Market update

Today the market rallied but nothing is really changed.  On the SPX P&F chart, we can see that the support is still solid, the uptrend is confirmed by higher highs and higher lows.  On the hourly chart, the multi-week consolidation is ascending a little bit but there is no real breakout yet, so the real direction is still unknown.  Statistically the breakout at the up side is more likely, which is consistent with the daily chart.

SPX P&F chart SPX hourly chart

The market breadth in the past two days was very bullish.  Especially the volume was much higher, $CPC $CPCE and $CPCI reflect that sentiment reached a high level. We have yet to see if this indicates a short term top.

As all of us know, the trend of gold and US dollar has reversed.  This will impact the financials and commodities.  At the moment XLF doesn’t look well on daily chart, on the hourly chart it’s approaching the resistance at ~14.5.  The potential pullback could cause more upside in the short term, but it has to stand above 14.5 firmly to prove the rally.

XLF hourly

Summary: intermediate term I am not sure (technically bullish, but US dollar might be a problem);  short term should have more upside but pullback might follow.

Market Update

No more “buy dip”?  The market has consolidated for several weeks and hasn’t gone anywhere.  Recently it seems “sell into strength” is back and effectively dragged down all tempts of making new high.  Breaking the trading range at the upside looks very tough.  US dollar jumped up last Friday and consolidated today.  On the daily chart, although negative divergence we have seen for months are still there, technically speaking uptrend still holds before SPX making a swing low below 1030 (nov 2).  Personally I think it’s better to watch and see how the situation develops.  Because of technical and fundamental improvement of the broad market, at the moment I don’t bet on another down leg as deep as sub 800.

SPX hourly

Strengths of sectors are mixed.  Tehnologies and industrials are not lagging which is not a bearish sign, but financials are quite weak.  Defensive sectors seem getting stronger.  My speculation is a prolonged consolidation or some pullback.

Sector overview

The descending triangle pattern was resolved at the down side.  Unless making a swing high above 14.9, the downtrend should continue for a while.

XLF hourly

Take a look at some big names in financial sector, most of them look tired except for V and MA which were better than peers in the past.

Financial sector candle glance daily

Summary: consolidation will continue or turn itself into an intermediate-term pullback.  But it’s still risky to short the broad market.

Market Update

Technically bears have not struck back to the market yet, at least for now.   On the following P&F chart, what we can see is still higher high and higher low, which is not even a major pullback.  After the last Major Distribution Day, the market bounced back a little today, while the volume shows that there are still many people buying dips.  On the SPX daily chart, negative divergence on most technical indicators has been there for several weeks but so far all pullbacks are gifts to bulls.  Take a closer look on the hourly chart, the current pattern is either a flag of consolidation or Header & Shoulders, depending on which side the breakout will be.

SPX P&F Chart SPX hourly

The triangle pattern on XLF was broken at the lower edge (14.54), today it went back above this support/resistance and so negated the previous breakout.  Personally I think 14.54 will become a support in the near future.

XLF hourly FAZ hourly

No update to the US dollar index chart.  Currently there is no sign of the downtrend being ended.  From the following sector candle glance chart, we can also see that the broad market looks healthy, since there is no sign of money flowing into defensive sectors.

In summary the near term and intermediate term outlook are bullish, and personally I think last Friday low will be a significant swing low.

Market Update

EUR/USD daily.  It’s due for a pullback.

SPX hourly.  In consolidation and may breakout at the upside.

Sector overview.  Techs and Industrials are very bullish, so is the market outlook.

XLF hourly.  Looking forward to upside breakout.

FAZ hourly.

EWZ daily (negative divergence, may pullback) EWZ hourly

Crude oil.  looking for more pullback in short term and more upside.

