Technically the SPX made a lower low on the 2hr charts, so the next move should be a lower high. However, enough news manipulation and we could see a Broadening Pattern, which is the single hardest pattern to deal with in technical analysis. I have seen more Broadening Patterns in the past six months on both the daily and intra-day charts than I've seen in several years prior. The Broadening Pattern is very difficult to accomplish without news. It usually takes some sort of news to push a stock or the market from a lower low back to a higher high. And of course, we've had a lot of "news" (real or manufactured) the past six months.
1:00 pm MT: The SPX pushed to 810 (810.48) as speculated. There were no put opportunities, as speculated. And the market has been quiet, as speculated. As we move in to the last hour, expect volatility to increase with some mini-whipsaws as fund managers try to throw a little lipstick on the pig on the last day of the quarter. Give your eyes a rest and don't bother watching it all too closely. I thought the day was over as soon as the news bogey hit pre-market, and it pretty much was. I held out hope for one good signal intra-day, but it lasted all of 10 minutes and that was it. There were little trades here and there, but the momentum disruption hit pre-market and that was that.
1:45 pm MT: There goes the end of quarter profit-locking. Some big funds decided to lock right about when this usually happens - the last 15 minutes. The SPX is rolling over on the 2hr charts.
Monday, March 30, 2009
Market Goes Thump
Pre-market futures are down sharply without any news from the market calendar. Instead, traders are worried about the continued crunch in the European economy, along with fears of more government intervention in the banks. Speaking of government intervention, the White House determined what's working and not working in the auto industry based on their knowledge and expertise and ousted (asked to leave) GM's CEO Rick Wagoner. Oh, and Treasury Sectretary Geithner said there's only about $135b left in the "financial-stability fund" (is it just me or are there new names for everything about every other week?).
The market is set to gap down, with the SPX essentially opening right around 800. Look for a test of 790 eventually, also look for a potential "seed" change in the market today amongst fund managers, and also look for a news bogey or two from the Plunge Prevention Program. We may not get the news bogey today, but if it's a sharp down day, then we'll probably get it by tomorrow.
My sense is that news bogeys will have some effect, but if/when sellers overwhelm the googly-eyes every time they try to buy, then even the googley-eyes will figure it out and the news bogeys will have limited effect for awhile (just like late February).
The gap down this morning is a short-term breakaway gap that has the look of reversing the upswing/uptrend (chugger). I speculate that 790 won't hold this week, and that we will see 770.
I think there will still be enough googley-eyes that the market will have a little bullish Earnings Season run, especially if other fund managers just smile and go along for the ride. So I think that 750 on the SPX is the furthest target to the downside ahead of Earnings Season. If the SPX does make a round trip, I don't think that the market will test those early March lows until after Earnings Season gives it more data.
You can see that traders are wasting little time as they sell this market towards 790. If you didn't hop the train right out of the gate, then wait for the first counter move on the 5m charts. Remember to look for good setups intra-day after this initial thrust because it will probably be a pretty volatile day.
It's not hard to imagine a lower low on the 2hr charts (breach of 790). The next low is around 767 - 770, and then next one below that is 750. A change in trend on the 2hr charts will probably begin today. We'll see how much this does or doesn't hold up ahead of Earnings Season. But for now, puts are the flavor of the day.
9:08 am MT: The first intra-day Bear Flag came and went on the 10m charts. The second wiggle is fading as I type.
The market is set to gap down, with the SPX essentially opening right around 800. Look for a test of 790 eventually, also look for a potential "seed" change in the market today amongst fund managers, and also look for a news bogey or two from the Plunge Prevention Program. We may not get the news bogey today, but if it's a sharp down day, then we'll probably get it by tomorrow.
My sense is that news bogeys will have some effect, but if/when sellers overwhelm the googly-eyes every time they try to buy, then even the googley-eyes will figure it out and the news bogeys will have limited effect for awhile (just like late February).
The gap down this morning is a short-term breakaway gap that has the look of reversing the upswing/uptrend (chugger). I speculate that 790 won't hold this week, and that we will see 770.
I think there will still be enough googley-eyes that the market will have a little bullish Earnings Season run, especially if other fund managers just smile and go along for the ride. So I think that 750 on the SPX is the furthest target to the downside ahead of Earnings Season. If the SPX does make a round trip, I don't think that the market will test those early March lows until after Earnings Season gives it more data.
7:31 am MT: Here is a daily chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
You can see that traders are wasting little time as they sell this market towards 790. If you didn't hop the train right out of the gate, then wait for the first counter move on the 5m charts. Remember to look for good setups intra-day after this initial thrust because it will probably be a pretty volatile day.
7:36 am MT: Here is a 2hr chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
It's not hard to imagine a lower low on the 2hr charts (breach of 790). The next low is around 767 - 770, and then next one below that is 750. A change in trend on the 2hr charts will probably begin today. We'll see how much this does or doesn't hold up ahead of Earnings Season. But for now, puts are the flavor of the day.
9:08 am MT: The first intra-day Bear Flag came and went on the 10m charts. The second wiggle is fading as I type.
9:09 am MT: Here is a 10m chart of the SPY showing the first Bear Flag:
(click on image to enlarge)
(click on image to enlarge)
9:12 am MT: The next signal will probably come from the 15m or 30m charts. The market could have a trend day to the downside intra-day, but there may still be more put opportunities if price can push back towards the gap around 79.80 or so. The first turn back to test the gap may be happening right now.
9:15 am MT: If the SPY (SPX) can close above 79.10 on the 10m charts right now then expect a gap test and another put opportunity. If the SPY tests back in the 79.50 - 80.00 area in the next little while, then rolls over, there will probably be another put opportunity. If you're already in puts, you might as well keep at least half of them right now and just see how far this will ride down today. This is the first intra-day support test (although it overshot - but that's not all surprising given that savvy traders were expecting the market to drop early this week).
9:21 am MT: This is the second Bear Flag forming on the 10m charts. Go back and forth between the 10m and 15m charts now for the next roll-over signal.
9:15 am MT: If the SPY (SPX) can close above 79.10 on the 10m charts right now then expect a gap test and another put opportunity. If the SPY tests back in the 79.50 - 80.00 area in the next little while, then rolls over, there will probably be another put opportunity. If you're already in puts, you might as well keep at least half of them right now and just see how far this will ride down today. This is the first intra-day support test (although it overshot - but that's not all surprising given that savvy traders were expecting the market to drop early this week).
9:21 am MT: This is the second Bear Flag forming on the 10m charts. Go back and forth between the 10m and 15m charts now for the next roll-over signal.
9:24 am MT: Here is a 15m chart of the SPY showing the second Bear Flag:
(click on image to enlarge)
(click on image to enlarge)
This looks like a roll-over candidate as well.....
10:09 am MT: The SPY is right at the gap from March 23rd. You may want to be out of most of the first wave of puts, but keep some. Switch to the 30m charts and look for a Bear Flag as a potential 3rd entry signal for the day. Lots of momentum to the downside, but if we get a little bit larger wiggle on the day, it should come right here. A Bear Flag on the 30m charts becomes the next good entry for puts today. Don't look for more than 2-3 candles in the Bear Flag. We'll see how the next intra-day pattern forms.....
10:42 am MT: The Bear Flag is forming nicely on the SPY 30m charts. This is the first cherry pick area. If it goes as far as the low 79's, that becomes another cherry pick area.
10:45 am MT: There is a Bull Flag on the 5m charts, so the SPY (market) may pop to the upside a little more before it (potentially) rolls over later on.
10:55 am MT: Swap over to the SPY 10m charts for the potential Bull Flag. If you cherry picked a put a few minutes ago, at least you are positioned in case the market takes another leg down. If the market pops to the upside, then look for the 79.25 - 79.50 area to add another put.
11:25 am MT: The market legged down to the lows and held. Switching back to the SPX, look at the Double-Bottom on the 15m charts. If the SPX can pop through the 791-792 intra-day resistance, then it might make a run to the 795 area. If the SPX rolls over on the 15m charts in the 788 - 790 area, then the pattern morphs into a Descending Triangle and the selling probably continues below the lows of the day. This is why you cherry pick a put and at least have it there in case the selling continues. And you keep some of your powder dry in case we rally a little before rolling back over in the last 90 minutes or so. Once you have the big intra-day drop early in the day, it sometimes takes a little finessing and maneuvering to get the next good entry. That's trading for you.
11:37 am MT: A Descending Triangle it is. We'll see if the market hits new lows on the day.
12:33 pm MT: The market did hit new lows. Fund managers are in a mild state of panic trying to sell enough ahead of each other in order to report the best first quarter results as possible. The market will probably continue to chug down, and the Shorts have very little incentive to cover today or tomorrow knowing the Longs are having an end-of-quarter messy pants day.
6:30 pm MT: Market Wrap: Traders had a negative reaction to the government interventions in both Europe and America. But the news was more of a spark that lit the competitive fires of fund managers as they tried to be the first to lock profits on the big March rally. Selling volume wasn't very high, but then again, the speculative game the past several weeks was a lot of hot money anyway. So many fundies were playing hot money in, hot money out, lock and walk ahead of the end of the quarter (tomorrow), and then try to report a less than miserable quarter to their clients. That means there may be a little more selling tomorrow if enough Hot Money is worried that their quarter returns will flutter away like a wounded ostrich (I was thinking sparrow, but an ostrich is more gangly and representative of their buying and selling habits recently.....and see how restrained I was to not mention something about heads in the sand?.....).
Realistically, the 766 - 770 area is probably the furthest I would look tomorrow - barring a news catastrophe - although a mini-panic to end the quarter for the reasons stated above is not completely out of the question. I would speculate, though, that the most likely scenario is a drop and settling into the 766 - 770 support area. 770 is the 38.2% (1/3) retracement of the upswing/uptrend, and 766 is the previous low. And if I can see it, then about a jillion hedgies can see it as well.....
It's possible the market could test the 741 - 750 support zone, but I think that will only happen if we get a nasty Manufacturing Report (ISM) on Wednesday. It's possible the ADP Employment Report could create some pushing and shoving on Wednesday as well. The way this is lining up, barring a news bogey, is 767 - 770 tomorrow, and then if we get nasty news on Wednesday, then 741 - 750.
I will refer to these numbers and this chart tomorrow morning, especially if we don't get a "good news" bogey.
10:09 am MT: The SPY is right at the gap from March 23rd. You may want to be out of most of the first wave of puts, but keep some. Switch to the 30m charts and look for a Bear Flag as a potential 3rd entry signal for the day. Lots of momentum to the downside, but if we get a little bit larger wiggle on the day, it should come right here. A Bear Flag on the 30m charts becomes the next good entry for puts today. Don't look for more than 2-3 candles in the Bear Flag. We'll see how the next intra-day pattern forms.....
10:42 am MT: The Bear Flag is forming nicely on the SPY 30m charts. This is the first cherry pick area. If it goes as far as the low 79's, that becomes another cherry pick area.
10:45 am MT: There is a Bull Flag on the 5m charts, so the SPY (market) may pop to the upside a little more before it (potentially) rolls over later on.
