Hump Day

Don't get to bearish, while the market has moved off it's highs it is nearing oversold and could give the market a short-term bounce.

The gap at 1050 is still open and the pressure on the market is still down so this gap may be filled before a move up. One thing to note is the positive divergence on RSI, the market has made lower lows on the hourly and RSI has not followed.

The 1050 level is now very important for this market, it is the nearest remaining gap and the up trendline from March. A move to 1050 also completes the descending triangle.

NYMO has moved below -80 and perviously this has started rallies since March.

Short-term the market is showing signs of oversold, so a bounce may be coming. Internals are weaker during this decline so the chance of a strong rally to new highs is less likely then the previous rallies.

Never Leave Home With Out It

AXP- Weekly Line Chart

35.20 is a key level for AXP, this level represents it's 2002 highs and it's 2008 support before it tanked. AXP has closed above this level on a daily time frame but has not closed above it on a weekly time frame.
MACD histogram has been diverging from the price action and it is overbought on a weekly time frame. A break above 35.20 would be bullish but there may be a lot of resistance from that level, 36.03 is a 50% retracement from it's high's in 2007 to the 2008 lows.

Triangle break

That was a fun day!  The bulls looked like it was going to party but then whammy the market drops.  I mention this morning if SPX was to test the 1075 level it would break, how many technical analysis books describe a "triple bottom".  It doesn't happen.

The descending triangle broke as did the 20 ema and both were broken easily.

The gap at 1050 still remains unfilled and looks like it could be filled soon with a short-term down trend now established.  I am still looking for the major trend change day in the first few day in November, either the new down trend breaks or the up trend since March breaks.

There is a chance of a retracement back up to 1070-1075 or the bottom of the descending triangle, as the market is nearing oversold.  The volume ratios are nearing oversold conditions as the down-volume to total is nearing its upper range and up-volume to total is below it's range.

New Fall Trends

SPX filled it's first of 3 short-term gaps on Thursday and this area became support on Friday.  The market tried to break through it but was unsucessful each time, as buyers stepped in and bought at that level. 
SPX has now a short-term down trend from Wed to Friday of last week.  The key area will remain the support at 1073-1070 and the more the market test this level the weaker it becomes.

The 1070 level is more import on the daily chart.  On the daily SPX a descending triangle has formed, although it is young and not well defined yet, forming with only a few candles. The bottom of it is the 1070 level, which is also the 20ema.  A break of this descending triangle, which would make a rough measured move from 1100-1075=25pts.  This would put SPX right at the second gap that has yet be filled at 1050.

Wait a second!

What was this "selling" at the close.  How can they do that?  You are suppose to hit the buy button at 3!
Finally some action in the market.  I haven't been posting, one because I've been busy but two the market sucked.  Everyday "The market is up", and some pundit is screaming "We have recovered, go out and spend, have unprotected sex, eat raw meat, earnings are doing great".  Each day the market ripped up and all you had to do was pick three letters and hit buy.

The bears finally did some damage today.   The first thing that should be smacking you in the face, is the beautiful double top.  The bears have claimed the 1095-1100 level their house and they will defend it. The selling was quick and fast today, breaking the 20 and 50 ema.  It stopped in no mans land close to support but not there, now the momentum may be down and that gap is looking like it needs to be filled.
One thing to note on this chart is the text book negative divergence.  Look how SPX made highs and each time MACD, RSI did not make a new high, it just trended down.  That my friends is BEARISH Divergence.

The Daily chart shows the divergence too and it's indicators look ready to roll over!

The divergence is clear in this chart and the negative trend in the MACD.  If the rally was a true rally as it was in March and July, MACD would have made new highs, confirming the move.

Gaps, Divergence and SPX

Gaps always get filled is an old saying, but there is no time frame to when gaps get filled.  Right now on SPX there are three filled gaps below the current market price.  There is also a gap at 900 that has not been filled yet.

Right now the market is looking neutral, sitting between support and resistance.  If the market starts selling, the market could gravitate towards these gaps.  But the trend is still up and the market will trend towards resistance.

Here is the daily chart of SPX, you can see the first two gaps on the daily chart.  The 900 gap is not highlighted.

