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…
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.
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.
SPX breaks down from the rising wedge, loses RSI 50 and threatens support. Of course, this is just one lagging headline index. The damage elsewhere in indicators and leading markets is excellent. All according to the preferred NFTRH operating plan I might add. And that goes for the precious metals too.
Last week the Canary in the coal mine had a hiccup.
Further, the Canary’s Canary, the Semi equipment stocks took a hard hit. The equipment stocks like AMAT, LRCX, KLAC, etc. were the ones whose ramp up we used to gauge coming economic (esp. manufacturing) strength [note: AMAT is making a Hammer candle at S/T support today]. Sooner or later the SOX’ big picture, massive breakout around 560 may get tested and that test would mean only everything for the broad markets.
Meanwhile, the S&P 500 ambles along…
Spain iShares EWP was one of two (Italy being the other) Euro markets NFTRH has used over the last year to gauge speculation over in that bubble. The target for this market that people were running away from in droves (including its bonds) as recently as 2012 has been 44. Check.
The stop loss would be above 43. Otherwise, if my macro view does not change this could be a good hold back down to 30 or so. Again, like with SPY, it’s a straight short with no leverage.
The buy target per the original highlight was 7. In after hours LSCC sheared right through that and is, much like fellow Semiconductor company SIMG a couple months ago, now hands off. Trade idea is aborted. It is now fodder for day traders I guess.
I am not liking what I am seeing in some of the Semi’s this earnings period outside of Intel and a few others. Speaking of which, Intel may be sold as well if my market view firms to bearish for a correction.
Remember AMD’s earnings sucked too and that Intel’s performance has a lot to do with Intel and not a rising tide in the sector, in my opinion.
Remember also that the Semi’s are a leader, both ways.