10:55 am MT: Swap over to the SPY 10m charts for the potential Bull Flag. If you cherry picked a put a few minutes ago, at least you are positioned in case the market takes another leg down. If the market pops to the upside, then look for the 79.25 - 79.50 area to add another put.
11:25 am MT: The market legged down to the lows and held. Switching back to the SPX, look at the Double-Bottom on the 15m charts. If the SPX can pop through the 791-792 intra-day resistance, then it might make a run to the 795 area. If the SPX rolls over on the 15m charts in the 788 - 790 area, then the pattern morphs into a Descending Triangle and the selling probably continues below the lows of the day. This is why you cherry pick a put and at least have it there in case the selling continues. And you keep some of your powder dry in case we rally a little before rolling back over in the last 90 minutes or so. Once you have the big intra-day drop early in the day, it sometimes takes a little finessing and maneuvering to get the next good entry. That's trading for you.
11:37 am MT: A Descending Triangle it is. We'll see if the market hits new lows on the day.
12:33 pm MT: The market did hit new lows. Fund managers are in a mild state of panic trying to sell enough ahead of each other in order to report the best first quarter results as possible. The market will probably continue to chug down, and the Shorts have very little incentive to cover today or tomorrow knowing the Longs are having an end-of-quarter messy pants day.
6:30 pm MT: Market Wrap: Traders had a negative reaction to the government interventions in both Europe and America. But the news was more of a spark that lit the competitive fires of fund managers as they tried to be the first to lock profits on the big March rally. Selling volume wasn't very high, but then again, the speculative game the past several weeks was a lot of hot money anyway. So many fundies were playing hot money in, hot money out, lock and walk ahead of the end of the quarter (tomorrow), and then try to report a less than miserable quarter to their clients. That means there may be a little more selling tomorrow if enough Hot Money is worried that their quarter returns will flutter away like a wounded ostrich (I was thinking sparrow, but an ostrich is more gangly and representative of their buying and selling habits recently.....and see how restrained I was to not mention something about heads in the sand?.....).
Here is a chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
Realistically, the 766 - 770 area is probably the furthest I would look tomorrow - barring a news catastrophe - although a mini-panic to end the quarter for the reasons stated above is not completely out of the question. I would speculate, though, that the most likely scenario is a drop and settling into the 766 - 770 support area. 770 is the 38.2% (1/3) retracement of the upswing/uptrend, and 766 is the previous low. And if I can see it, then about a jillion hedgies can see it as well.....
It's possible the market could test the 741 - 750 support zone, but I think that will only happen if we get a nasty Manufacturing Report (ISM) on Wednesday. It's possible the ADP Employment Report could create some pushing and shoving on Wednesday as well. The way this is lining up, barring a news bogey, is 767 - 770 tomorrow, and then if we get nasty news on Wednesday, then 741 - 750.
I will refer to these numbers and this chart tomorrow morning, especially if we don't get a "good news" bogey.
Friday, March 27, 2009
The Monkey Rang the Bell
Pre-market futures are down sharply on no news. The monkey simply rang the bell and everybody is grabbing their cheese and going home. I came in to the day speculating that profit-taking on the sharp upswing/trend would hit by the afternoon. Well, it looks like the savvy mutual fund managers figured the same thing and decided to get a jump on things. That's what smart money does, speculate, which means getting a jump on things.
The bullish tone change the past several weeks won't go away without a fight. Expect some buying and thrusting from all the late comers to the party who have buyers remorse because they've been standing like a deer in the headlights and staring at the big run-up for the past 2 1/2 weeks.
7:32 am MT: The SPX (gapped) down to 820. The Broadening Pattern on the 30m charts held. The SPX poked through the 820 area (remember that number from late yesterday) and down to 819. This area is not likely to hold. The next target down is 803 - 806 area, so about 805.
You can see the Broadening Pattern I warned of yesterday has been significant several times both yesterday and today. It won't be much longer and the pattern won't be important anymore, and then it's on to the next thing. But for now, it will act as a guide, probably at least towards the 803 - 806 area, and perhaps down to the 780 - 785 area in the next couple of trading days.
7:43 am MT: Here is the first potential wiggle point. I sense that this wiggle might not carry much push behind it. If it has a small push then it will probably tap out around 821 - 823. A medium push would probably tap out around 825, and a strong push would reach for 828 - 829. Despite the late-comer's phenomenon, I think there is enough savvy money out there today that simply wants to lock profits on the freneticism and go home. That means that the selling will probably be stronger in the morning (the fund managers that want to sell and start their weekend right away), and then later in the afternoon (the fund managers that felt guilty about not at least trying to put in a full day, but not so guilty that they didn't want to beat the afternoon rush hour going into the weend).
So I speculate, in a broader view, that the day will probably be: sell the morning, deer in the headlight gang buy the mid day, and sell the afternoon.
On the daily charts, the low of yesterday is important around 814, then the 803 - 806 area that I mentioned earlier, then the 790 - 791 low from three days ago, and then the 780 - 785 area that I mentioned earlier. A big consolidation could go as far as the 770 area. That's a lot of areas. I think the more important areas to watch will be the 805 area, which the market could drop to later today, and then the 790 area, which could be a target on Monday.
8:02 am MT: The first wiggle was a weak push just as I speculated. It tagged 822, which was right in the middle of my 821 - 823 shorter target. It was a nice Bear Flag and now the market is taking another leg down on the 5m charts.
Remember to keep a perspective on things. There are enough traders with buyers remorse (deer in the headlight gang) and 2006 envy (I lost my Ferrari and I want it back gang) that the market won't roll over without some thrusting, jousting, and fighting. However, there appear to be enough mutual fund managers wanting to take a profit today that the market (SPX) is most likely headed for a consolidation day, and probably won't get back to yesterday's highs, but rather consolidate down in to the lower 800's. We shall see.....
8:19 am MT: The SPX hit the next wiggle point (I targeted 814, it hit 815.59). The sellers continue to outweigh the buyers. It looks like the sell/buy pattern for the day is playing out so far. Some time in the next couple of minutes we may get the first of the deer in the headlights gang buying. Then a bit of a tug of war back and forth.
8:23 am MT: The gyrating has begun, so once again, stand back a bit on your view, go out a time frame or two and get a bigger picture of the price action. In general, I still expect price to continue to play out with the sell/buy/sell pattern of behavior I detailed earlier.
12:20 pm MT: The market continues to play out the way I speculated. We got the early selling, and then some mid-morning to mid-day gyrating by some buyers. After all that, the market is sitting just about where it was 4 hours ago, which is down about 2%.
There are still enough buyers out there hoping to ride the wave they missed all the way through the swing, or hoping the swing will run to the top of the world so they can get their groove back on. So the market might not be quite ready for any late-day/end-of-week/end-of-swing profit-taking. But I speculate the thought of taking profits again before the weekend is hovering around the frontal cortex of a lot of traders minds right now.
The 30m charts are showing the possibility of a bounce right now, but I'm not buying it, I think the market may wiggle some more in the next little while, but the risks of late day profit-taking are increasing. I don't think we will see a big sell-off, there's way to much bullishness for that, but I think the market will soften up and sell a bit into the close.
12:59 pm MT: There's another spurt to the upside. It's pretty apparent to me that there is a segment of fund managers that are still transfixed by all the "good news" the past several weeks and are buying every little dip. If we get the profit-taking I am looking for, it won't happen until the last 30 minutes.
1:07 pm MT: I have been pondering this question in my mind for the past week or so: Is there so much focus on the perceived "good news" recently that the upswing/uptrend has very little in the way of pullbacks?
Normal price action would see some pullback consolidations by now, but there may be enough googly-eyed traders out there that the uptrend just kind of flattens out and rounds a bit. It's like someone running up a hill. Normally a person runs up a hill, then walks a little, then stops and takes a breather, which consolidates their energy for the next move up. The current price action may be like someone who is fantastically desperate to get to the top of the hill, as if their very life depended on it. That type of person starts running, then walking, then crawling on their hands and knees, then dragging themselves on their belly with their elbows when their hands wear out, and then finally just wriggling and pushing themselves with their toes as they slide prostrate across the dirt and rocks. The first person usually gets to the top, or at least has a good run. The second person exhausts themselves, and does some damage to their body along the way. The second person also takes an even greater risk. They can get so worn out, and their body becomes damaged enough, that they lose their direction, turn sideways, and then roll back down the hill completely out of control.
This market may have too many traders desperate to get to the top of the hill. A consolidation would actually be healthy, and create some sustainability for another push back up into Earning Season. I would rather see the market catch its breath right here, it's been a long run.....but of course I'm not in control of the market, so as always, we shall see.....
1:28 pm MT: Well, I thought it would be the last 30 minutes, I was off by two minutes. We'll see if this is the end-of-day profit-taking I was speculating about. It still may not be enough to stop the desperate hill-climbers. That's why I said earlier, don't look for big selling, just a bit of selling into the close.
1:36 pm MT: And the answer is.....profit-taking. It looks like a bit of net selling into the end of the week, as was speculated. We'll see how this finishes.
1:50 pm MT: And the googly-eyes come right back. Such is our market. I don't really like watching days like this for too long, but I wanted to hang around and get a feel for the mood of the various types of traders out there right now. It wasn't much to trade, but some days are like that, more information gathering then trading. This market continues to fight every little pullback. Which means that Earning Season is still the only likely candidate in the next three weeks that could possibly change the trend. Other than that, I'm not looking for pullbacks to go very far. We'll see what next week brings.
2:00 pm MT: Market Wrap: The market did see the Friday profit-taking I speculated. However, there were plenty of buyers fighting it all the way. Every dip got a buy, which created quite a bit of chop intra-day. The net selling closed the market down 2%, but the upswing/uptrend is not pulling back much, but rather just oozing its way into more of a flattening, rounding consolidation because of the frenetic hill climbers. I have been speculating for more than a week that the upswing/uptrend (by the way I call these "chuggers") would not go away without a fight. Well, the fight continues, but the fight is also starting to get unhealthy and carry some risks, especially in our economic environment. We'll see if the market will have a healthy consolidation early next week or not. I'm still targeting Earning Season as the next major potential seed change, so until then, it's probably bullish.
The bullish tone change the past several weeks won't go away without a fight. Expect some buying and thrusting from all the late comers to the party who have buyers remorse because they've been standing like a deer in the headlights and staring at the big run-up for the past 2 1/2 weeks.
7:32 am MT: The SPX (gapped) down to 820. The Broadening Pattern on the 30m charts held. The SPX poked through the 820 area (remember that number from late yesterday) and down to 819. This area is not likely to hold. The next target down is 803 - 806 area, so about 805.
Here is a current 30m chart of the SPX showing the rollover:
(click on image to enlarge)
(click on image to enlarge)
You can see the Broadening Pattern I warned of yesterday has been significant several times both yesterday and today. It won't be much longer and the pattern won't be important anymore, and then it's on to the next thing. But for now, it will act as a guide, probably at least towards the 803 - 806 area, and perhaps down to the 780 - 785 area in the next couple of trading days.