What is interesting to note is the divergences on the indicators.  While price has made a new high, MACD has not.  Also shown is the CMF indicator, look how there is less accumulation during the latest rally.

There is a lot of chatter about going to 1100, but because this is the most predictable area for the market to move too this might not happen.   In fact the sentiment is very bullish going into next week.

Look at the 5 day EMA on CPC, it is at a very low level indicating some strong bullish sentiment as well.

It is still hard to get bearish on the market when you have the energy sector breaking out.  Remember oil and energy has been leading the market.  If oil and energy can sustain this move, equities can keep climbing.

Broken Tools

If the price action lately has been making you scratch your head and saying "Wtf is this?", then take a look at some of the most reliable indicators and oscillators. These indicators and oscillators are screaming bearish divergence, either that or they are broken and cannot be trusted anymore.

First here is NYMO, normally if the market is exploding higher each day NYMO would move a good amount with the market. NYMO touched -75 on Oct 2nd, it is now barely about 20. Just look at the pervious market rallies and how NYMO has reacted bounce off its low of -75. NYMO has barely budged during this monster rally. Either NYMO is broken or something is screaming beware.

NYSI- Very similar to NYMO but on a longer-term time frame. Just look at this chart, NYSI hasn't even made a move up, it is almost flat line.

TICK- Notice the highs it made during the rally from July, when the market was making new highs so was the 5 MA on TICK. Now the market is making new highs and TICK is failing too.

These indicators are reliable and right now they are showing lots of divergence between their movement and price. This divergence coupled with the lack of volume may be signaling that the market rally might be running out of steam. Or the new market with constant gap ups, no meaningful correction and back to back to back to back days up, could just be wrecking the indicators proving them useless.

INTC Before Earnings

Intel's earnings come out after the market today, there is a lot of attention being put on Intel's earnings being a gauge is the economy is recovering.

Let's see if Intel's chart can give us a clue to what Intel's earning's might be or how to trade INTC after it's earnings are released.

First thing to notice is yesterday doji right at resistance, this is a bearish candle. The 20.66 level provided resistance perviously and moved Intel down to 19.50, it also formed a doji candle around the 20.66 level. There is also longer-term resistance above the 20.66 level that can be seen on the weekly chart.
While there is resistance at 20.66 there is strong support at 19.50 but be careful of the gap that has not been filled at 17.50. If Intel misses their earnings, it could try to fill that gap.

Intel doesn't report till after the market is closed but these should be key levels to watch after Intel announces earnings. But more importantly watch INTC at 3:56 when the big guys get the earnings report first.

End of Day Review looking at Oil SPX and the Dollar

Today was a typical holiday trading day.  Low volume and swings. but in the end SPX closed at another high for the 6th day up in a row.  While this is bullish, SPX may be nearing an overbought condition.

Here is the Volume of the market:
When the Up-volume to Total Volume ratio reaches above .60 it starts signal an overbought condition.  When Down-Volume to Total Volume reaches close to .35 it is overbought too.  The Moving averages are nearing these conditions.

One thing to be wary of if you are long is that MACD is not making new highs.  MACD has barely moved up with this latest market move.  If this move had strong strength to it, it would have moved the MACD.  You want to see MACD make new highs with the market.

It is still hard to get very bearish with SPX making new highs and energy breaking out.

Oil still has not broken out but is nearing it's high for the year, it broke above its June highs.  The 75 area may provide some resistance and a pullback.  But Oil's MACD is performing just like SPX's, it is not making new highs with the price and oil's stoch is showing overbought.

So watch oil, if it starts to pullback it could bring the market with it.  This is what has happen after the pervious rallies since March.

XLE broke out today and has now retrace 32% from its high in 07 to its low in 09.

Of course can't forget about the U.S Papyrus De Toilet.  I personally think Bob Pisani has been selling the dollar just so he has something to talk about everyday.
Is it possible that the dollar may be forming a DOUBLE BOTTOM!

The 76 level just might be providing some support of the dollar.  But every single bullish pattern for the dollar has been completely destroyed.  But it does look like the dollar may be forming some type of short-term bottom.  Pisani is shitting his pants, he won't know what to talk about if this happens.

