Tag Archives for " SPX "
Shake-Out Or Correction?
They say the trend is your friend, but is the trend bending? How can one determine the trend? First you have to define trend. Trend is different for every trader. It depends on the time frame they are trading. Then you must know that there are trends running concurrently like a double helix. There are many methods and strategies that market participants use to determine when a pullback is a buying opportunity or a pullback is something more than a pullback. The 3 Day Chart and the 3 Week Chart are two of the best tools I know of to determine the near term trend and the intermediate trend. The 3 Day Chart turns down anytime there are 3 consecutive lower daily lows OR a prior circled 3 Day low is violated (a prior swing low which marked a trough). The 3 Day Chart turns up with 3 consecutive higher highs or on trade above a prior circled 3 Day Chart high. The 3 Week Chart turns down anytime an item shows 3 consecutive lower weekly lows—or on trade below a prior circled 3 week circled high. The 3 Week Chart turns up anytime an item shows 3 consecutive higher weekly highs —or a prior 3 week circled high is cleared. Let’s take a look at an SPX daily from the last major swing low on August 21st. The last time the 3 Week Chart turned down was on the week of August 21. The index set a low at 2417 on an undercut of its 50 day line. The last time the 3 Day Chart turned down was on November 15th. Notice that there was roughly 90 days/degrees between the August low and the November low. The natural 90/180/270 and 360 day/degree divisions of the year are integral to Gann analysis. The November 15th turndown of the 3 Day Chart also was a test of the 50 day moving average. Today the SPX is poised for a possible turndown of its 3 Day Chart if it trades below yesterday’s low. This will trace out 3 consecutive lower daily lows. Importantly, this is occurring as the index satisfies a 90 degree price pullback. From last Friday’s record 2872 high, 90 degrees down is 2818. Notice that despite the selling pressure of the last two days the SPX has held 2818 on a closing basis. It slipped under 2818 yesterday to a low of 2813 but recovered to close at 2823. Importantly, January 31, yesterday, is 90 degrees square the number 2813 on my Square of 9 Wheel. So we have so to speak, a double square-out on the table: The SPX has satisfied a 90 degree price pullback. Yesterday was a possible time/price square-out with 2813 being 90 degrees square of January 31st. It’s still a bull market so these square-outs must be respected. That said the 3 Day Chart has not turned down yet. It could do so today. Trade below Wednesday’s low that that sets a low and turns up either today or Friday suggests a low of some degree. However there are a few caveats that suggests this time is different that November. First of all the index is dealing with a Break Away gap directly off an all time high. It looks like a Gallows Hangman pattern. This suggests last Friday’s rip was a Buying Climax…at least in the short run. Additionally, the SPX is stretched well above its 50 day moving average—a conspicuous difference between the August and November lows. The presumption is that if the SPX turns down its 3 Day Chart and it does not define a low, it’s going lower. The indication is that if 2818 and 2813 fail to act as support, the SPX is headed lower. The conclusion would be that we have a change in character and that rather than a shakeout, a more meaningful correction is playing out. So let’s do the geometry. A 180 degree decline from high is 2766. 360 degrees down is 2662. This would be one full cycle in price down from the 2872 record high. There is some good symmetry to the idea of a decline to around 2662. It represents a 50% retrace of the last leg up (from the August low). It marks a little burst of volatility in early December which was the mid-point of the rally. 2662 also ties to a test/undercut of the 50 day line. Additionally, a decline that flushes the 50 day satisfies a test of a trendline connecting the August low and the November low. The January low is 2682.36. Trade by one tick below that level in February would also satisfy a turn down in the Monthly Swing Chart. If that occurs, bull or bear, the strong likelihood would be for a continuation of the bull or a reaction higher even if a bear market is on the table. The last time the Monthly Swing Chart turned down was in November 2016. It’s stretched. The probabilities are that it will turn down. If it does not do so in February…180 degrees/days from the August low, it may do so in March on trade below whatever the February SPX low is…going into the NINTH anniversary of the March 2009 low. Whenever it turns down, it will be a significant inflection point. Be that as it may, the price action here going into the weekend will tell the tale as to whether we’re in just a short-term shakeout or a more meaningful correction is on the table. Because 2 X the 455 point range of the leg up from August is the range of the 910 point bear market from Oct ’07 to March ’09, the symmetry suggests that the 2872 high (a square-out as January 26 is 180 degrees opposite 2872) may have marked the end of a significant Buying Climax—one which should at least see the deepest correction in the last 14 months. Interestingly, 455 is opposite the date of March 6th…the low
Continue Reading -->The Red Dog’s Roadmap
The SPX futures are up 2 ahead of the Fed this afternoon. It has been a methodical move since clearing the descending channel above 2430 to take out 2453 before making a new all-time high at 2481. Now we’ll look to see if the active bulls stay in control with upper support at 2464 and yesterday’s low at 2474. IWM gave another calculated entry Monday after it reclaimed $142.25 and cleared $143.55 to hit a hgih of $144.25. It will need to hold $143.21 to keep active bulls happy and, if it can, extend another day towards a target of $145. XLE is trying to stay relevant as some are long vs the $64.50 stop while others want to see if hold the 50day of $65.86. IBB has its first bearish engulfing candle in a while and I did tweet that I sold around $329.50. After this move from $310, some digestion makes sense. Look for banks to be in play on fed day as JPM had a nice 2 day move. If it is able to hold the $92 area, I will be looking for it to make a move towards all-time highs in the days ahead.
Continue Reading -->Morning Call Express: 2017 Starts with Green Arrows. Do They Stick?