Market Update (2009-11-16)

Today the market has decisively broken the resistance at 1100 and made a new high.  In the previous weeks the volume had been increasing with the rally, however today’s volume was substantially higher.  After the previous major accumulation day, today’s strong market breadth (NYUPV:NYDNV=7.37) has further affirmed the uptrend.  The last three day’s consolidation (a flag pattern) fixed a few overbought conditions on technical indicators.  At the moment the market may revisit the nearest support but large pullback may not be likely.  On the SPX intermediate-term daily chart, negative divergence on several indicators are still there but we have yet to see when it will become a real problem.  On SPY 30-min chart, all indicators show negative divergence which could lead to minor consolidation or pullback.

SPX daily

XLF is quite weak in these days.  On the hourly chart, the trend is up and a bullish flag pattern formed.  The volume increased a little bit but not very significant.  The nearest resistance is 15.38.

XLF hourly

QQQQ broke out from the consolidation today and revisited the nearest support at 44.16.  RSI and MACD have a little bit divergence so further pullback may be expected, but i guess it will be bounced back up again at around 43.75.

QQQQ hourly

As previously mentioned, US dollar more or less indicates where the broad market will go over the intermediate term.  On the daily chart, one can see that there is no sign of downtrend being reverted.

US Dollar index daily

Summary: uptrend has been confirmed.  A pullback (or consolidation in certain sectors) may happen but it would be a buyable dip rather than a short opportunity.

Market Update

Today the market rallied massively and made a Major Accumulation Day.  Major indices went up more than 2%, financials went up by 3.56%, SPX is approaching the previous high at 1101.36.  The ratio between advanced volume and declined volume in NYSE was 18.24, which is the highest in recent four months.  Personally I think the trend over all time frames of the market is back to up again.  In the last week, there were two major distribution days and it seemed that a down leg had started, but today’s strong rally should have negated this – especially if we see another major accumulation day in the short term.

US dollar index – daily

US dollar is turning down again, now it’s at the lowest point since last September.  Looking at the trend in gold, they are very consistent.  Therefore I think this downtrend will not change in the short or intermediate term.  Crude oil is trading in a consolidation range but there is no sign of major pullback at the moment.  Consequently I don’t think the broad market is or will have a down leg very soon.

XLF hourly

XLF seems back to uptrend today after resolving from the symmetric triangle pattern.  It is now approaching to the breakdown level at ~14.85 and may very likely go above it shortly.  However the massively resistance at 15.4 still looks quite strong.

Over the short term, some technical indicators on intraday charts are overbought or will be so if the market goes up again.  The volume in recent weeks were declining, which is also a bearish sign.  A pullback around this level will be necessary and healthy, and it will not be an evidence of hypothesis down leg.

Summary of market outlook: market is bullish, and the trend is still up over all time frames.  However, there may be risk of possible pullback in the short term.

Market update

The market pulled back more today.  The volume increased a little bit, but the volatility spiked up (see VIX daily).  This is the second consecutive down day, the short term trend is obviously down but it is interesting to see how resilient the intermediate term uptrend is.  On the bright side,

• the market is close to overbought in the short term, and there is a few positive divergence on the intraday charts (see SPY 30min and SPY 15min).
• Although the technical indicators on the daily chart start to point down, there is no lower low at the moment on major indices.
• The unusually high TRIN often causes strong bounce back up on the next day.
• CPCE and CPC still look neutral to bullish, at least there is no significant concern.
• The rally on US dollar will meet resistance on MA very soon and we have to see if the big downtrend is really reversed or not.
• The pullback on crude oil is approaching to a support level, we are not sure if this level will break.

However, we should be very cautious to the giant rising wedge, negative divergence, and sell signals on intermediate term trend (see SPX Intermediate-term Trading Signals).  A lower low is made on SPX daily chart will be an evidence that the uptrend is materially changed and the basic strategy should be changed.  At the moment, I doubt if it will happen.

Summary: both intermediate term (in term of technical indicators) and short term trends are confirmed to be down; however in the short term the market may bounce back up.