So let's bring it all together, SPX making new highs, meeting resistance at 1080, nearing overbought.  Oil is nearing resistance and showing signs of overbought.  U.S Peso possible forming a bottom or sideways action.  So the key will be to see if energy can keep climbing to boost the market, but if the dollar does find a bottom here both the market and oil can see some weakness.

New Week

While sacked out on the couch sick this whole week, I would occansionally put on Mad Money, partial to see what Cramer was saying but more to induce vomit. While watching that stellar piece of market commentary I remembered one phone call some lady calls up and says this and I quote "I am a beginning investor, DECK has had a long run up, is this a good short". I was running a high fever and thought I was hallucinating because someone suggested SHORTING! on Mad Money.
Right away I knew after hearing that this market had to go higher. It has to kill those people who for the first time in their life discovered shorting after the 2008 crash and now think they can make money shorting the market. Till these fake bears are brought out back and beaten like a red headed step child the market will go higher. This latest pop might even be the one that does it.
But I also might have had my Shoeshine boy story this weekend too! That can come later.

SPX had one of its best weeks of the year rallying hard after a small "correction". It is now nearing it's highs in Sept and almost poised to possibly break them.
The Sept highs may provide some resistance, since there are still some bulls underwater from buying at those levels. RSI is nearing overbought and STOCH is overbought. There is also a gap unfilled at 1060. A move to the 1070 level may provide a pullback or a consolidation.

On the daily chart, the trendline is still in tack and climbing. (may chart isn't a log anymore so it reflects the new trendline).

It will be interesting to see what the next few days bring for the market. There are a few potential bullish patterns that could be forming.

While SPX is looking more bullish then bearish, the lack of volume is still a concern:

The last 3 days have seen low volume on the moves up, but this is a double edge sword. But this doesn't mean the rally is weak or fake. Look at the volume around Sept 8th when the market was nearing it's previous highs. The volume was low, once it broke it's highs volume came back into the market.

NYAD keeps climbing and is showing strength. The trendline is still up and it has broken out of its highs of the year. This shows advancers are leading price.

Another bullish sign is NYHL, is making new highs a head of making market highs and keeps climbing.

Overall SPX is nearing some short-term resistance at the September highs and may pullback to close the gap at 1060. But there is now stronger support below the market after it tested the 1025 levels and was able to hold. 1054 should be a level to watch now as support.

SPX and Manta

SPX-

Will jump up this morning and probably climb higher, resistance is above at 1065-1079.

Decent looking long, with a tight stop it's low risk.

What a shitty post sorry!

Seen this story before

Sorry for no updates since Monday, but around 10am on Monday I got hit with a mac truck and was running a fever of 101. It's not swine flu so don't worry.

But to the markets! Once again its the same shit different day. Look at that, oil and commodities lead that market. Shocking really, this never happens. Oil rallies on the 30th and the market follows a few days latter. This has been the trend since March. The market celebrates high oil prices. Now just wait for finanicals to top and oil to move back down again and whammy another "correction".

Oil is nearing resistance though and may start to pullback if it can't break above 72.00, which is the down trendline which started it's decline. The PnF chart shows this better:

As I talked about Sunday night the market bounced off the 1019-1022 level. Looks like buy the dips is still in play.

The bears were to get the market to close below the key 1055 level, the small downtrend from 1070 is still in tack.

On the daily chart, the new move up is testing the bottom of the trendline that was broken and testing the down trendline.

I don't see any clear edge to enter a trade right now, hourly the market was slight overbought and may drop a little from here, but the daily is slight out of oversold territory and MACD may be turning up. It is better to take plays at different stocks when the market is showing no edge. Check later for a list of possible longs.


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One reason I was so sure there was going to be a bounce at the 1020-1019 level by combining my analysis of the up trendline, the 1022 support of the 200 monthly MA and the oversold condition, with the RL's.


Here is were their "Go Long Levels" on Oct 2nd. The best go long was at 1019.64 with a 79% chance of a reversal at these levels. The low on Oct 2nd was 1019.95.