7:43 am MT: Here is the first potential wiggle point. I sense that this wiggle might not carry much push behind it. If it has a small push then it will probably tap out around 821 - 823. A medium push would probably tap out around 825, and a strong push would reach for 828 - 829. Despite the late-comer's phenomenon, I think there is enough savvy money out there today that simply wants to lock profits on the freneticism and go home. That means that the selling will probably be stronger in the morning (the fund managers that want to sell and start their weekend right away), and then later in the afternoon (the fund managers that felt guilty about not at least trying to put in a full day, but not so guilty that they didn't want to beat the afternoon rush hour going into the weend).
So I speculate, in a broader view, that the day will probably be: sell the morning, deer in the headlight gang buy the mid day, and sell the afternoon.
Here is a daily chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
On the daily charts, the low of yesterday is important around 814, then the 803 - 806 area that I mentioned earlier, then the 790 - 791 low from three days ago, and then the 780 - 785 area that I mentioned earlier. A big consolidation could go as far as the 770 area. That's a lot of areas. I think the more important areas to watch will be the 805 area, which the market could drop to later today, and then the 790 area, which could be a target on Monday.
8:02 am MT: The first wiggle was a weak push just as I speculated. It tagged 822, which was right in the middle of my 821 - 823 shorter target. It was a nice Bear Flag and now the market is taking another leg down on the 5m charts.
Here is a current 5m chart of the SPX showing the first Bear Flag:
(click on image to enlarge)
(click on image to enlarge)
Remember to keep a perspective on things. There are enough traders with buyers remorse (deer in the headlight gang) and 2006 envy (I lost my Ferrari and I want it back gang) that the market won't roll over without some thrusting, jousting, and fighting. However, there appear to be enough mutual fund managers wanting to take a profit today that the market (SPX) is most likely headed for a consolidation day, and probably won't get back to yesterday's highs, but rather consolidate down in to the lower 800's. We shall see.....
8:19 am MT: The SPX hit the next wiggle point (I targeted 814, it hit 815.59). The sellers continue to outweigh the buyers. It looks like the sell/buy pattern for the day is playing out so far. Some time in the next couple of minutes we may get the first of the deer in the headlights gang buying. Then a bit of a tug of war back and forth.
8:23 am MT: The gyrating has begun, so once again, stand back a bit on your view, go out a time frame or two and get a bigger picture of the price action. In general, I still expect price to continue to play out with the sell/buy/sell pattern of behavior I detailed earlier.
12:20 pm MT: The market continues to play out the way I speculated. We got the early selling, and then some mid-morning to mid-day gyrating by some buyers. After all that, the market is sitting just about where it was 4 hours ago, which is down about 2%.
Here is a 30m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
There are still enough buyers out there hoping to ride the wave they missed all the way through the swing, or hoping the swing will run to the top of the world so they can get their groove back on. So the market might not be quite ready for any late-day/end-of-week/end-of-swing profit-taking. But I speculate the thought of taking profits again before the weekend is hovering around the frontal cortex of a lot of traders minds right now.
The 30m charts are showing the possibility of a bounce right now, but I'm not buying it, I think the market may wiggle some more in the next little while, but the risks of late day profit-taking are increasing. I don't think we will see a big sell-off, there's way to much bullishness for that, but I think the market will soften up and sell a bit into the close.
12:59 pm MT: There's another spurt to the upside. It's pretty apparent to me that there is a segment of fund managers that are still transfixed by all the "good news" the past several weeks and are buying every little dip. If we get the profit-taking I am looking for, it won't happen until the last 30 minutes.
1:07 pm MT: I have been pondering this question in my mind for the past week or so: Is there so much focus on the perceived "good news" recently that the upswing/uptrend has very little in the way of pullbacks?
Normal price action would see some pullback consolidations by now, but there may be enough googly-eyed traders out there that the uptrend just kind of flattens out and rounds a bit. It's like someone running up a hill. Normally a person runs up a hill, then walks a little, then stops and takes a breather, which consolidates their energy for the next move up. The current price action may be like someone who is fantastically desperate to get to the top of the hill, as if their very life depended on it. That type of person starts running, then walking, then crawling on their hands and knees, then dragging themselves on their belly with their elbows when their hands wear out, and then finally just wriggling and pushing themselves with their toes as they slide prostrate across the dirt and rocks. The first person usually gets to the top, or at least has a good run. The second person exhausts themselves, and does some damage to their body along the way. The second person also takes an even greater risk. They can get so worn out, and their body becomes damaged enough, that they lose their direction, turn sideways, and then roll back down the hill completely out of control.
This market may have too many traders desperate to get to the top of the hill. A consolidation would actually be healthy, and create some sustainability for another push back up into Earning Season. I would rather see the market catch its breath right here, it's been a long run.....but of course I'm not in control of the market, so as always, we shall see.....
1:28 pm MT: Well, I thought it would be the last 30 minutes, I was off by two minutes. We'll see if this is the end-of-day profit-taking I was speculating about. It still may not be enough to stop the desperate hill-climbers. That's why I said earlier, don't look for big selling, just a bit of selling into the close.
1:36 pm MT: And the answer is.....profit-taking. It looks like a bit of net selling into the end of the week, as was speculated. We'll see how this finishes.
1:50 pm MT: And the googly-eyes come right back. Such is our market. I don't really like watching days like this for too long, but I wanted to hang around and get a feel for the mood of the various types of traders out there right now. It wasn't much to trade, but some days are like that, more information gathering then trading. This market continues to fight every little pullback. Which means that Earning Season is still the only likely candidate in the next three weeks that could possibly change the trend. Other than that, I'm not looking for pullbacks to go very far. We'll see what next week brings.
2:00 pm MT: Market Wrap: The market did see the Friday profit-taking I speculated. However, there were plenty of buyers fighting it all the way. Every dip got a buy, which created quite a bit of chop intra-day. The net selling closed the market down 2%, but the upswing/uptrend is not pulling back much, but rather just oozing its way into more of a flattening, rounding consolidation because of the frenetic hill climbers. I have been speculating for more than a week that the upswing/uptrend (by the way I call these "chuggers") would not go away without a fight. Well, the fight continues, but the fight is also starting to get unhealthy and carry some risks, especially in our economic environment. We'll see if the market will have a healthy consolidation early next week or not. I'm still targeting Earning Season as the next major potential seed change, so until then, it's probably bullish.
Thursday, March 26, 2009
Traders Keeps Rowing the Boat
The market consolidation the past two days will be tested with a series of data this morning. The three key bits of data will be the GDP report, the Initial Jobless Claims report, and BBY's earnings. The first of the three data bits just hit, with traders buying the release of BBY's earning. BBY beat expectations and guided up, which is the double-whammy. BBY is set to gap up around 7% - 8% at the open if the early trading holds up. It's still way too early to get a sum total read on any of the data, but the pre-market futures are up on the first stage of news.
The market consensus will be known by about 7:00 am MT. Until then, reference the charts and information I posted at the the end of yesterday, which pertain to today's trading day. In addition, here is a 30m chart of the SPX showing a Broadening Pattern. The pattern of highs and lows will be a good reference for short swings today, if any form.
Currently, the futures are set to gap the market up, right to the 825 resistance area. If the GDP and Initial Jobless Claims reports add to the BBY tailwind then the Broadening Pattern may break to the upside, which will open the door for a run on the SPX to the 840 - 850 area. Next up are the economic reports.....
6:33 am MT: The economic data just posted and that whistling sound you just heard was the air coming out of the Frenetic Fundies balloons. The more experienced fund managers are probably nodding their heads and muttering to themselves, "that's about right." The GDP report came out -6.3% vs. -6.6%, which was slightly better than expectations, but way off what the news manipulators and the Top Gun Traders thought would be the number. Pre-market futures have immediately dropped on the report. I can't even get started on these Top Gun Fundies anymore, I guess I must be the guy just shaking my head and muttering about their goofy expectations. I suppose losing the Ferrari, Upper West Side condo, and the Limo service can make a Top Gunner a little goofy.....
In addition to the GDP report, which is actually a lagging indicator and really not that important (except to the press and to the amateurs), the more timely (and more important) Initial Jobless Claims reported 652k vs. 650k expected, which is roughly in-line with consensus. The jobs environment continues to bleed out, and with the IBM layoff announcement yesterday as a current litmus test, the employment situation in America is not rebounding yet. In fact, continuing claims are at a new record high for recent history.
6:50 am MT: Pre-market futures are still up, but off the highs. The SPX is set to gap up a little, but stay range-bound inside the Broadening Pattern on the 30m charts. There doesn't appear to be a momentum trade this morning, although their appears to be a Frenetic Fundy Frustration Trade, which could be a buying spurt from those fundies who are stubbornly angry about not getting their way with the economic reports this morning. So watch for signals that the fundies are trying to push the market on a last leg up in the current trend - economic data be darned.....
6:58 am MT: I imagine the rose colored glasses just got strapped on, the microscope was zoomed in to the bottom of the glass, and the stubborn refusal to see anything other than the recovery of their 2006 lifestyle was just forced on to their frontal cortex, because the the fundies are pushing the pre-market futures back towards the highs of the morning.
The market is still set to gap up, somewhere near the highs of yesterday. It's possible we see another leg up, and a continuation move today. I think the probabilities are still slightly higher that the market tries to push up one more time, and the current trend is not ready to roll over yet. There are still some battles out there, but the first move looks like a gap and test of the two day resistance to see if the market can make one more push. If the same fund managers (presumably mostly mutual fund managers) come in and sell again, like they have the past two days, then the consolidation will continue for awhile longer.
11:50 am MT: The SPX finally pushed through the two-day short term resistance. However, watch this area (830) as the top of the Broadening Pattern I drew for you earlier. The market is trying to make a push, but traders are also getting a little tired. How the market holds, builds, or consolidates on the break will be important as to whether or not traders have a move to 840 - 850 still in them, or if some of the buying euphoria is starting to wear off.
The internals are showing a slight positive for the Bulls. So the market could continue to shimmy and saunter towards the next resistance. For now, calls are still in play. If the SPX falls back below 825 it's a warnings sign, and a drop below 820 is a drop dead area for calls. Traders are content to keep rowing the boat, and enough sellers are on the banks of the river watching the boat go drifting by that the market could continue to float along for awhile.
12:55 pm MT: The SPX turned back right off the top of the Broadening Pattern I warned of earlier. The key to this pullback (especially since it pierced 825) is to hold and be fairly orderly, like a Bull Flag.
A drop below 820 and I want to be out of calls for now and perhaps waiting for another opportunity tomorrow. If the market comes back and finishes strong into the close, we may see another push tomorrow before any profit taking hits just before the weekend.
1:48 pm MT: The SPX held 821 and rallied back to the top of the Broadening Pattern. If the market can finish strong then look for the possibility of a little follow-through tomorrow before traders lock profits ahead of the weekend.
2:15 pm MT: Market Wrap: The SPX did close near the highs, which was also right on the resistance line of the Broadening Pattern. Tomorrow's market calendar is pretty bare, so I'm looking for a residual push from the Top Gunners and then some profit-taking by the fund managers going into the weekend.
The market consensus will be known by about 7:00 am MT. Until then, reference the charts and information I posted at the the end of yesterday, which pertain to today's trading day. In addition, here is a 30m chart of the SPX showing a Broadening Pattern. The pattern of highs and lows will be a good reference for short swings today, if any form.
