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.
Let’s get the Dumb Headline of the Day over with right off the git go…
US Stock Futures Erase Loss as Ukraine Offsets Iraq
Ha ha ha… one geopolitical problem evens out the other and this has a net calming effect on the stock market.
If the market rallies it is because the S&P 500 has a would-be technical bounce objective to 1950-1960. I have refused to short anything (and am indeed long a couple things) in anticipation.
Also, did you notice gold take a U Turn?
 Up, down all around; gold, stock market… none of it means anything if it’s coming about due to emotional stuff in the media. Filter…
 Errr, care to try again genius?
We noted that an SPX bounce target by the daily chart we used a couple days ago was 1950-1960. Then some resumed bearish price activity called that bounce projection into question. Today we are back at it asking ‘what if?’ with respect to the SPX’ bounce potential. What if it can get to the high end of the 1950-1960 range per the 60 minute chart’s interpretation?
The 60 minute view has got positive divergence to price and a would-be measured target to a thick visual resistance area.
With the help of some of NFTRH‘s standard weekly charts, we take a snapshot of the US stock market.
The Bank index is unbroken from a weekly perspective. People will talk about an H&S but it is not activated until the trend channel and the neckline (a well defined support area) are broken. BKX, along with the Semiconductors has been a notable leader to the entire surprise* phase of the bull market out of Q4, 2012.
A breakdown of support would break this cycle of the bull market (if this is a secular bull market as many experts think, then the bull would live again after the cycle completes). It would probably be healthiest to the secular bull case for a breakdown to occur into a relatively small cyclical bear market.
Nearly 7% on a country ETF is enough. Not being the world’s most accomplished or strongest bear trader I think I’d better not look a gift Ponzi Scheme in the face. There should be new bear opportunities aplenty in the months to come. Short in EWP is covered.
Where to re-short the SPY on a stock market bounce? Well, I’d like to see the SPX at 1950-1960. That would be a classic setup at resistance (former support now broken). A handy stop loss would be above 1960 as suits individual risk tolerance.
I guess this is actually an NFTRH+ style post, but we have been focusing more on long setups (downside buying op’s) in the gold sector as this little correction in the PM’s (also expected and charted for subscribers well in advance) plays out.
SPX dropped out of the wedge, spectacularly crashed support and ruined RSI. 1960 is now resistance and the whole world sees it.
Target to Re-Short: 1950-1960
Downside Target: 1860-1865
Stop Loss: As suits risk tolerance above 1960
[edit, 8.1.14] SPY short covered, EWP short ongoing. [edit 2] FAZ sold. EWP still ongoing, probably for a longer hold.
How perfectly did this crap rise to test the breakdown and then drop? My stop as noted last week was a rise above 43, so I still hold Spain (Europe’s version of junk bonds) short, along with the chunk of SPY also noted. No leverage, just short. I am leveraged short against the Financials however, with FAZ, bought yesterday (conveniently noted today, so distrustful sorts feel free to discount it) on its chart pattern. This is starting to feel sooooo January 2014.
Back on EWP, it (along with Italy’s iShares EWI) was an indicator to the speculative potential (i.e. manic excess) over there in Europe since the middle of last year. The target was in the low-mid 40’s and damned if it did not get there off its lows below 20.