Just to show you that the RL's are not one hit wonders. Here was the "Go Short odds" on Sept 29th.

Using the RL's with your own trading system really enhances your odds of entering the trade at the right price. Check out their site and review the product. Trust me its a great trading product.

On the Radar

LDK-bounced off support on Friday, past 3 days the selling volume has declined.  Indicators are pointing to oversold.  But one thing that is even nicer about this stock is the short-interest on it.  FINVIZ has the short interest at 61%.  Here is their chart

WNR- Another stock with high short interest that is nearing support.

NCS- has seen selling off, might be trying to catch a falling knife but getting in around 2.50 is safe.  Stock also has a high short-interest.

A few internals to review

Below is a post about the market price action but price only a part of the structure of the market internals and indicators can give a better picture of the market.

NYAD- will be important to watch going forward.  Since March the NYAD line has followed its 8 day EMA.  Each market decline started after NYAD dipped below it, the last two big rallies were started after NYAD bounced off its 19EMA.  Right now NYAD is sitting below its 19EMA and could bounce here.  The last two most recent dips ended after NYAD bounced off its 19ema.  All moves down since March ended on the 39ema.

NYMO- is showing a bearish market but it is also showing oversold.   If NYMO moves above zero it be bullish and not confirm the down move.  Instead NYMO needs to base under zero to confirm the recent move down. Since March is has managed to stay above -75 and each time provided some bouncing points for the market.

NYSI- is turning down and will be interesting to watch.  It is nearing a level where it has bounced off of perviously.  When NYSI moved below the 1250 level it managed to bounce and the market bounced with it.    It broke its up trendline on Friday and may be signaling a further move down.  It is dipped below its 39 day ema.  Last time it did this was in June when the market started its decline.  This is a longer-term indicator though can should be used for a longer-term trend analysis.

SPX

Could not think of a good lead into sentence so right to some charts.
SPX right now is slightly oversold having declined the past few days.  STOCH and RSI are representing oversold conditions.

SPX is sitting strong support, it is slightly below its 50EMA, sitting on an uptrend from early September and 1022 is the 200MA on the monthly chart.   This area should provide a bounce to higher levels.  The the first strong resistance level is the 1045 area, it will be important to see how the market reacts at this level.  SPX will be testing overhead resistance at this level and the 20EMA which was perviously support.  This level may be hard for the bulls to break.

The 1050-1050 level is the strongest resistance, this is now the newly established down trendline from the top at 1070.  This area is also resistance on the weekly and monthly.  On the weekly chart is its the 89 EMA, on the monthly chart it is the 20EMA.  When the market broke this levels last time, it made new highs and  after breaking it this week the market sold off.  

The real key levels to watch are:

Resistance- 1055
Support- 1022

Another reason for the possible bounce is the sentiment is very bearish right now.  The CPC is very high and bearish.  This has a tendency to the bullish.

 Another reason I would expect the bounce is that to many people are expecting a "correction".  The market will have to suck in some more people to the long side.  All day on Friday, CNBC just kept babbling on about a "correction".  So a bounce should happen and then they can babble about "new leg up".

Earnings season starts this week and this could be the catalyst for some selling or maybe buying.  Friday's job numbers indicated an economy that might not be rebounding, if earnings come in lower then expected it could signal that the economy is doing even worse.  But good earnings should be received well by the market and may boost the market.

Money on the sideline

Enough about the money on the sideline. This is the cheerleaders last ditch effort to pump up the market. They said the same stuff in 2008 and early 2009. But they were spewing this junk, when the market was taking a nose dive. The dummies over at CNBC cheered about the money on the sideline would come in and bid the market up. It sort of made sense then.

But now this same money is back after a market has retraced 50% from it's low, say WHAT!? Where did the money come from? Oh it must be from people earning lower wages, or it must be from the increased unemployed workers. More then likely, the new money is coming from people cashing their $25 savings bonds from their Communions, since they don't think the gov't will be able to repay them soon. This must be the source.
Here is a good article from Zerohedge about the dumb money on the sideline augment.

Here is the money flow into Rydex SPX fund. That's odd money is flowing out, how can that be the money on the sideline is suppose to be going into the market.