Here is the 30m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
Currently, the futures are set to gap the market up, right to the 825 resistance area. If the GDP and Initial Jobless Claims reports add to the BBY tailwind then the Broadening Pattern may break to the upside, which will open the door for a run on the SPX to the 840 - 850 area. Next up are the economic reports.....
6:33 am MT: The economic data just posted and that whistling sound you just heard was the air coming out of the Frenetic Fundies balloons. The more experienced fund managers are probably nodding their heads and muttering to themselves, "that's about right." The GDP report came out -6.3% vs. -6.6%, which was slightly better than expectations, but way off what the news manipulators and the Top Gun Traders thought would be the number. Pre-market futures have immediately dropped on the report. I can't even get started on these Top Gun Fundies anymore, I guess I must be the guy just shaking my head and muttering about their goofy expectations. I suppose losing the Ferrari, Upper West Side condo, and the Limo service can make a Top Gunner a little goofy.....
In addition to the GDP report, which is actually a lagging indicator and really not that important (except to the press and to the amateurs), the more timely (and more important) Initial Jobless Claims reported 652k vs. 650k expected, which is roughly in-line with consensus. The jobs environment continues to bleed out, and with the IBM layoff announcement yesterday as a current litmus test, the employment situation in America is not rebounding yet. In fact, continuing claims are at a new record high for recent history.
6:50 am MT: Pre-market futures are still up, but off the highs. The SPX is set to gap up a little, but stay range-bound inside the Broadening Pattern on the 30m charts. There doesn't appear to be a momentum trade this morning, although their appears to be a Frenetic Fundy Frustration Trade, which could be a buying spurt from those fundies who are stubbornly angry about not getting their way with the economic reports this morning. So watch for signals that the fundies are trying to push the market on a last leg up in the current trend - economic data be darned.....
6:58 am MT: I imagine the rose colored glasses just got strapped on, the microscope was zoomed in to the bottom of the glass, and the stubborn refusal to see anything other than the recovery of their 2006 lifestyle was just forced on to their frontal cortex, because the the fundies are pushing the pre-market futures back towards the highs of the morning.
The market is still set to gap up, somewhere near the highs of yesterday. It's possible we see another leg up, and a continuation move today. I think the probabilities are still slightly higher that the market tries to push up one more time, and the current trend is not ready to roll over yet. There are still some battles out there, but the first move looks like a gap and test of the two day resistance to see if the market can make one more push. If the same fund managers (presumably mostly mutual fund managers) come in and sell again, like they have the past two days, then the consolidation will continue for awhile longer.
11:50 am MT: The SPX finally pushed through the two-day short term resistance. However, watch this area (830) as the top of the Broadening Pattern I drew for you earlier. The market is trying to make a push, but traders are also getting a little tired. How the market holds, builds, or consolidates on the break will be important as to whether or not traders have a move to 840 - 850 still in them, or if some of the buying euphoria is starting to wear off.
Here is a 30m chart of the SPX showing the top end of the Broadening Pattern I pointed out pre-market (where the market is having a mini-consolidation right now):
(click on image to enlarge)
(click on image to enlarge)
The internals are showing a slight positive for the Bulls. So the market could continue to shimmy and saunter towards the next resistance. For now, calls are still in play. If the SPX falls back below 825 it's a warnings sign, and a drop below 820 is a drop dead area for calls. Traders are content to keep rowing the boat, and enough sellers are on the banks of the river watching the boat go drifting by that the market could continue to float along for awhile.
12:55 pm MT: The SPX turned back right off the top of the Broadening Pattern I warned of earlier. The key to this pullback (especially since it pierced 825) is to hold and be fairly orderly, like a Bull Flag.
Here is the current 30m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
A drop below 820 and I want to be out of calls for now and perhaps waiting for another opportunity tomorrow. If the market comes back and finishes strong into the close, we may see another push tomorrow before any profit taking hits just before the weekend.
1:48 pm MT: The SPX held 821 and rallied back to the top of the Broadening Pattern. If the market can finish strong then look for the possibility of a little follow-through tomorrow before traders lock profits ahead of the weekend.
2:15 pm MT: Market Wrap: The SPX did close near the highs, which was also right on the resistance line of the Broadening Pattern. Tomorrow's market calendar is pretty bare, so I'm looking for a residual push from the Top Gunners and then some profit-taking by the fund managers going into the weekend.
Wednesday, March 25, 2009
Spinner Day Spins Away
For the first time in a number of days traders will have a chance to react to some economic data. Durable Orders is due to be reported in about 5m. In addition, New Home Sales will be reported 30m after the open. Pre-market futures are relatively flat, so traders are sitting and waiting and pondering the realities (or fantasies) of the current economy.
The market charts to reference for today are at the end of yesterday's post. The 2hr chart on the SPX is noteworthy, and I pointed out some possibilities for today. Of course, much of it depends on the data that is just about to report.
6:35 am MT: Durable Orders reported at +3.4% vs. -2.5% expected, which is a much stronger than expected. The report is being parsed and contemplated as I type. The initial reaction to the report was a modest jump in the futures, but not as much as I expected for such a big positive. There must be something in the report that traders think is a statistical anomaly. For now, it looks like the market is set to wiggle a little to the upside, but nothing powerful, which keeps the consolidation on the 2hr charts still in play. I'll watch and see how the futures jump around a bit on this report, but so far, traders haven't taken the big positive to the bottom line yet.
7:00 am MT: Pre-market futures continue to hang around the slightly positive area. The trader reaction to the report is more muted than I would have expected, so another consolidation day in the market is still on the table.
8:10 am MT: The New Home Sales report beat expectations, which is giving the early wiggle a push to new highs. The February, and especially end of February economic data has been coming out largely better than expected. The SPX may attempt to run towards the 850 area, with a wiggle in the 840 area along the way. The key to the move will be how the market handles the first intra-day consolidation after the spike. If this is just an end-of-upswing short covering then the SPX (market) will probably not hold 815. If, however, the SPX holds the 815 - 818 area intra-day and bounces, then there is the potential for another bullish leg up towards 840.
The pattern on the 2hr charts is done and out of reference now, the news changed the inside structure of the charts. I am now watching the 10m charts for the little pullback off the spike, and I'm watching the 30m charts for the overall intra-day structure and support areas.
As I type this, the 10m charts are showing a Dark Cloud Cover, which means the news spike is probably going to consolidate for a short while. If the consolidation is orderly, and the price action maintains it bullishness, then I may look for calls on a bounce. We shall see.
8:35 am MT: Here is the bounce on the 10m charts that could start another push. At the very least it's defining the area I speculated on before as potential intra-day support. I was looking around 818 and the SPX held 820. If this will continue to hold and push, it may be worthy of some call trades. I paper traded a part of the position I wanted on the pullback.
8:39 am MT: The market just pushed to new highs, so the calls are already working. I want to see the move hold and price action to continue to form strongly so I can add more calls to my current position.
8:53 am MT: The price action is a little too loosey-goosey right now. The market really needs to show some tight strength in the next 30m or so, otherwise this could go back to consolidation and the push off the economic data was just short-covering. Traders have had every opportunity to go frenetic and panic buy off the much better than expected economic data. They have certainly been panic buying the past two weeks. So the price action right now is a little sloppier than I would expect for such "good news" on the day. I will keep a sharp eye on things and see if this tightens and builds or loosens and fades.
11:25 am MT: The market went through some min-chop intra-day off comments by Cleveland Fed President Sandra Pianalto who stated that the economy should stabilize by year-end and start to recover in 2010. Evidently some fund managers thought this was news, so there was some funky gyrations in volume after the comments. Since that time, the market has resumed its consolidation, which I was guessing might happen after the early loosey-goosey price action. So toss out Pianalto's comments, it's typical market news manipulation that only briefly put a blip on the radar screen. The market is headed for a consolidation day again, like yesterday. If it holds up in an orderly fashion, then perhaps tomorrow or Friday it may make one more push to 840 - 850 on the SPX. A drop below 800 today would put the orderly consolidation at risk and create a bit more hesitancy on the part of traders.
12:05 pm MT: The fade is getting deeper. The 2hr chart scenario from the end of yesterday's post is back on the table. The SPX may be headed more towards 785 - 790, especially if it can't hold the 800 area. Regardless of how deep the fade goes, the market is in full-on consolidation mode and unlikely to come back to new highs today. I speculate that we may see at least 795 before the end of the day.
1:10 pm MT: The 2hr chart scenario continues to play out as the SPX hit and passed 795, and is headed into the 785 - 790 area. This is the original consolidation I speculated last night (before all our news bogeys put some wiggle into the market). That's why I was interested in ferreting out the truth to see if the wiggle was real or fake. So the move I was looking for is back on track and playing out as I type.
6:30 pm MT: Market Wrap: There was all kinds of goofball price action intra-day today, but in the end the market did what it was most likely to do, which was consolidate. The wide wicks and small body on the market ended in a Spinning Top candlestick, but the pattern doesn't mean much right now, other than there was some manipulating, maneuvering, and gyrating going on all day. The media is getting the headlines it wanted to sway the American public, so I'm happy for them. But in reality this economy has a long way to go before it truly stabilizes, which the American public is going to figure out soon enough despite the headlines that are being vended to them right now. The price action was a little too loosey-goosey today, which contributed to the wide wicks, but overall the upswing/trend are holding bullish. The SPX could still reach for the 840 - 850 area in the next day or two, and the Dow could reach for the 8,000 - 8,200 area. The GDP number will get a lot of press tomorrow, and there are enough amateur fund managers to buy or sell whatever the GDP tells them to do, but the two most important bits of data tomorrow morning are actually the Initial Jobless Claims and BBY's earnings. If the data lines up bullish, then expect a gap up in the morning, and at least an attempt by traders to reach for the next (and probably final) leg up in the current swing/trend.
Like the SPX, I don't expect the Dow to make it all the way to the next resistance level even if the data comes out bullish, but rather to peak out around half way into the zone (8,000 - 8,200 area). A drop below 7,500 on the Dow and the bullish consolidation is likely headed for a stronger pullback instead of another leg up. A drop below the 785 - 790 area on the SPX and the same thing goes, the upswing is likely headed for a bigger pullback and the market might not make it back above today's highs on the current move. I will reference these charts in the morning for tomorrow's price action.
The market charts to reference for today are at the end of yesterday's post. The 2hr chart on the SPX is noteworthy, and I pointed out some possibilities for today. Of course, much of it depends on the data that is just about to report.
6:35 am MT: Durable Orders reported at +3.4% vs. -2.5% expected, which is a much stronger than expected. The report is being parsed and contemplated as I type. The initial reaction to the report was a modest jump in the futures, but not as much as I expected for such a big positive. There must be something in the report that traders think is a statistical anomaly. For now, it looks like the market is set to wiggle a little to the upside, but nothing powerful, which keeps the consolidation on the 2hr charts still in play. I'll watch and see how the futures jump around a bit on this report, but so far, traders haven't taken the big positive to the bottom line yet.
7:00 am MT: Pre-market futures continue to hang around the slightly positive area. The trader reaction to the report is more muted than I would have expected, so another consolidation day in the market is still on the table.
