Stock Market Update

As of the break to new lows for this correction in SPY this afternoon, stocks have a very nice hourly chart bullish set-up with significant divergence present.  This is the type of set-up that often leads to nice rallies in the direction of the major trend.  So keep an eye out for that here.

However, the reversal attempt today did not manage to close in the top half of the daily price range, and so I don't view this as a bottom reversal day. 

Until there is a clear bottom reversal day, I view the larger pressure to be down here still.  That being said, the set-up is in place for a rally attempt.  When the larger currents are down, the nice bullish set-ups may be only lead to 1-3 day modest bounces, so that is something to factor in if taking bullish positions on a reversal attempt here.

Stock Market Update Video 2-28-14

 

This stock market video update covers technical analysis of the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and related ETFs.  I show several technical indicators including MACD, stochastics, and bollinger bands and give you my interpretation based upon current price formations and market sentiment.

Large scale divergences in sentiment (VIX and total put/call ratio) are present on the current breakout suggesting that we be prepared for a failed breakout and potential market correction.

I review long and intermediate term channel lines which are currently overhead resistance on several markets.

Additionally, here are some links relevant to this video and current market situation.

Broadening Top Formation

What Final Highs Have Looked Like

Stock Market Update and FREE Trial Offer

I recorded a new video today covering technical analysis of the stock market as well as several stocks that are perfect candidates for trading opportunities using the Integrative Harmonic Trading methodology.  

In this video I also give you an opportunity to try out my services for FREE for up to 1 month! 

CLICK HERE to Watch the video

The video specifically covers CAVM, TXT, PLCE, FSLR, BBRY, and the S&P 500.

• What is the MACD indicator telling us?
• What are the VIX and put/call ratios telling us about the current market correction?
• If stocks continue to decline, how far can we expect them to go?

Find out answers to these questions in the video and get ready to learn some useful techniques for your trading.

Enjoy the video.

CLICK HERE to Watch the video

All the best to your trading,

Pete Birchler

Stock Market Update Video - The Importance of Last Week's Low

This stock market update video covers the total put/call ratio, Commitment of Traders report data, and technical analysis of the stock market.  Based on these data, I suggest that last week's low is a significant price point in the market.  This may be an important low in a continuing uptrend, but a move below last week's low would be probable indication that the market is currently in a correction that may have significant further downside.

Stock Market Update 5-7-13

Stock Market Update 5-7-13

This stock market update video covers the US stock indexes.  Analysis of Commitment of Traders data, put/call ratios, and technical analysis is discussed.  Key support levels are shown for placement of protective or trailing stops on long stock positions.

There is an increasing build up of speculative long positions in the market which should be monitored over coming weeks and months.  The technical situation is clearly uptrending, so any shorting or top picking should be based on objective indicator methods with clearly defined risk and stop points.

Stock Market Update 4-29-13 - Bearish Divergence

Click on Chart to Enlarge

This chart is of the SPY etf and is an hourly chart with a MACD and an ADX study underneath the chart.  What we have seen since the April 5th low in SPY resembles an upward "flat" pattern in both price and time relations and indicator behavior.

In the ideal flat wave B should take longer than wave A, and also wave C should take longer than A.  The price legs are often nearly equal creating horizontal or "flat" trendlines - hence the name "flat."

Looking at the indicators we can see that currently the MACD chart is displaying a pretty classic bearish divergence pattern as prices have made higher highs the last two sessions, but the MACD peaked on 4-25-13.  So that is the type of indicator set-up that is typical at a high point in the markets.  Not all divergences lead to pullbacks, but they are the hallmark of the end of price trends.

Also, the ADX can be used in conjunction with the MACD in order to better gauge whether the price movement is likely trending or corrective.  The ADX is a measure of trending activity, and when it is rising, that indicates trending price behavior.  So if the ADX and MACD rise together, that indicates a stable uptrend.  That is what we saw from April 5th through 11th.  Then as the MACD fell and prices corrected back to the April 5th low, the ADX remained above 20 but not rising.  This indicates a relatively strong correction against the prior trend.  Now, since the April 19th low, we have seen the MACD rise, but the ADX trend down.  This indicates a probable counter trend or terminal type of move.

If an upward flat pattern is forming and is completing the current leg up in stocks, then we should require that prices move back below the April 19th low in less time than the C portion of the pattern took to form.  That would shift the price logic to the downside, and suggest that we would see further price declines.  But until that April 19th low is breached, then the price trend is clearly up.

Stock Market Update 4-24-13

4-24-13 Stock Market Update
This video covers multiple time frame technical analysis of the stock market, with focus on how to gauge whether the uptrend is still in force, and what point likely solidifies that a correction will occur.  Additionally I show you a few different real money gauges of how various smart and "dumb" traders are positioned in the current market.
Comments related to the rebound rally in gold are made as well.

Stock Market Update - Gold and Silver Bear Market

4-15-13 Stock Market Update

This video is accidentally split into 2 parts.  It covers stocks, bonds, gold, silver, oil, and the US dollar index.

Stock Market Update 4-3-13

Click on Chart to Enlarge

As noted in the recent video, it is possible that the S&P 500 is forming an ending diagonal type pattern on the hourly chart with implications of sharp downside in the short term.

As of this morning, the trendline of the diagonal is now broken and the MACD is in a confirmed sell coming off of a mild bearish divergence which is typical of the momentum loss at the end of a price pattern.