SPX hourly (my wild guess is to kiss back 1075-1080 at least)

  XLF hourly (unless the resistance is taken, the rally is gone)

XLF daily (more pullback? but it’s still higher high and higher low)

US Dollar daily (see if the magic MA resistance will work again)

Crude oil daily (test the support?)

Market update

Today the market went up again with decreasing volume.  The trend in all time frames is still up, however it’s important to check if the market is in distribution or not.  At bull’s side, the market is up and there is no sign of trend reversal at the moment.  At bear’s side, negative divergence on several technical indicators on SPX daily haven’t been resolved since August, and the rising wedge is still there.  On the SPX hourly chart and other intraday charts (see SPY 30min, SPY 15min charts), negative divergence is also significant.  The market breadth doesn’t looks so strong especially in the afternoon.  The TICK and TRIN indicators were neutral to a little bit bearish, and the end of day action looks bearish.  VIX has been up a little from all year low but it’s still oversold. Financials dropped below 15.4 where it broke out last week. Therefore, a pullback in the short term will be expected.

SPX hourly XLF hourly

However, the market outlook in the intermediate term is still promising.  The important support level of US dollar is broken and the next support is still far away.  Crude oil has got out of the consolidation, the rally is resumed.  Major pullback on the gold price seems unlikely at the moment.

US dollar daily Crude oil daily

Summary: short term the market may have a moderate pullback.  However the trend is still up.

Market Update

The market is going up on decreasing volume, which could be bearish.  Today SPX tested the previous high but couldn’t break it.  The financials seem strong still.  The profit-taking near previous high was strong, but people were still eager to buy any dip, so SPX didn’t even drop in last Friday range which seems bullish.  So far the market is neutral, there are a few negative divergence on SPY 30-min chart but it is not a reason of pullback.  The decreased NYADV (see NYSE - Issues Advancing) seems unhealthy though.  If SPX breaks up 1080, a new round of rally will be started, otherwise a pullback is still possible.

SPX hourly

US dollar and gold: it seems to me that the most significant market movement is the upside breakout of gold which in turn confirms the downtrend of us dollar.  In the following two charts, the trend is very clear: US dollar will drop deeper and gold will continuously go higher.

gold monthly us dollar daily

The crude oil is still in consolidation.  However, the big trend will be up considering the weakening US dollar.

Crude oil daily

Emerging market: the rising wedge is unresolved and a pullback is due.

EEM daily

Market Update

After four consecutive down days, the market recovered quite well today.  The NYSE up/down volume ratio was 8.97 and almost qualified for a major accumulation day, the volatility decreased dramatically (see 2.0.0 VIX daily).  On SPX intermediate-term chart, all intermediate-term signals are pointing down, and the giant bearish rising wedge seems broken. On SPX:CPCE chart, broken trend line confirms the intermediate-term down trend (however we have to keep in mind that this signal doesn’t tell how long the downturn will last), at the very least the pullback will last for a while. 

Although the total trading volume wasn’t strong enough to judge whether today marks a short-term reversal, personally I feel that the market is likely bullish over the short-term which can been seen on CPCE and very bullish CPC at 0.80 (refer to 2.8.1 CPC).  If the market gaps up tomorrow and reaches 1050+ with increasing volume, the short-term trend should be considered as reversed to up.

Financials seem bullish today.  The nearest resistance is at about 14.8.  Should it break it with strong volume – which seems not a problem – the down trend will be reversed.

SPX hourly XLF hourly

Finally, keep an eye on US dollar.  For several months, it couldn’t break up EMA34 and so far the downtrend has not been stopped.  It is hard to say if it’s good to see a new swing low, but I suspect the market will at least look bullish if this becomes true.

US dollar daily

Summary: long term is still bullish – technically; intermediate term is downtrend, but it may get reversed quickly; short term is bullish.