8:10 am MT: The New Home Sales report beat expectations, which is giving the early wiggle a push to new highs. The February, and especially end of February economic data has been coming out largely better than expected. The SPX may attempt to run towards the 850 area, with a wiggle in the 840 area along the way. The key to the move will be how the market handles the first intra-day consolidation after the spike. If this is just an end-of-upswing short covering then the SPX (market) will probably not hold 815. If, however, the SPX holds the 815 - 818 area intra-day and bounces, then there is the potential for another bullish leg up towards 840.
The pattern on the 2hr charts is done and out of reference now, the news changed the inside structure of the charts. I am now watching the 10m charts for the little pullback off the spike, and I'm watching the 30m charts for the overall intra-day structure and support areas.
As I type this, the 10m charts are showing a Dark Cloud Cover, which means the news spike is probably going to consolidate for a short while. If the consolidation is orderly, and the price action maintains it bullishness, then I may look for calls on a bounce. We shall see.
8:35 am MT: Here is the bounce on the 10m charts that could start another push. At the very least it's defining the area I speculated on before as potential intra-day support. I was looking around 818 and the SPX held 820. If this will continue to hold and push, it may be worthy of some call trades. I paper traded a part of the position I wanted on the pullback.
8:39 am MT: The market just pushed to new highs, so the calls are already working. I want to see the move hold and price action to continue to form strongly so I can add more calls to my current position.
8:53 am MT: The price action is a little too loosey-goosey right now. The market really needs to show some tight strength in the next 30m or so, otherwise this could go back to consolidation and the push off the economic data was just short-covering. Traders have had every opportunity to go frenetic and panic buy off the much better than expected economic data. They have certainly been panic buying the past two weeks. So the price action right now is a little sloppier than I would expect for such "good news" on the day. I will keep a sharp eye on things and see if this tightens and builds or loosens and fades.
11:25 am MT: The market went through some min-chop intra-day off comments by Cleveland Fed President Sandra Pianalto who stated that the economy should stabilize by year-end and start to recover in 2010. Evidently some fund managers thought this was news, so there was some funky gyrations in volume after the comments. Since that time, the market has resumed its consolidation, which I was guessing might happen after the early loosey-goosey price action. So toss out Pianalto's comments, it's typical market news manipulation that only briefly put a blip on the radar screen. The market is headed for a consolidation day again, like yesterday. If it holds up in an orderly fashion, then perhaps tomorrow or Friday it may make one more push to 840 - 850 on the SPX. A drop below 800 today would put the orderly consolidation at risk and create a bit more hesitancy on the part of traders.
12:05 pm MT: The fade is getting deeper. The 2hr chart scenario from the end of yesterday's post is back on the table. The SPX may be headed more towards 785 - 790, especially if it can't hold the 800 area. Regardless of how deep the fade goes, the market is in full-on consolidation mode and unlikely to come back to new highs today. I speculate that we may see at least 795 before the end of the day.
1:10 pm MT: The 2hr chart scenario continues to play out as the SPX hit and passed 795, and is headed into the 785 - 790 area. This is the original consolidation I speculated last night (before all our news bogeys put some wiggle into the market). That's why I was interested in ferreting out the truth to see if the wiggle was real or fake. So the move I was looking for is back on track and playing out as I type.
6:30 pm MT: Market Wrap: There was all kinds of goofball price action intra-day today, but in the end the market did what it was most likely to do, which was consolidate. The wide wicks and small body on the market ended in a Spinning Top candlestick, but the pattern doesn't mean much right now, other than there was some manipulating, maneuvering, and gyrating going on all day. The media is getting the headlines it wanted to sway the American public, so I'm happy for them. But in reality this economy has a long way to go before it truly stabilizes, which the American public is going to figure out soon enough despite the headlines that are being vended to them right now. The price action was a little too loosey-goosey today, which contributed to the wide wicks, but overall the upswing/trend are holding bullish. The SPX could still reach for the 840 - 850 area in the next day or two, and the Dow could reach for the 8,000 - 8,200 area. The GDP number will get a lot of press tomorrow, and there are enough amateur fund managers to buy or sell whatever the GDP tells them to do, but the two most important bits of data tomorrow morning are actually the Initial Jobless Claims and BBY's earnings. If the data lines up bullish, then expect a gap up in the morning, and at least an attempt by traders to reach for the next (and probably final) leg up in the current swing/trend.
Here is a chart of the SPX:
(click on image to enlarge)
Here is a chart of the Dow:
(click on image to enlarge)
(click on image to enlarge)
Here is a chart of the Dow:
(click on image to enlarge)
Like the SPX, I don't expect the Dow to make it all the way to the next resistance level even if the data comes out bullish, but rather to peak out around half way into the zone (8,000 - 8,200 area). A drop below 7,500 on the Dow and the bullish consolidation is likely headed for a stronger pullback instead of another leg up. A drop below the 785 - 790 area on the SPX and the same thing goes, the upswing is likely headed for a bigger pullback and the market might not make it back above today's highs on the current move. I will reference these charts in the morning for tomorrow's price action.
Tuesday, March 24, 2009
Fund Manager Battle Ends in a Harami Day
I keep getting conflicting reports from fund managers over the government actions, the economy, and the financials. It's been quite a while since I have seen such a disagreement over the market, and the conflict is only getting more interesting.
There are some fundies, like Mark Mobius, who are insisting the market is on the verge of a new macro bull. There are other fundies, like Bill Dinning, who are not convinced the government actions have really set the table for a new macro bull. The two camps are pretty divided, and it's interesting to see how the division is defined. I've been explaining some clues about this in VC, and I have been teaching many of you insights into what may be happening over the course of the past several months and longer. It appears that hedge fund managers are net buyers the past 4-5 weeks, while mutual fund managers are still net sellers in the same time period. In addition, I have shown you the explosive growth in the hedge fund industry, and likely demographic of many hedge fund managers. The bottom line is that not all Big Money is Smart Money, and the gene pool has been highly diluted. The hedge fund industry has taken a big hit in the past year as some of that big, but not necessarily smart money gets compressed out of the market, like it usually does.
There is another element to this game, and it has to do with political ideology amongst the fund managers. I won't go into detail on what I think is going on because it is such a sensitive subject with so many people, but it is even more fascinating to watch, and potentially much more dangerous to the market than the first phenomenon of "big, but not always smart" money. I call the second phenomenon (for now) the "actions, but not the consequences" money. I hope that I never have to go into detail on what a danger they pose to America, because if I do, it will be as a last resort to do some small thing on my part to counter what would be the end of our freedom as a country.
As for the market today, you will notice this is the biggest morning gap down since the upswing began. The tug of war between the smart money and the "not so smart" money (there, now wasn't that all politically correct of me.....), is going back and forth.
I'll switch the analogy and description a bit here so I can be even more politically correct. The market is fighting to decide whether or not the current extreme upward trend-swing completely erases the extreme downward trend-swing from February. The price action the past month has been sharp to say the least. I won't count out the upswing just yet, but the gap down this morning has me on notice.
8:35 am - 8:55 am MT: Intra-day Update: I'm starting to get a feel for the price action and the minds of the fundies. The market has been bullish the past two weeks thanks to the News Bogey Gauntlet from the government and the banks. Many fundies bought it all the way, many fundies did not. The fundies that did participate in the market the past couple of weeks were net buyers. In addition, there was a lot of short covering that exacerbated the move. The gap down this morning was not driven by any news. It appears that the Energy, Commodity, and Financial sectors are seeing some compression this morning, especially Energy and Commodities.
Now, think about what I have been teaching you. Energy and Commodities can not lead a bull market. Rising oil prices will put a lid on any recovery, especially in the delicate economic environment we are experiencing.
The reason Energy and Commodity stocks were one of the big leaders in the recent rally is because of cult trading and short covering. Think of Tech stocks in the run up in 1998 - 2000, and then the residual "remorse cult trading" in mid 2000 - 2002 as all the Top Gun Traders kept buying tech all the way into the ground. Energy and Commodity stocks of 2005 - 2008 were the new Tech stocks. Those sectors had such a dramatic drop in 2008, and are so crispy right now, that many Top Gun Traders are scrambling to grab as much of the kool-aid as they can in hopes of putting life back in their lifestyle.
This looks so similar to the Tech stock cult trading phenomon because of the type of traders that still exist in the market. It's even possible that the Top Gun Traders may be right, and Energy and Commodity stocks are due for a strong counter move, and a solid uptrend for several months (because of the perception that the sectors are so oversold). However, with the price of oil jumping to $54 yesterday on just the beginning of a counter move, the question becomes, how much further will the price of oil rise if the Energy sector does take off? Will we see $75, or perhaps $100 again? This is exactly what I've been talking about when I say that Energy and Commodity stocks can not lead a bull market. The scary scenario is the government deciding to continue manipulating the financial market without a comprehensive energy policy in place, and then knee-jerking into price controls in order to try to force an alternative consequence to their own actions.
9:00 am MT: The market looks like a consolidation day today. I speculate we will see more of a Harami type of pattern today. I think there are still enough fundies out there who will try to buy dips. And I think it's pretty obvious (with this morning's gap down) that there are also enough fundies out there who can reason through the current Financial sector conditions and the problems with Energy stocks leading the rally (just as I've been posting all morning), that the market will sell a bit when the buyers make a push. The net price action today looks like a balance between the frenetic fundies and the realistic fundies. I think we will see more consolidation today, but not necessarily a sell-off. And I thik that any spurts of buying will be met with the new group of fundies who entered the market this morning to sell stocks.
Aren't you glad you are making it a practise not to hold major positions overnight?
9:07 am MT: Intra-day Update: If we do get a test of yesterday's highs, it will start right here. If you are still in a mood to try a little call trade, this is the time. The first resistance on the SPX is going to be 818, and then 823. I'm not that enthusiastic about the price action, so if you do something right now, do it very small. I'm also not that enthusiastic about buying puts because of the plethora of fundies who are still googly-eyed over all the kool-aid they've been fed the past two weeks.
The market is probably going to make a push right here, but I think the push will not be energetic and frenetic like yesterday. The market has a sense of hesitation to it today. Perhaps it's gathering energy for another move. Perhaps the frenetic fundies are hoping for another government news bogey to force even more short-covering. Or perhaps the mutual fund managers are stepping in to sell a little bit of stock on the recent run-up. I don't think anything dramatic is going to happen in the market for awhile, and perhaps all day. That's why I speculate we may see a Harami type of day today.
9:30 am MT: Well, there's the push, and so far, it's just as advertised.....which is nothing to write home about.....
10:00 am MT: The little push rolled over, which ads to my speculation that this will be a Harami type of day. It's worth watching for a while longer to see if anything starts forming, but don't knock yourself out trying to analyze every tick of the chart today. Maybe something will happen, but I'm not going to hold my breath over every little move.
10:15 am MT: The market had such a big move yesterday, and such a steep upswing the past two weeks that it's probably headed for a bit of consolidation. If you look at the price action on the 19th and 20th (last Thursday and Friday) you get a feel for what the market may be headed for today. You can see the consolidation a bit easier on the 30m charts.