In order to provide solid confirmation that we have seen a pattern of some degree complete with this ending diagonal, we will need to see SPY trade back below the March 19th low by April 9th.

Also continue to watch the QQQ for a break of the uptrend line since coming off the Nov 2012 low.  That would be a first indication that a possible head and shoulders top pattern may have completed the right shoulder.

Stock Market Update 4-1-13

This stock market update covers the recent CoT report as well as technical triggers that could be used for protecting long positions or entering short positions in stock indexes.

Brief comments are made on gold as well which is coming off of historically bearish sentiment and may be set for a significant rally.  A break of the February lows in gold would be a significant technical failure in gold and  may result in continuation to the downside.

Stock Market Update 3-11-13

3-11-13 Stock Market Update

This video is a stock market update covering the S&P 500, QQQ, IWM, with technical indicator review, forecast projections, and analysis of the Commitment of Traders data relative to the current market action.

Stock Market Update 2-9-13

Stock Market Update Video 2-9-13

This video covers US stock indexes, CoT data, technical analysis, foreign ETF's, US Dollar Index developing triangle, a harmonic trading pattern on EWA, and QQQ head and shoulders development among others.  The price logic of the QQQ rally is such that it looks weak and corrective and likely will complete a head and shoulders top pattern.

Stock Market Update 2-4-13

Stock Market Update 2-4-13

This video is a stock market update covering the S&P 500, QQQ, EWA (Australia etf), among others.  Pattern time cycles are noted, technical indicators are reviewed.  Price action suggests that the US markets may experience some further upside which may become more choppy and volatile in coming weeks.

Stock Market Update - Overbought But Uptrending

 Click on Chart to Enlarge

The QQQ is still in the middle of its range since the large gap up at new year's.  If the first breakout of the range is to the downside then it may be an ideal long trade set-up on the hourly chart.  If it is to the upside then it may be best to wait for a subsequent hourly chart oversold signal and look to go long.

Notice that while the SP 500 is at new highs (chart below) the QQQ is not, so it is lagging a little, and often that will indicate a resolution to the downside at least briefly.

                                                          Click on Chart to Enlarge

The S&P daily chart shows a bullish moving average configuration with 50 day over the 200 day.  So the price trend is clearly up.  The daily ADX study below the chart shows that it is about to move above 20 which is classic for a new trending move, in this case to the upside.

The last such signal was pretty uneventful in Sept.  But in January of last year it was an ideal signal.

The recent CoT data is somewhat mixed, but I will give my interpretation.

                                                          Click on Chart to Enlarge

The commercials have reached a lower net short peak than they did in September, with prices right near the September highs in the S&P 500 and Dow.  This is similar to the way the net positions played out at the May and July 2011 tops indicated by the red arrows.  So while they did not sell the recent rally it may indicate that they are basically fully hedged at this point.  Likewise, it indicates that the large speculators didn't buy the rally, but rather used the rally to close out positions and take profits.

The Russell 2000 commercial traders remain near a record net short position indicating that they consider the Russell 2000 to be overvalued and at a risk of decline.

Overall this could be a typical type of divergence at a significant market high.  If not, then a typical pattern would be for the commercials to cover short positions on rising prices if prices continue to push higher.  That often leads to a steady, but low volatility rise in stock prices.

Given the major uptrend in stock prices, it would probably be wise to wait for weekly time frame sell signals to shape up before shorting the indexes.  And if long, a stop below the late December low would be logical based on the price action.  

Stock Market Update 12-12-12

Stock Market Update 12-12-12

This video provides a stock market update covering US markets and ETF's as well as foreign market ETF's.  The current upward pattern may have a completion and topping time frame around the Christmas holiday.  Several sectors of the US stock market and world market ETF's are pushing to new highs since the Oct 2011 low, though some are lagging well behind and may be ideal candidates for short opportunities in coming weeks.

Market Update

7-8-12 Market Update

This rally is likely topping soon or topped Friday.  Check the video for multiple time frame analysis.

Stock Market Update 6-3-12

Weekend Market Update 6-3-12

This video is a comprehensive look at multiple times frames of the US equity market.  It appears probable that a 2-4 week rebound will occur, followed by what could be a tremendous declining phase.  Larger scale patterns suggest this bear market will take stocks below the 2009 lows.

Stock Market Update

Click on Chart to Enlarge

Today was a nice reaction rally from oversold conditions in the stock indexes.  However, the volume was a lot lower than Friday and sharp rallies like this should be expected in a downtrend, especially given the high put/call ratios recently. 

I have made a couple projections for the SPY from this level.  The blue projections would be a more dramatic but certainly not impossible waterfall decline that would be typical of a MAJOR pattern completion in the markets.  If this spring's high was the end of the bull market rally since 2009, then we should expect a larger move than any correction along the way.  So we could see a decline bigger than last summer's decline.  Obviously that seems improbable, but that would confirm a new bear market.

The green projection is what would be a very typical type of scenario before a new decline.  I have not talked about this recently but often the first support level is broken followed by an ABC type rally that retraces about 50% of the initial thrust down.  That is followed by downtrend continuation.  Should we see that scenario play out and the market remain well below this year's highs as the time of the purple box reaches its end in the first week of June, and the daily stochastics has rallied back up to overbought and then turns into a sell signal, that would be a time to short crap out of it.

The elevated put/call ratio typically leads to a multi week rally, so we may expect a more bullish near term scenario, but any push to new lows, will likely initiate a dramatic plunge lower.