Dual Time Frame Overbought Signal in SPY 10-8-15

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The technical position of SPY is currently showing the classic type of formation in the last stage of an advance - in this case at least on the hourly chart.  The money flow index peaked a couple days ago, and now it has declined and is ready to poke back above its average.  The next cross of the money flow index below its average after a bearish divergence in this position is typically coincident with a top.

Also the daily 14,3,3 stochastics is now basically overbought with %K>80 and %D at about 76.  So there is a clear dual time frame of daily overbought, and hourly time frame bearish divergence in the midst of downtrending long term moving averages (252, 200, 63, 50 day MAs).

I would anticipate a multi day top would be likely be in place by tomorrow.  The gap up at 195 which is unfilled, would be the first obvious target for next week.  

I like the odds and historical expectation stats of entering short/puts here without waiting for confirmation of reversal.  A reversal candlestick today or tomorrow, like a bearish engulfing pattern, occurring right at the resistance level in the 200 region which has been established since Aug 24th, would be a nice daily confirmation signal that a multi day decline may begin.  

Also a 30 minute 8,21 EMA cross down would  be a reasonable lagging indicator to initiate a short with a stop above the intervening high.

Pete

9-13-13 Stock Market Update Video

 Stock Market Update Video
This stock market video update covers multiple time frame technical analysis of the MACD indicator.  I highlight divegences developing on various time frames and note a set-up for a potential short trade based on the weekly and daily MACD formation at the current time frame.
Equity put/call ratios are reviewed and I highlight a recent signal of complacency in the options market this past week, which may be a caution against expecting sustained upward momentum from this point.

Multiple Market Update - Gold and Silver Smart Money is Nearing Net Long

Multiple Market Update Video 6-24-13

The video update of the markets covers stocks, bonds, gold, silver, and cotton.  The stock indexes are currently in a volatile formation which could see further sharp selling for if today's lows are broken.  Bonds appear to be in a long term downtrend and have broken the strong negative correlation with stocks since the May 22nd high.  This may be indication that the long term uptrend in bonds is over.

I also give a technical indicator breakdown on what to look for on some different time frames in these markets.  I discuss the Commitment of Traders data on gold and silver, and I cover a few sentiment gauges for stocks.

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.

SPY Technical Analysis

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This is an hourly chart of SPY which is the S&P 500 ETF.  The daily chart is not shown but has triggered a parabolic SAR sell signal, so price is below the SAR point.  Also not shown is the weekly chart which also triggered the SAR sell signal last week, so price could be considered to now be in a downtrend on those larger time frames.  Of note on this chart though, we can see that price is above the SAR point on the hourly chart and has some room below it before triggering.

So here is my take away from the multiple time frame set up.  When you see a stock or market trending in one direction on the larger time frames, you can then use your indicator set-ups and triggers on smaller time frames to trade in the direction of the larger trend.  So in this case, for a short sell swing trade on SPY, I would suggest waiting for the hourly SAR to trigger, and if it does so AT A LOWER HIGH than the recent all time high, then that could be a nice short entry.  Also, possible is that the first SAR sell signal fails and leads to a higher price high and possibly some technical divergence.  In that case, then we could again take the next SAR sell signal to trigger.

Similar comments could apply for the MACD indicator set up.  The daily is down and coming off a sharp bearish divergence.   The weekly is flat.  The hourly is up, and if the hourly MACD turns into a sell at a lower high than the recent all time high, then it could offer an opportunity to short.

We will want to pay attention to whether this move up is able to retrace the recent decline in less time than it took to form or not.  That will help us objectively gauge the direction of trend strength in the market.

Currently the 153.60 level on SPY has been tested 3 times and held.  If prices move below that level, it could offer a continuation entry for additional downside, and be probable confirmation that we are in a correction.  The daily bollinger band is currently at that level as well, and prices rebounded after touching the lower band.  That is to be expected in an uptrend.  And in the initial move down off of a high, it often will occur as well.  But if prices break below that low again, then it indicates weakness and will probably lead to downside follow through in my opinion.

Stock Market Analysis Video

Stock Market Analysis 11-27-12

This video covers stock market analysis on multiple time frames.  The hourly charts are overbought but without strong bearish divergence which suggests that price action may become choppy before a multi day pullback occurs.

Brief notes on trendlines, moving averages, unfilled gaps, and several technical indicators are covered.

Stock Market Video Update

Stock Market Update 11-10-12

Check out this video update for short to intermediate term technical and sentiment analysis on the stock market.

Long Term Bonds, Interest Rates, and Implications

Bonds and Rates 6-3-12

Long term US bonds are likely nearing an major top.  Technical analysis, pattern analysis, and CoT data are suggestive that this current rally may be the final leg up of this bull market.  Wait for daily chart technical divergence to develop before considering short entries.

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.