You can see the 30m chart already doubling back off the attempted bounce that I posted earlier. If we get a consolidation similar to the 19th - 20th, then when it resolves and continues, the market may take another leg up to 850. If the market tries to reach for the beach right now, then this swing will probably exhaust itself in the 825 - 830 area. And if the market drops below 790, then the consolidation on the 30's could lead to a pullback or roll-over on the daily charts. We'll see how this all forms up in the next little while. There may still be some call trades today, so again, it's worth watching, and perhaps doing a little trade here or there, especially knowing that there's still a chance that the frenetic traders are hovering their fingers over the panic buy button. But if the market doesn't pick up any momentum in the next couple of hours, then expect more of a Harami typ of day and give you eyes a rest. The next push will probably come right now, so we'll see how far this one goes.
12:20 am MT: The next push is still fussing along, but it looks like it's getting ready to consolidate again after hitting yesterday's high. So there was a little call trade in there, as I speculated, but the day still looks like a Harami or narrow range day (which isn't that much of a stretch considering how wide the range was yesterday).
1:00 pm MT: The market did consolidate shortly after I warned. These little ebbs and flows are only worth a casual glance at this point, just to see how things close. Give your eyes a rest, especially if you've already locked some good trades in today.
6:30 pm MT: Market Wrap: The SPX finished with a Harami, which was what I was looking for all day.
I'll get an early jump on tomorrow since I don't know how much I will be able to post pre-market. The Harami on the SPX could end up being part of an orderly mini-consolidation. However, an inside view of the 2hr charts shows the beginnings of a pullback that could go as deep as 785, with some wiggle in the 800 area first. I still think the upswing won't end without a fight due to the googly-eyed frenetic fundies, so we may see some type of Double Top before we see 785. Any drop below 785 and the upswing is likely over.
I will update again in the morning, but these are the charts to reference for tomorrow.
There are some fundies, like Mark Mobius, who are insisting the market is on the verge of a new macro bull. There are other fundies, like Bill Dinning, who are not convinced the government actions have really set the table for a new macro bull. The two camps are pretty divided, and it's interesting to see how the division is defined. I've been explaining some clues about this in VC, and I have been teaching many of you insights into what may be happening over the course of the past several months and longer. It appears that hedge fund managers are net buyers the past 4-5 weeks, while mutual fund managers are still net sellers in the same time period. In addition, I have shown you the explosive growth in the hedge fund industry, and likely demographic of many hedge fund managers. The bottom line is that not all Big Money is Smart Money, and the gene pool has been highly diluted. The hedge fund industry has taken a big hit in the past year as some of that big, but not necessarily smart money gets compressed out of the market, like it usually does.
There is another element to this game, and it has to do with political ideology amongst the fund managers. I won't go into detail on what I think is going on because it is such a sensitive subject with so many people, but it is even more fascinating to watch, and potentially much more dangerous to the market than the first phenomenon of "big, but not always smart" money. I call the second phenomenon (for now) the "actions, but not the consequences" money. I hope that I never have to go into detail on what a danger they pose to America, because if I do, it will be as a last resort to do some small thing on my part to counter what would be the end of our freedom as a country.
As for the market today, you will notice this is the biggest morning gap down since the upswing began. The tug of war between the smart money and the "not so smart" money (there, now wasn't that all politically correct of me.....), is going back and forth.
I'll switch the analogy and description a bit here so I can be even more politically correct. The market is fighting to decide whether or not the current extreme upward trend-swing completely erases the extreme downward trend-swing from February. The price action the past month has been sharp to say the least. I won't count out the upswing just yet, but the gap down this morning has me on notice.
8:35 am - 8:55 am MT: Intra-day Update: I'm starting to get a feel for the price action and the minds of the fundies. The market has been bullish the past two weeks thanks to the News Bogey Gauntlet from the government and the banks. Many fundies bought it all the way, many fundies did not. The fundies that did participate in the market the past couple of weeks were net buyers. In addition, there was a lot of short covering that exacerbated the move. The gap down this morning was not driven by any news. It appears that the Energy, Commodity, and Financial sectors are seeing some compression this morning, especially Energy and Commodities.
Now, think about what I have been teaching you. Energy and Commodities can not lead a bull market. Rising oil prices will put a lid on any recovery, especially in the delicate economic environment we are experiencing.
The reason Energy and Commodity stocks were one of the big leaders in the recent rally is because of cult trading and short covering. Think of Tech stocks in the run up in 1998 - 2000, and then the residual "remorse cult trading" in mid 2000 - 2002 as all the Top Gun Traders kept buying tech all the way into the ground. Energy and Commodity stocks of 2005 - 2008 were the new Tech stocks. Those sectors had such a dramatic drop in 2008, and are so crispy right now, that many Top Gun Traders are scrambling to grab as much of the kool-aid as they can in hopes of putting life back in their lifestyle.
This looks so similar to the Tech stock cult trading phenomon because of the type of traders that still exist in the market. It's even possible that the Top Gun Traders may be right, and Energy and Commodity stocks are due for a strong counter move, and a solid uptrend for several months (because of the perception that the sectors are so oversold). However, with the price of oil jumping to $54 yesterday on just the beginning of a counter move, the question becomes, how much further will the price of oil rise if the Energy sector does take off? Will we see $75, or perhaps $100 again? This is exactly what I've been talking about when I say that Energy and Commodity stocks can not lead a bull market. The scary scenario is the government deciding to continue manipulating the financial market without a comprehensive energy policy in place, and then knee-jerking into price controls in order to try to force an alternative consequence to their own actions.
9:00 am MT: The market looks like a consolidation day today. I speculate we will see more of a Harami type of pattern today. I think there are still enough fundies out there who will try to buy dips. And I think it's pretty obvious (with this morning's gap down) that there are also enough fundies out there who can reason through the current Financial sector conditions and the problems with Energy stocks leading the rally (just as I've been posting all morning), that the market will sell a bit when the buyers make a push. The net price action today looks like a balance between the frenetic fundies and the realistic fundies. I think we will see more consolidation today, but not necessarily a sell-off. And I thik that any spurts of buying will be met with the new group of fundies who entered the market this morning to sell stocks.
Aren't you glad you are making it a practise not to hold major positions overnight?
9:07 am MT: Intra-day Update: If we do get a test of yesterday's highs, it will start right here. If you are still in a mood to try a little call trade, this is the time. The first resistance on the SPX is going to be 818, and then 823. I'm not that enthusiastic about the price action, so if you do something right now, do it very small. I'm also not that enthusiastic about buying puts because of the plethora of fundies who are still googly-eyed over all the kool-aid they've been fed the past two weeks.
9:15 am MT: Here is a current 10m chart of the SPX showing a potential Double Bottom Base:
(click on image to enlarge)
(click on image to enlarge)
Here is a current 30m chart of the SPX showing a potential Bull Flag:
(click on image to enlarge)
(click on image to enlarge)
The market is probably going to make a push right here, but I think the push will not be energetic and frenetic like yesterday. The market has a sense of hesitation to it today. Perhaps it's gathering energy for another move. Perhaps the frenetic fundies are hoping for another government news bogey to force even more short-covering. Or perhaps the mutual fund managers are stepping in to sell a little bit of stock on the recent run-up. I don't think anything dramatic is going to happen in the market for awhile, and perhaps all day. That's why I speculate we may see a Harami type of day today.
9:30 am MT: Well, there's the push, and so far, it's just as advertised.....which is nothing to write home about.....
10:00 am MT: The little push rolled over, which ads to my speculation that this will be a Harami type of day. It's worth watching for a while longer to see if anything starts forming, but don't knock yourself out trying to analyze every tick of the chart today. Maybe something will happen, but I'm not going to hold my breath over every little move.
10:15 am MT: The market had such a big move yesterday, and such a steep upswing the past two weeks that it's probably headed for a bit of consolidation. If you look at the price action on the 19th and 20th (last Thursday and Friday) you get a feel for what the market may be headed for today. You can see the consolidation a bit easier on the 30m charts.
Here is the current 30m chart of the SPX with the previous consolidation channel highlighted in blue:
(click on image to enlarge)
(click on image to enlarge)
You can see the 30m chart already doubling back off the attempted bounce that I posted earlier. If we get a consolidation similar to the 19th - 20th, then when it resolves and continues, the market may take another leg up to 850. If the market tries to reach for the beach right now, then this swing will probably exhaust itself in the 825 - 830 area. And if the market drops below 790, then the consolidation on the 30's could lead to a pullback or roll-over on the daily charts. We'll see how this all forms up in the next little while. There may still be some call trades today, so again, it's worth watching, and perhaps doing a little trade here or there, especially knowing that there's still a chance that the frenetic traders are hovering their fingers over the panic buy button. But if the market doesn't pick up any momentum in the next couple of hours, then expect more of a Harami typ of day and give you eyes a rest. The next push will probably come right now, so we'll see how far this one goes.
12:20 am MT: The next push is still fussing along, but it looks like it's getting ready to consolidate again after hitting yesterday's high. So there was a little call trade in there, as I speculated, but the day still looks like a Harami or narrow range day (which isn't that much of a stretch considering how wide the range was yesterday).
1:00 pm MT: The market did consolidate shortly after I warned. These little ebbs and flows are only worth a casual glance at this point, just to see how things close. Give your eyes a rest, especially if you've already locked some good trades in today.
6:30 pm MT: Market Wrap: The SPX finished with a Harami, which was what I was looking for all day.
I'll get an early jump on tomorrow since I don't know how much I will be able to post pre-market. The Harami on the SPX could end up being part of an orderly mini-consolidation. However, an inside view of the 2hr charts shows the beginnings of a pullback that could go as deep as 785, with some wiggle in the 800 area first. I still think the upswing won't end without a fight due to the googly-eyed frenetic fundies, so we may see some type of Double Top before we see 785. Any drop below 785 and the upswing is likely over.
Here is the Daily chart of the SPX showing the Harami:
(click on image to enlarge)
(click on image to enlarge)
Here is the 2hr chart of the SPX showing the Pullback starting:
(click on image to enlarge)
(click on image to enlarge)
I will update again in the morning, but these are the charts to reference for tomorrow.
Monday, March 23, 2009
Another Day, Another News Bogey
The U.S. Treasury announced that it will "finance" as much as $1 trillion in "toxic bank assets." A "Public-Private Investment Program" will use around $100 billion from the TARP to create "purchasing power" of $500 billion, and the program "may double over time." Another day, another trillion dollar news bogey.....I don't know if I can use any more quotation marks than that.....
I'll let you draw your own conclusions because I shot past reality into the surreal nebula a long time ago.....
Now, let us all come back to a type of reality for the trading day. Remember, it doesn't matter what you think about the news, it matters what fund managers think about the news, at least enough of them who are buying this stuff with real money. Pre-market futures are up sharply. The market is set to gap up and probably head for a test of the Wednesday/Thursday highs from last week.
Here's one Fund Manager's take on the news: Mark Mobius, who helps oversee $20b of emerging-market assets as executive chairman of Templeton Asset Management Ltd stated "A new bull market has begun, you have to be careful not to miss the opportunity."
So there you have it, Mark is calling the bottom, we can all look forward to a new 27-year secular bull market.....