In today’s Morning Call Express, Scott Redler welcomes us to the New Year. Scott starts things off by looking at the EWG and the big resistance level it is coming up to test and how it compares to the FXI. He also looks at the SPX and QQQ and where they will be opening the new year. Scott also reviews some high beta tech names as well.
Continue Reading -->Happy New Year!
We have mixed/quiet markets around the world as we close out the year. Europe is flattish and has a very tight pattern. It looks ready to rally. We’ve been long EWG calls in RAA since the Italian Referendum, and EWG/FEZ look like they’ll give more gains. In Asia, the landscape is a little different. The Nikkei had a big run and needs to digest. The Hang Seng has been choppy to the downside, though it was up 1.0%. The Shanghai was up +0.4%, but it needs time to show its hand. SPX futures are up 4-5 handles. Yesterday, most sectors hit new weekly lows but rallied back a bit to close off the lows. We saw a few Red Dog Reversals as some sectors traded below Wednesday’s lows and reclaimed them Thursday by day’s end. I’m not sure what today brings. The action may depend on whether we have any leftover rebalancing to work through. At this point, there are multiple scenarios to consider for the New Year. We’ve seen a little give on the post-Trump Trade, but not much. The USD came in a bit and Treasuries rallied. Some strong sectors tested the 21 day and held. Do new funds come in the first five days and drive the indices to new highs fast? Do traders book gains to push taxes out to 2018? Do some January effect-type trades take place in beaten-down names and sectors? We will have scenario A, B, and C. Whatever you do today, don’t let it ruin your holiday. Just focus on starting 2017 on the wrong foot. There will be more than enough time to figure out new relationships, correlations, etc. as the first few days develop. For today, see if the upside gap holds or gets sold. SPX has 2242 as pivot support for today and to start the year. If this holds, it would bring in new money to lift stocks in January. If they hit stocks fast in January, the important level will be the prior breakout area at 2193-2210. If they buy them fast, the first level to clear and hold above is 2262ish with the high of the range at 2277. A close above this and the door to 2325 opens for the first quarter. SPY put a low in at $223.84 yesterday. That will be your pivot support for today and to start the year. If they hit them fast, this needs to get taken out with a close below the 21 day. Then perhaps it can see $220ish. For today, see if SPY holds yesterday’s high of $224.89. For the bulls to come out quick in January, they need a trade and hold above $226.30 as the first step. Then the high of the range is $228.34. A close above this in the first few days of the year and the door to $232.50 is open. I will have a very extensive note to start the year on Tuesday morning as a lot can change between now and that open. For today, keep it light and get ready for the holiday and get your head ready for 2017. Remember, your time frame matters. Have a long-term plan with a 401k/403b/IRA/529 because over the long run, the bull market wins. But to participate, you must have a process that works for you. Never invest and live above your means. If you swing trade and trade for a living that’s different. It takes a routine, time, and commitment to a process. Combine that with discipline and humility, and you can win. Most importantly, live life and enjoy the time you have with your family and friends. A little fitness doesn’t hurt either. Don’t sweat the small stuff as it ends up being meaningless when you’re faced with the big things. Thanks for being a part of my community. Having friends like you on my team gave me a mission instead of a job. Happy New Year!
Continue Reading -->Morning Call Express: Fear Trumps Greed
In today’s Morning Call Express, Kurt Capra talks about the selloff yesterday and what may have been behind it. He also looks at the financials for clues as well as where GLD may be headed before truly reversing. Kurt also points out some of the retailers that may have additional downside today and points out an interesting pattern in AMZN.
Continue Reading -->Daily Recap: The Last Mile is the Hardest
In today’s Daily Recap, Scott Redler and special guest Lulu take a look at the action today which may have caught some by surprise. He also talks about how he navigated today in light of coming into today mostly long.
Continue Reading -->Chart Attack: SPX, FAS, AMZN and ACIA
Once again, quiet markets as we have 3 days left in 2016. This is a nice upper flag type pattern that usually leads to positive resolution. You can be long vs. 2256 or 2248 and, if you are quick, perhaps add above 2273 for a move to all-time highs at 2277. We’ll see if there is enough juice this week, or does it need new January 2017 flows to ignite it. Either way, a nice tight pattern to trade verse. Banks have been the best sector with multiple set ups along the way. Some are alread in the FAS vs. $41. If you think we get DOW 20,000 this can probably be a grab when it clears $42.25 for a move to clear highs of $42.83. Use Goldman Sachs (GS) as an indicator. AMZN has been consolidating since missing last quarters earnings. This pattern is tight. With the best selling holiday product and a huge online retail season electronically, I think this wedge resolves upwards. I am long and looking to add with a high volume move above $774.70 for a quick move towards $780 then to fill the gap up to $820. ACIA, last years high flyer, was cut in half. Two sell signals helped us get out of the way. Now, it’s tight and could see a January effect type move. It will need a high volume move above $68.30 to help trigger a day 1. I am long small and looking to add if it triggers and holds. The first target is $72 which is the 50 day.
Continue Reading -->Morning Call Express: 2017 Count Down
In today’s Morning Call Express, Scott Redler talks about some of the recent action in Europe and reviews where we are in the SPX. Scott also looks at how the financials and high beta tech are looking as we head into the end of the year.
Continue Reading -->Morning Call Express: Santa Drifting
In today’s Morning Call Express, Scott Redler gets us ready for today’s action by reviewing the Indices as well as some sectors. He also looks at some high beta tech names and new issues.
Continue Reading -->Morning Call Express: Looking For Santa Claus
In today’s Morning Call Express, Scott Redler talks about the potential of a Santa Claus Rally and whether or not we will get DOW 20,000 before the New Year. Scott reviews the key levels and looks at some sectors for clues.
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