Today's holiday-shortened session is off with the bulls running higher. Seasonality-wise, today is typically an up day and also one of the lowest volume days of the year. The RTH, XLF, VIX and JJC remain as described previously, with a bias towards the bull side, so the markets float higher. The SPX received its smidge of green in the futures overnight so a market launch occurred, the SPX jumping several handles at the open. SPX is now over 1400. The 1391 resistance was key so once that let loose, 1403 is in play. As described in the prior chart, the 200 EMA on the 60-minute chart is 1402.23, the bulls can dance a happy jig, while throwing confetti, if the 1402.23 is taken out to the upside. The HOD is 1401.35, within one point of this bull goal. A large nail in the bear coffin is price overtaking the important 20-day MA at 1394, a very bullish signal. Look for a back kiss of the 20-day MA.
The American consumers are exposed as vampires, coming out in droves overnight to suck up deals like blood thirsty monsters, and now retiring home to sleep during the daylight hours. WMT says the sales may set a record. The retail action appears robust. The trick while gauging retail is not to simply look at the number of people but rather look at the number of people that are carrying bags. Key SPX S/R is 1422, 1419, 1416, 1413, 1411.68 (20-week MA), 1409, 1406.85 (100-day MA), 1406, 1404, 1403, 1402.23 (200 EMA on the 60-minute chart), 1401, 1399, 1397, 1394, 1393.80 (20-day MA), 1391 and 1389.
Note Added 11/23/12 at 10:30 AM: The bulls are running strongly higher. The 200 EMA as described above at 1402 was taken out. The strong 1403 resistance is attacked and price keeps on going now testing the strong 1403. Everything is going the bulls way and in light volume it is easy to push the markets strongly higher. The 1402-1407 resistance gauntlet is a big deal today. Bears will simply be happy if they can send the SPX back under 1402. Any close at 1402.23 or higher provides the bulls a strong upper hand going into next week. The SPX HOD is 1404.21, the 1404 R has held, so far.
Note Added 11/23/12 at 10:48 AM: Note the drama at the 200 EMA, the SPX now printing 1402.26. The euro is at a three-week high. Just Wednesday we were watching the 1.2820 level to see if bulls or bears would win, the euro is now at 1.2963. The 50-day MA is 1.2915 so pay attention to this level and use is as a bull-bear gauge, euro above 1.2915 and markets move higher, euro below 1.2915 and markets drift lower. Checking the four key parameters dictating market direction currently; XLF is 15.79 above the 15.62 creating market bullishness, the RTH is 44.56 above the 43.92 creating market bullishness, the VIX is 15.12 below the 15.95 creating market bullishness (volatility moves opposite to the markets) and JJC is 44.47 below the 44.85 creating market bearishness. In a nutshell, the bears need the SPX under 1402 and the XLF under 15.62 asap. The bulls need to move the JJC above 44.85 and there will be no looking back, SPX 1425 and higher is on its way. The HOD holds at 1404.21, so far. The 10-year yield is 1.69%. The markets close in two hours.
Note Added 11/23/12 at 11:58 AM: The SPX is printing 1402.23. Today's market drama is provided by the 200 EMA on the 60-minute chart. The HOD at 1404.21 continues to hold. The euro is 1.2960 well above the 50-day MA at 1.2915 so the bulls are smiling broadly.
Note Added 11/23/12 at 12:47 AM: The bulls are taking no prisioners today, the SPX takes out the HOD and takes a stab at the strong 1406 resistance. HOD is 1405.81. JJC is 44.60 not yet at the 44.85 and higher that the bulls need to verify the enthusiastic market upside. VIX is trying to keep its head above water at 15. Bulls want to enjoy the weekend as they consume turkey leftovers.
Note Added 11/23/12 at 12:56 PM: Keystone bot more SPXS adding to this ongoing long position (which is a leveraged short ETF).