Now, in my reality, I don't believe today is the start of a new 27-year bull market. But that doesn't matter, I just care about what I think the fund managers think, and if enough of them believe a new bull market has begun today, then they will be net buyers for the next several weeks, which is what I've been speculating anyway. I'm still targeting the April Earnings Season for the next major catalyst in the market after the News Bogey Gauntlet launched an important seed change amongst fund managers. The NBG has had a few well-placed follow-up bogeys, like today, which continues to push the mentality of "innocent until proven guilty" with the fundies.
The SPY is set to gap up about 1.50, which means the SPX will open about 10-15 points higher right out of the gate (probably right around the 780 area). Today looks like it may form a Breakaway type of candlestick pattern. The market is likely to take a shot at 800 again some time in the next several days. Traders will probably try to probe the highs for a breakout and see if the they can push a rally as far as the 820 - 830 area some time in the next week or so.
Expect some volatility, hype, freneticism, and even exhuberance today. There will probably be an initial thrust out of the gate, then some wiggle depending on how the Existing Home Sales number reports (30m after the open). I will choose to stay nimble with any call trades today, and then if the market closes strong, I will look for some solid carry-through to the upside for a couple more days.
9:25 am MT: Intra-day Update: The SPX hit 800 as speculated, now it looks like the market may consolidate a bit intra-day. Financials, Energy, and Commodity stocks are leading the way, which isn't a surprise at all. Of course Energy stocks leading the market is unsustainable, but that's irrelevant right now. What matters is that the fundies are googly-eyed for stocks, at least for the near term.
The market internals are confirming that the big volume push is coming in a more selective group of sectors and industries. Nevertheless, as long as traders are excited, then even a push in a narrow group of sectors will be enough to keep the market chugging along. At this point, being scaled out of about 2/3 of any call positions from this morning is a good idea. If we get an orderly pullback, then there will probably be another opportunity for a second leg up intra-day.
10:00 am MT: Intra-day Update: The market is making another push off a quick consolidation. This leg will probably run for another 15-20 minutes before the next consolidation hits. When the current push peaks out in the next little while, I would look to sell the last 1/3 of any calls from the morning, and then use the next intra-day consolidation (if it holds up fairly well) to re-enter a new set of calls for a push into the afternoon.
12:50 pm MT: Intra-day Update: There's the afternoon push after the consolidation.
3:00 pm MT: Quick Market Wrap: The DIA and SPY both finished with pure Bullish Kicking Patterns today. Volume wasn't as big as the news, but then again, this isn't about reality anyway. I expect today's Kicking pattern on the market to carry through to the upside for another couple of days. Traders are buying Financials like their very lives depend on it, which is being exacerbated by the Shorts, who are on fire and running screaming into the night.
The SPX has resistance in the 825 area, and then again in the 875 area. The Kicking pattern carry-through should overshoot 825, but might not make it to 875, so I'll go with 850 as a good average area to shoot for in the next couple of days. It's possible, if the Shorts are in mortal anguish, and the Top Gun Fundies are "feelin' the need for speed" then the market could shoot as far as 875, but I'll keep an eye on the 850 area first.
I'll let you draw your own conclusions because I shot past reality into the surreal nebula a long time ago.....
Now, let us all come back to a type of reality for the trading day. Remember, it doesn't matter what you think about the news, it matters what fund managers think about the news, at least enough of them who are buying this stuff with real money. Pre-market futures are up sharply. The market is set to gap up and probably head for a test of the Wednesday/Thursday highs from last week.
Here's one Fund Manager's take on the news: Mark Mobius, who helps oversee $20b of emerging-market assets as executive chairman of Templeton Asset Management Ltd stated "A new bull market has begun, you have to be careful not to miss the opportunity."
So there you have it, Mark is calling the bottom, we can all look forward to a new 27-year secular bull market.....
Now, in my reality, I don't believe today is the start of a new 27-year bull market. But that doesn't matter, I just care about what I think the fund managers think, and if enough of them believe a new bull market has begun today, then they will be net buyers for the next several weeks, which is what I've been speculating anyway. I'm still targeting the April Earnings Season for the next major catalyst in the market after the News Bogey Gauntlet launched an important seed change amongst fund managers. The NBG has had a few well-placed follow-up bogeys, like today, which continues to push the mentality of "innocent until proven guilty" with the fundies.
Here is a chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
The SPY is set to gap up about 1.50, which means the SPX will open about 10-15 points higher right out of the gate (probably right around the 780 area). Today looks like it may form a Breakaway type of candlestick pattern. The market is likely to take a shot at 800 again some time in the next several days. Traders will probably try to probe the highs for a breakout and see if the they can push a rally as far as the 820 - 830 area some time in the next week or so.
Expect some volatility, hype, freneticism, and even exhuberance today. There will probably be an initial thrust out of the gate, then some wiggle depending on how the Existing Home Sales number reports (30m after the open). I will choose to stay nimble with any call trades today, and then if the market closes strong, I will look for some solid carry-through to the upside for a couple more days.
9:25 am MT: Intra-day Update: The SPX hit 800 as speculated, now it looks like the market may consolidate a bit intra-day. Financials, Energy, and Commodity stocks are leading the way, which isn't a surprise at all. Of course Energy stocks leading the market is unsustainable, but that's irrelevant right now. What matters is that the fundies are googly-eyed for stocks, at least for the near term.
The market internals are confirming that the big volume push is coming in a more selective group of sectors and industries. Nevertheless, as long as traders are excited, then even a push in a narrow group of sectors will be enough to keep the market chugging along. At this point, being scaled out of about 2/3 of any call positions from this morning is a good idea. If we get an orderly pullback, then there will probably be another opportunity for a second leg up intra-day.
10:00 am MT: Intra-day Update: The market is making another push off a quick consolidation. This leg will probably run for another 15-20 minutes before the next consolidation hits. When the current push peaks out in the next little while, I would look to sell the last 1/3 of any calls from the morning, and then use the next intra-day consolidation (if it holds up fairly well) to re-enter a new set of calls for a push into the afternoon.
12:50 pm MT: Intra-day Update: There's the afternoon push after the consolidation.
3:00 pm MT: Quick Market Wrap: The DIA and SPY both finished with pure Bullish Kicking Patterns today. Volume wasn't as big as the news, but then again, this isn't about reality anyway. I expect today's Kicking pattern on the market to carry through to the upside for another couple of days. Traders are buying Financials like their very lives depend on it, which is being exacerbated by the Shorts, who are on fire and running screaming into the night.
The SPX has resistance in the 825 area, and then again in the 875 area. The Kicking pattern carry-through should overshoot 825, but might not make it to 875, so I'll go with 850 as a good average area to shoot for in the next couple of days. It's possible, if the Shorts are in mortal anguish, and the Top Gun Fundies are "feelin' the need for speed" then the market could shoot as far as 875, but I'll keep an eye on the 850 area first.
Friday, March 20, 2009
Consolidation Day
Pre-market futures are flat on a relatively quiet morning. However, traders are still hanging around the upper reaches of the current extreme upswing wondering if the magical news bogey bus tour will continue. You see, Benny speaks at a bankers convention in 2 1/2 hours. And that's the perfect recipe for another news bogey, a government official and a bunch of bank leaders all in the same room at the same time. So you can't really blame the Bulls for wanting to hang around and the Shorts from having their finger hovering over the eject button.
If the market has a normal, unimpeded by a bogart morning. I speculate that traders will continue to consolidate the gains from the past week and a half. That would mean a possibility for an initial consolidation to the 775 - 780 area, and then an intra-day wiggle, a slightly lower high on the 60m charts, and then further consolidation down to the 765 area. The furthest I would expect a consolidation to go today, if we get it, would be 750. But I still think that Benny and the Banks could bogart the market. So I'm not looking for a sharp drop yet, I think the market will hang around, act a little soft, sell a little, wait until Benny yaps, and then decide what to do.
So in general, I'm looking for consolidation down to the 780 (or 775) area, a wiggle, and eventually the consolidation to drop in to the 760 - 765 area. But I don't expect a drop down into the lower reaches until after Benny speaks, and even then it may not happen today. So a barring a bogart, a consolidation day is probably on the way.
12:35 pm MT: Intra-day Update: The price action today has gone mostly according to my speculation. The SPX dropped to 780, wiggled for an hour, and then continued on down to the 765 area (766 a few minutes ago).
You can see the index is now riding into the 50 period MA on the 60m charts, which is the next natural wiggle point.
The 750 - 755 area is the next target in the consolidation, but as I stated pre-market, I don't think it will happen today. I speculate that the market will consolidate again on Monday (and of course, as always, that will be barring a magical news bogey). If the market rides on down another 7-8 points in the next 45 minutes, then watch for Shorts to come in and cover in the last 30m or so. I don't think there are too many Shorts that want to have a ton of open positions going into the weekend.
So far, the day is right on track with what I outlined pre-market. We shall see how it closes.....
1:58 pm MT: End-of-day Update: It looks like only a modest amount of short-covering hit in the last hour. The market is fading to the lows going into the close, which means Monday morning (barring a news bogey) has a good chance of furthering the consolidation, just as speculated.
2:00 pm MT: Market Wrap: The consolidation today was actually fairly orderly, which is what I have been expecting and writing for several days. I think the Bulls won't flee for their lives on this pullback like they did last month. I speculate that Monday may continue the consolidation of the upswing, but the market will try to bounce at a higher low. As long as the pullback stays under control, traders will continue to think "innocent until proven guilty." And there probably isn't a strong catalyst to de-rail that train until the beginning of April when we get to Earnings Warning Season and the early month economic reports.
If the market has a normal, unimpeded by a bogart morning. I speculate that traders will continue to consolidate the gains from the past week and a half. That would mean a possibility for an initial consolidation to the 775 - 780 area, and then an intra-day wiggle, a slightly lower high on the 60m charts, and then further consolidation down to the 765 area. The furthest I would expect a consolidation to go today, if we get it, would be 750. But I still think that Benny and the Banks could bogart the market. So I'm not looking for a sharp drop yet, I think the market will hang around, act a little soft, sell a little, wait until Benny yaps, and then decide what to do.
Here is a daily chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
Here is a 60m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
So in general, I'm looking for consolidation down to the 780 (or 775) area, a wiggle, and eventually the consolidation to drop in to the 760 - 765 area. But I don't expect a drop down into the lower reaches until after Benny speaks, and even then it may not happen today. So a barring a bogart, a consolidation day is probably on the way.
12:35 pm MT: Intra-day Update: The price action today has gone mostly according to my speculation. The SPX dropped to 780, wiggled for an hour, and then continued on down to the 765 area (766 a few minutes ago).
Here is the current 60m chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
You can see the index is now riding into the 50 period MA on the 60m charts, which is the next natural wiggle point.
Here is the current daily chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
The 750 - 755 area is the next target in the consolidation, but as I stated pre-market, I don't think it will happen today. I speculate that the market will consolidate again on Monday (and of course, as always, that will be barring a magical news bogey). If the market rides on down another 7-8 points in the next 45 minutes, then watch for Shorts to come in and cover in the last 30m or so. I don't think there are too many Shorts that want to have a ton of open positions going into the weekend.
So far, the day is right on track with what I outlined pre-market. We shall see how it closes.....
