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.
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.
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.
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
Guest Post by Tom McClellan
July 31, 2014
If you want to get worried about long-term stock market valuations, this week’s chart should do the job. I saw a version of this chart recently in a research report by Daniel J. Want, who is Analytics Director for Prerequisite Capital Management in Queensland, Australia.
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.
SPX daily from NFTRH 300
Guest Post by Tom McClellan
July 25, 2014
The Fed is still pumping liquidity into the banking system, albeit at diminished rates, and the large cap indices are still showing no signs of trouble, with the DJIA making higher highs and higher lows.