Note Added 11/23/12 at 1:03 PM: The broad indexes launch higher with an obscene move to the moon into the closing bell, an upside orgy that sends the Dow Industrials over 13K. The SPX finishes at the highs above 1409 resistance, a huge 1.30% move today, 18 handles. The NYSE volume is light as expected. The bulls took out the 20-day MA, 200 EMA on the 60-minute and the 100-day MA, all very bullish indications. Keystone's 60-Minute Chart with 200 EMA Cross Indicator signals bullish markets for the hours, days, perhaps weeks ahead. The rally into the close is frothy. The TRIN is at an uber low 0.44 verifying the over-the-top bullishness. Two +1000 TICK's occur in the last twenty minutes. The NYAD almost tags +2000 signaling uber bullishness. The TRIN, TICK and NYAD hint at the need for the markets to pull back on Monday to relieve this extreme bullishness. The CPC put/call wil be interesting. The VIX finishes flat at 15.19; the VIX should have fallen over 5% or more today, well down into the low 14's to verify the bullishness, instead it finished flat, so this will keep traders guessing thru the weekend. VIX, JJC and XLF will play a key role come Monday.
Apparently, Count Consumer has risen from the grave. Only Dr. BradleyTurn can wedge a stake in his heart.
ReplyDeleteThe market wanted to impulse for (c) after all. Bear market rallies sure are annoying. Here is my new interpretation targeting 1411-1412 after some consolidation here, then a crash:
ReplyDeletehttp://i.imgur.com/CUhY1.png
This rally is making me prefer a much more bearish collapse now as the count looks better that way again given the possibilities that were eliminated. Just thinking logically as well: This rally should have squeezed plenty of shorts out and induced more bulls after sentiment barely got shaved down to begin with, so we should have plenty of weak hands to support a big crash again now.
A cross of 1435 would create huge problems for this count and suggest that it may be some extremely ugly correction before moving higher, but I view this as a very low probability scenario that I won't even think about until a cross.
Re-analyzing counts is not what I was hoping to do on the Friday after Thanksgiving... This market sure is a pain.
Count Consumer is a good one, not even a stake thru the heart of the American consumer can stop them.
ReplyDeleteTrader, interesting chart, so the 1404-1412 is very important to see if the bulls can turn it back down. The 20-week MA is 1411.76 so that will be useful to watch for your hypothesis. Volume uber light today. The HOD remains at 1404.21, see if that holds today, or not.
Form is always the most important, so this count wants to see a corrective move for iv, then an impulse or diagonal (less likely) for v, but yes ratios are very helpful to confirm and I was glad to see that this fit with your resistance level as well. The time that iv wastes followed by a weaker v should also create divergences in the indicators, so we would want to watch for this as well to signal a loss of momentum for additional confirmation.
Delete1433.64 is technically the exact invalidation for this interpretation but I said 1435 because it could be fudged a bit to 1434.27, but one could use that level as a stop loss point for an entry around the 1411-12 level. This might be rather wide for a very short term trader, but if you consider that this is likely looking to move quite directly through the bulk of the move to that 1000 level again, that is not so much after all. I am not personally trading like this as by the time these invalidation levels get hit the market is usually ready to go the other way for a bit to provide a better exit after you are proven wrong anyway, but it is one method that is available for trading waves.
I don't particularly like providing such one sided analysis, but I am not seeing any bullish alternates, or even just less bearish possibilities that I am satisfied with at the moment and I think that the evidence I gather outside of the waves is supportive of this outcome as well, so I think it is at least reasonable and that one should at a minimum be very careful about long positions at this time.
I remain very short at the moment.
Great chart and you are right on. Your confirmation is the low vol.... compared to the vol on down days. These are weak long piling in that missed the boat on the prior rallies. Smart longs will be selling... I see the spx at around 1250 to 1280. Sell off should begin next week.
DeleteI would be careful about relying on the volume too much here because of the holiday's effect, however, this high down volume, low up volume has been the case going back to at least 2010 which is one of the many reasons why I think the top is in (1470.96 orthodox), this whole rally is a bear market rally and the downward potential is very high, though I don't expect it will make it much beyond 1000 on this next crash before a significant rally.
DeleteThis very very bearish larger picture is what made me post the super bearish nesting before and jump back into shorts way too early, because this thing really has a lot of potential to crash hard from what I'm seeing.