1:58 pm MT: End-of-day Update: It looks like only a modest amount of short-covering hit in the last hour. The market is fading to the lows going into the close, which means Monday morning (barring a news bogey) has a good chance of furthering the consolidation, just as speculated.
2:00 pm MT: Market Wrap: The consolidation today was actually fairly orderly, which is what I have been expecting and writing for several days. I think the Bulls won't flee for their lives on this pullback like they did last month. I speculate that Monday may continue the consolidation of the upswing, but the market will try to bounce at a higher low. As long as the pullback stays under control, traders will continue to think "innocent until proven guilty." And there probably isn't a strong catalyst to de-rail that train until the beginning of April when we get to Earnings Warning Season and the early month economic reports.
Thursday, March 19, 2009
Euphoria May Finally Wear Off
The market is still experiencing some morning-after warm and fuzzies after the Fed announced more than a trillion dollars in Treasury and mortgage-backed securities purchases. This is the government's second coordinated effort with the banks to lower the long end of the yield curve. The result was to drop the 30-year mortgage down to 4 5/8 by 4:00pm MT yesterday. The first time the government targeted the long end of the yield curve back in November it had the exact same effect. The mortgage rates dropped until January, and then the 30-year had a quick, sharp drop to 4 5/8. The banks dangled the low rate for part of one day, sucked some more people in at 4 3/4 and 4 7/8, left it at 4 7/8 for one more day, and then blasted out of their like, well.....like a bank heist.....
I expect more of the same. I speculate that 4 5/8 will carry through this morning for a bit and then be gone again.
Earnings news is getting mostly glossed over, (except the good news of course). ORCL beat earnings and guidance and is trading up sharply pre-market, which is giving the Naz a boost over the other indices early in the day. FDX (which is typically a good barometer for the economy and business) missed earnings and guidance, and is trading down early. NKE missed guidance and is also down early.
Finally, on the jobs front, Weekly Jobless Claims came in slightly better than expected. So the glass is definitely full enough for traders to make one more morning-after push to pump up stocks towards the highs of yesterday, and perhaps even a little beyond.
You can see that the SPX (market) ran right to the top end of the resistance zone I drew for you several before the open yesterday. That was further than I thought, but then again, a positive news surprise is not always easy to guess before it happens. Trading means staying on your toes at the key catalyst times (like the FOMC Meeting yesterday), even when you think it will be a non-event. You don't always know if a governmet agency or politician will surprise you (negatively or positively) until it happens. In this case, targeting the long end of the yield curve is the right thing to do, I just wish that it wasn't part of a manipulative govermnent/bank effort that gets yanked right back away after sucking in the wrong (or right I suppose if you're a bank) clients.
I speculate that the market may try to push just a little more this morning, but eventually even huge swings that are contrived through massive coordinated government and bank manipulation do come to an end.....
A drop through 780 on the SPX would be the first warning that the upswing is probably over. Remember again, as I have stated over and over the past several days, don't get too carried away trying to play puts on the consolidation, traders are very much a-flutter over stocks right now.....So any consolidation will probably be somewhat shortened not last more than a couple of days.
I'm going to take a moment to answer Eric's questions about trying to deal with an extreme move (or short move) right here, since it's relevant to all:
The market (and price swings) don't always go exactly where you think they will go. For much of 2008 and 2009 the price swings would go shorter than expected (hence the switch to short-swing trading). But occasionally (and especially since September) the swings have gone longer than expected (usually because of news or news manipulation). Either way, you can only speculate on the future, you only see the beginnings and ends of swings after the fact. So as a speculator, I don't know when the current upswing will end, and I read as closely as I can whether or not I think it will end quickly, or if it will put up a fight. With the current upswing, I warned over and over that it was going to put up a fight (be fussy). I also have been warning that there is a "mood change" with traders (the stock market was guilty until proven innocent, and now - thanks to the news manipulation - traders view the market as innocent until proven guilty). So don't get too jiggy about cherry picking puts at what you think is the top of the swing.
I have thrown several small puts at what I thought was the end of the upswing as "feelers" the past several days. But I kept it small, and scaled out as I went. I also kept the stops tight. As a result, I have not lost any money on puts this week (in aggregate). I have also missed a few call opportunities, although I could have done a short swing call a couple of times if I had the opportunity. But that's how it goes, identify the conditions and go with it, and realize that price action often doesn't do exactly what you think it will. I call a lot of swings pretty closely, but I also miss some, usually because news is such an unknown, even for me, even though I am actually able to guess some of the news bogeys before they happen. One of the keys to trading is always adapting to current market conditions, and on this swing I adapted, which is why I didn't lose any money on puts even when I thought it might be rolling over. I always view the market as a probability and never as an absolute.
7:48 am MT: Intra-day Update: Ironically, after the above post, it looks like the market upswing is finally running out of gas.....and of course, I view that as a probability and not an absolute.....
7:52 am MT: Intra-day Update: The market had every chance to reach a little more this morning based on the news "euphoria." I speculated pre-market on a little push (and I was thinking along the lines of hitting the high of yesterday). Well, the push has happened, and the market (SPX) went right to yesterday's high and is starting to wiggle a bit. It's still possible that it punches through, but I won't be surprised if the upswing is done now, and the market doesn't push through the two-day highs.
Price action is loosening up on the intra-day charts, which is another indication that the upswing is getting to a "relative" area of completion. And of course, I'm not loading up on any puts yet, I'm just watching what I think is the end of a very long swing.
It may be that there are some put opportunities a little later if the price action starts loosening up even more intra-day.
10:22 am MT: Intra-day Update: The 60m chart trend is continuing to loosen up. I think the SPX is headed towards 774, which would breach the first warning area of 780. However, we may still see a bit of fighting and upthrusting as the Fundies throw more money at the extreme areas of this upswing. A change in the trend of the 60m charts is probably the best guide for the end (or continuation) of the upswing. I've been following the 30m - 60m trend for several days now, and it hasn't changed or misled me. So it's the single best clue for price action today.
We'll see what happens next.....
12:25 pm MT: Intra-day Update: This is the last battle area for the market to hold if it's going to bounce back to the highs of the day. If the SPX drops below 785 then I speculate it will keep on going down to 776, which would be the next signal that the 60m trend may be drawing to a conclusion.
I expect more of the same. I speculate that 4 5/8 will carry through this morning for a bit and then be gone again.
Earnings news is getting mostly glossed over, (except the good news of course). ORCL beat earnings and guidance and is trading up sharply pre-market, which is giving the Naz a boost over the other indices early in the day. FDX (which is typically a good barometer for the economy and business) missed earnings and guidance, and is trading down early. NKE missed guidance and is also down early.
Finally, on the jobs front, Weekly Jobless Claims came in slightly better than expected. So the glass is definitely full enough for traders to make one more morning-after push to pump up stocks towards the highs of yesterday, and perhaps even a little beyond.
Here is a chart of the SPX:
(click on image to enlarge)
(click on image to enlarge)
You can see that the SPX (market) ran right to the top end of the resistance zone I drew for you several before the open yesterday. That was further than I thought, but then again, a positive news surprise is not always easy to guess before it happens. Trading means staying on your toes at the key catalyst times (like the FOMC Meeting yesterday), even when you think it will be a non-event. You don't always know if a governmet agency or politician will surprise you (negatively or positively) until it happens. In this case, targeting the long end of the yield curve is the right thing to do, I just wish that it wasn't part of a manipulative govermnent/bank effort that gets yanked right back away after sucking in the wrong (or right I suppose if you're a bank) clients.
I speculate that the market may try to push just a little more this morning, but eventually even huge swings that are contrived through massive coordinated government and bank manipulation do come to an end.....
A drop through 780 on the SPX would be the first warning that the upswing is probably over. Remember again, as I have stated over and over the past several days, don't get too carried away trying to play puts on the consolidation, traders are very much a-flutter over stocks right now.....So any consolidation will probably be somewhat shortened not last more than a couple of days.
I'm going to take a moment to answer Eric's questions about trying to deal with an extreme move (or short move) right here, since it's relevant to all:
The market (and price swings) don't always go exactly where you think they will go. For much of 2008 and 2009 the price swings would go shorter than expected (hence the switch to short-swing trading). But occasionally (and especially since September) the swings have gone longer than expected (usually because of news or news manipulation). Either way, you can only speculate on the future, you only see the beginnings and ends of swings after the fact. So as a speculator, I don't know when the current upswing will end, and I read as closely as I can whether or not I think it will end quickly, or if it will put up a fight. With the current upswing, I warned over and over that it was going to put up a fight (be fussy). I also have been warning that there is a "mood change" with traders (the stock market was guilty until proven innocent, and now - thanks to the news manipulation - traders view the market as innocent until proven guilty). So don't get too jiggy about cherry picking puts at what you think is the top of the swing.
I have thrown several small puts at what I thought was the end of the upswing as "feelers" the past several days. But I kept it small, and scaled out as I went. I also kept the stops tight. As a result, I have not lost any money on puts this week (in aggregate). I have also missed a few call opportunities, although I could have done a short swing call a couple of times if I had the opportunity. But that's how it goes, identify the conditions and go with it, and realize that price action often doesn't do exactly what you think it will. I call a lot of swings pretty closely, but I also miss some, usually because news is such an unknown, even for me, even though I am actually able to guess some of the news bogeys before they happen. One of the keys to trading is always adapting to current market conditions, and on this swing I adapted, which is why I didn't lose any money on puts even when I thought it might be rolling over. I always view the market as a probability and never as an absolute.
7:48 am MT: Intra-day Update: Ironically, after the above post, it looks like the market upswing is finally running out of gas.....and of course, I view that as a probability and not an absolute.....
7:52 am MT: Intra-day Update: The market had every chance to reach a little more this morning based on the news "euphoria." I speculated pre-market on a little push (and I was thinking along the lines of hitting the high of yesterday). Well, the push has happened, and the market (SPX) went right to yesterday's high and is starting to wiggle a bit. It's still possible that it punches through, but I won't be surprised if the upswing is done now, and the market doesn't push through the two-day highs.
Price action is loosening up on the intra-day charts, which is another indication that the upswing is getting to a "relative" area of completion. And of course, I'm not loading up on any puts yet, I'm just watching what I think is the end of a very long swing.
It may be that there are some put opportunities a little later if the price action starts loosening up even more intra-day.
10:22 am MT: Intra-day Update: The 60m chart trend is continuing to loosen up. I think the SPX is headed towards 774, which would breach the first warning area of 780. However, we may still see a bit of fighting and upthrusting as the Fundies throw more money at the extreme areas of this upswing. A change in the trend of the 60m charts is probably the best guide for the end (or continuation) of the upswing. I've been following the 30m - 60m trend for several days now, and it hasn't changed or misled me. So it's the single best clue for price action today.
Here is the current 60m chart of the SPX with the short term moving averages:
(click on image to enlarge)
(click on image to enlarge)
We'll see what happens next.....
12:25 pm MT: Intra-day Update: This is the last battle area for the market to hold if it's going to bounce back to the highs of the day. If the SPX drops below 785 then I speculate it will keep on going down to 776, which would be the next signal that the 60m trend may be drawing to a conclusion.
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