It’s probably getting about time to take the profit on this one. It’s only 4.5% but it’s my largest single stock position. As noted previously, I have a few fundamental longs, a chart long (bull flag) on a Semi stock and Mr. Bounce Long, Google. It’s always fun when people perceived as bearish like me do their buying amidst bull pukage and it works out.
GOOGL is probably going to boink the lower wedge line, but I may think about profit taking soon. In this racket you never know. When I covered the shorts on EWP, SPY and sold FAZ, I thought I might be leaving something on the table from the short side. Well, no not really. It was a good time to dump the shorts. Now I have the same thing going on with Google here, in reverse. Got to love the markets.  Though a look at the weekly chart and a comparison to the QQQ makes me think twice… dohhh! Be decisive Gary! Well, it’s a free site and thus I am not paid for decisiveness here.
Funny thing about the market; I’ve had this potential 17,500 target on the Dow since early in the year as it formed a bullish Ascending Triangle on this weekly chart we review often in NFTRH. Then the recent mini correction dropped it hard and I felt a little twinge of embarrassment about this chart. Now? Not so much.
This is what happens when market bounces extend off of corrections that came about amidst b/s like the Middle East and Russia/Ukraine tension (i.e. things that have nothing to do with the US stock market other than resetting over bullish sentiment to a healthier state). These bounce backs tend to fix technicals. The market can turn and drop tomorrow, but as of 3:00 on Tuesday, the Dow’s weekly technicals (if you discount MACD) are intact and targeting 17,500.
Okay, here’s the last one of these short-term casino patron updates. I’ve got more important things to keep track of like that short against DSLV, which is testing its limits this morning. SPX 60 minute view…
- Initial objective (targeted back when the average bull was supposedly worrying about Ukraine and Russia) of 1950-1960 (resistance, now tentative support) is in the books.
- Gap is filled.
- Pattern measurement still resides above.
- Typical of these rallies off of bull market corrections, they tend to test to the will of bears so that even those with the most conviction that this is finally the big one, will have a good amount of doubt, Soros Put position or not.
- I have no such conviction, and instead resolve to go with what the market says.
Well what do you know? Guess who’s trying to break the resistance zone, get to the gap and possibly even the pattern measurement? Why, none other than the SPX, fueled by easing Russia-Ukraine tensions according to this headline (try not to get startled when the picture jumps out at you).  They wisely dropped said picture down to the middle of the article.
For all you casino patrons keeping score of the short-term squiggles at home (okay, I admit it, when it comes to the US stock market I am a casino patron too ).
This thing is significantly higher than where I covered my SPY short so… so far so good. It would appear that the pattern neckline – which SPX resides above after dropping through – would be a key. Resistance is a viable candidate to stop the bounce, but as long as SPX is above the neckline so too I guess, are the gap and pattern measurement.
Updating the status of the 60 minute chart we observe the following…
- The anticipated resistance zone has been acheived.
- The gap and bottoming pattern measured target are higher.
- RSI is getting over bought (remember, this is just a 60 min. chart) so some disturbance can come about at the resistance zone.
- But the gap and 1980+ levels remain viable.
- Hey, it’s what the 60 min. chart says.
 Simple chart update turns opinionated [separate the two, as needed]… and the title is changed from ‘US Stock Market’ to reflect said opinions.
The first chart shows the progress the SPX is making on our 60 minute view. It turned up above the support level noted a couple days ago and is now logically dwelling at the pattern neckline. This is still bullish obviously, having made a higher high. Resistance and the measured target (blue arrow) are noted.
Switching to daily charts, the SOX is in a bullish looking short-term pattern, turning up from the first level of support in a zone we had labeled a ‘hot air’ zone (i.e. little support from 640 on down). A healthy and significant correction would take SOX to 560 at least. Two resistance levels shown in red will decide whether that is possible in the near term. I still hold Intel for fundamental reasons and a technical target, along with a chart buy on another Semi stock that will remain nameless because if its chart changes (from its current bull flag) it will be sold with no questions asked.
With the help of at least one MSM headline, the bounce looks to continue, as anticipated. Clicking the graphic yields the
bearish bullish story.
Here is how the S&P 500 closed yesterday, with a bullish looking flag settling down toward a visual support level that would be about a 50% retrace of the first up leg (again, this is a 60 min. view, not a daily, so everything’s compacted). The potential is that a bottoming pattern is still forming.
The more I look at it the more I think the bounce can exceed 1960, which was the upper end of the original target (we noted some details by daily charts in an NFTRH+ update). The market is down today but the 60 min. chart paints it as just the end of the first leg up.
In fact, if SPX holds the noted support line it could make a shoulder to a bottoming pattern (again, talking 60 min. view here) with a measurement up above the gap. Then to make things even more interesting, the bears would have to really think about things.
I continue to hold ‘bounce’ and fundamental longs, but with real interest being the gold sector as it attempts to make some signals that could transition the year long+ bottoming process into something else all together.
I am not interested in shorting SPY again until a) the market rolls over or more likely b) the upside objectives are hit and then signs of weakness or over bought hysterics ensue. Short gains this year have been good because I have given them short leashes in limiting losses and in decisively taking profits.
The market was supposed to bounce, it is bouncing (assuming today’s down is just a pause) and now the script needs to be managed to make sure it remains the script.
I went from feeling a little silly with the SPX 1950-1960 bounce target hanging out there (just asking to be mocked as the market dropped again on Thursday) to now seeing it as a near sure thing. This morning’s pre-market activity puts it at around 1940. What is 20 measly additional points to a stress relieved bull?
It would be a good idea to watch the RUT (and its bear flag) for early indicators. RUT spent last week grinding upward in the flag in a precursor to the broad market bounce to end the week, but it remains in a relatively vulnerable position if it remains below its MA 200.
Individual investors, newsletter writers and professional money managers all got very bearish (too bearish) with the routine hit that the markets took. This is now being adjusted. At 1960 SPX would offer resistance at the MA 50, the middle Bollinger line and a lateral cluster of traffic. To put a bear case back on we need to see a little bull bravado return to the scene.
 With the bulls becoming emboldened, I am taking a loss on the RUT short and waiting out the bounce objectives.
The Russell 2000 has been very bear flaggy for a month now. A check of the IWM ETF shows higher down volume than up volume on an overall low volume rise. The last big volume was on the plunge from the SMA 200. It’s a classic bearish setup and maybe it’ll be worth watching the RUT as a downside leader again. This does not look to have nearly the bounce potential that the SPX has.