Glad you liked the chart, hopefully this one will work out better than mine have lately (it should as I have been more careful now that I have had time to analyze and so my confidence is notably higher in this interpretation, and the price action has eliminated a lot of possibilities).
Curious though: Do you count waves as well? Or do you agree with it for other reasons (besides volume)? I am always curious what other analysis people are looking at to help balance my perspective and keep my biases somewhat in check and to see what overlap there might be since if we are both looking at the same things, its not as strong of a confirmation if we agree.
I do count wave. The problem is the count changes too often. I rely on pricing mechanism I developed. I got a high on this move at 1410 but no higher than 1422. I see there are many more complex abc moves within abc moves that make more sense than straigh 5 waves. many time 5 wave moves are actually complex abc moves.
DeleteI also use the rsi to interpret patterns as well as symmetry. A bull or bear move completes on complete symmetry which you can also see on the rsi.
In terms of the vol. pull up the spy and you can see how the vol compare to the last bottom is lacking.
With the vix at 15 that indicates low volitality not bullish expectations. Many blogs are looking for a new high and the facts do not support a new high just a corrective rally in a down phase.
Dollar index seems like it has bottomed. I see it will rally and as it does the market will drop. I see the DXY dollar index at 82. That will coincide with a bottom in this selloff.
Thanks for the overview, I agree that it seems far to many people are still looking for another high ("it'll sell off, but not yet, just one more!").
DeleteI am also bullish on the dollar despite all the printing and agree that the bottom is most likely in. Just noticed it had a hard break yesterday, may be close to an opportunity to go long DX, though that decline looks a little strong for a correction, we'll see. I would also prefer to go long the dollar by shorting specific other currencies rather than use the basket, but I'm a little behind on analyzing them.
KS, will you please revisit the SPX weekly chart this weekend? Looks like we're headed for the 20-week at 1411. But there were negative divergences galore. And, really, what are the odds of getting a Greek resolution Monday and of hearing no Fiscal Cliff rhetoric next week? (Tonight's CPC print should be wonderful.)
ReplyDeleteYep, there will be lots to look at. Going in to today, a lazy hazy day would have been expected, especially in light of the recent rally, but instead a wildly upside launch occurs. It is safe to say that the Greece resolution is priced in. It has not paid to think that way since the Greece decision has fallen thru a half-dozen or more times since August. VIX should have colllapsed, instead, it was flat. Bulls benefited with seasonality bullishness this week. Everyone will have to rest and prepare for a wild battle next week. Bears would have to reverse the 200 EMA cross at 1402-1403 on Monday or they are in big trouble; the SPX will be headed much higher. The Draghi put where the OMT was announced is 1403 so the bulls have regained that threshhold.
ReplyDeleteAll you have to do is study the RSI. APPL was so oversold it could have been in the bargain basement 99 cent store outside close outs with the cheap girl sandals and whiffle ball bats. The whole bear thing was again angry romneybots selling their profits. Maybe a sight move down, but puit on your seat belt for January.
ReplyDeleteYep Anon, but remember that, most major market crashes do occur from oversold RSI levels. That is how many traders lose a bundle, they assume the oversold RSI will lead to upside, even if some averaging-in is needed as the bottom forms. In a crash profile, many long traders will jump in, as is typically the proper move as you describe, only to be crushed as the markets crash. This may or may not happen but simply remember that markets crash from oversold levels.
DeleteI have 1406-12 as a place to start a short, and would hold unless 1424 is broken.
ReplyDeleteEven though the SPX ran to 1409, the 1402-1404 level is of great interest. If they bears drive the SPX back under on Monday, the bull-bear dance will continue with no clear side leading. If, however, the bulls keep the SPX above 1404 and higher, the SPX 1425, 1433 and 1435 levels should be in sight. Zig, that seems like a good approach, to nibble in the short side now as the SPX moves up, but perhaps at 1419 or higher the bulls will rule.
ReplyDeleteCopper will be key in the new week. JJC 44.85-ish will be key. Keybot will have to identify the exact level tomorrow. If the bulls push copper up over 44.85, SPX 1425 and likely the 1430's is probably a given. If the bears make a stand and prevent JJC 44.85, and move XLF under 15.62, the markets will start to sell off in earnest again.