Market Update

The market rallied after several gloomy days last week, the NYSE up:down volume ratio was quite strong.  Although the total trading volume seems a bit weak, the uptrend is more likely resumed.  On the SPX short term trend daily chart and the following SPX hourly chart, today’s rally has validated the ascending trend line and channel if there is no sell off in the coming days.  Regarding the intermediate term trend, we can see on the chart that negative divergence on RSI/STO/volume/ChiOsc/MACD has not been corrected yet, the market movement is still confined in a giant rising wedge, however there is no doubt that the primary trend is up.  Over the short term, the market looks bullish and there is few signs of overbought.  If the uptrend continues tomorrow, the pullback will be confirmed to be over.

SPX hourly

VIX dropped 2.85%.  This is quite positive.  We have yet to see a new low in VIX as the market goes higher.  On the other hand, CPC (put/call ratio) is relatively high, which may indicate people are not extremely optimistic to the near term market.

The crude oil is bouncing back a little bit but it’s unclear whether the consolidation is over before decisively standing above $68.  US dollar is not going down while the financials rallied dramatically.  To me this seems a little illogical, let’s see if US dollar goes south in the coming days since the trend reversal on XLF is very clear.

Summary: the intermediate term uptrend will likely continue for a while.  Over the short term the market is still bullish.

Market Update

The market consolidated a little bit today, and the volume is significantly lower than the last week.  Usually pullback on low volume is healthy.  On the SPX weekly chart, all signals are pointing up, especially the volume in the last week when the market broke the resistance at 1044 was noticeably higher than any previous weeks.  Therefore, it is no doubt that the intermediate term trend is up.  With the primary trend keeping in mind, let’s speculate how likely we will see a decent pullback.

On 0.0.3 SPX Intermediate-term Trading Signals, negative divergence on RSI, STO, and MACD has not been resolved yet.  Bearish rising wedge is still there.  However, none of these signals are confirmed and won’t necessarily cause market crash right away.

On the SPX hourly chart, the level at 1038-1040 is a strong support and should hold any recent pullback before making a new high.  If this level is broken this week and the market doesn’t come back, we should look forward to the change of intermediate term trend or at least a larger pullback.  In addition, recent drop seems like a bull flag, and quick upside breakout will lead to resume of rally.  Today’s market breadth look very healthy and there was no panic at all, CPC closed at a very bullish range (refer to 2.8.1 CBOE Options Total Put/Call Ratio).  The end of day pattern seems like accumulation.

SPX weekly SPX hourly

QQQQ is under consolidation and the lower range supported well so far.  Financials are pulling back with decreasing volume, and this seems healthy although daily chart has unresolved negative divergence on MACD.  Before 14.8 support level is broken, no need to worry about the downside risk.  The bounce on US dollar doesn’t last long so the broad market may not be impacted.

XLF daily

Summary: intermediate term trend is up; near term market will likely be bullish.

Market Update

After last Friday’s consolidation, today the market gapped down but closed at a new high with decent volume.  In all timeframes, the trend is still up although negative divergence can be seen on many technical indicators (see 0.0.3 SPX Intermediate-term Trading Signals).  Although the giant rising wedge looks a bit scary, the up trend line has been tested three times and it remains intact.  As mentioned many days ago, the volume between the current level and 1200 is very thin thus the uptrend may not get much resistance.  Note that the SPX weekly chart shows a confirmed header and shoulders pattern.  On the intraday chart, the market gets a little bit overbought and negative divergence on RSI and MACD could cause a pullback in the short term.

SPX hourly

Financials were very bullish today.  XLF may not make a new high very soon because of overhead resistance and negative divergence formed on the chart.  However, the uptrend seems being resumed and the breakout of the consolidation region between 13.7~14.8 could be violent.

XLF hourly

On the other hand, US dollar and crude oil do not look optimistic to me.  If the oil price goes further down and dollar bounces back, the stock market will suffer and the finacials will also pull back significantly.

US dollar futures  Crude oil futures

Summary: intermediate term bullish but be cautious. Could see a pullback in the short term.