2009-04-09 Market Watch

Today the market jumped up massively and formed a major accumulation day.  On the following wave-counting chart, note that: wave B is confirmed to be completed and SPX is in 3 of C now; if this is true, then the next target is ~880; assuming the length of A and C are the same, the upside target is 946+ which is close to the 200-day moving average at 993.73; EMA50 at 805.75 is likely a support instead of a resistance now.

SPX daily (inversed) close up

On the following weekly chart, one can see that the volume keeps declining while the the market got higher and higher during the past five weeks. This is not a sell signal but seems like a bear market sign.

SPX weekly

Note the MACD on the daily chart: the current buy signal was confirmed on 12 March; currently the signal is still buy; once the signal line crosses over the MACD and gives a sell signal, one can start to short.  In the past there were several days of delay however the reward/risk is huge.

Here is ES hourly chart.  Assuming ES is in 3 of C, the target will be 875.  Moderate pullback is possible but significant downturn is unlikely.  The previous three pullback setup is: (1) RSI got overbought, MACD gave sell signal; (2) small pullback, may or may not touch EMA50; (3) rally and formed a higher high; (4) at the same time both MACD and RSI showed negative divergence; (5) MACD gave sell signal, pullback started.  The beginning of the new trend is marked by a few times of RSI oversold and buy signal on MACD.  Currently there is no MACD sell signal or any negative divergence, so the uptrend will continue for a while.  If it pulls back to 830-835, that will be an excellent entry before the next significant downturn.

hourly chart 2-hour chart

XLF seems a good buy on pullback at $10.  FAZ has no value to trade and has become a falling knife.  Get it out.

XLF hourly FAZ hourly

Miscellaneous:

SKF daily SKF hourly  GAME OVER

VIX daily: volatility is declining.

EUR/USD daily hourly: downtrend will continue for some time.  Where will the stock market go?

RKH daily: broke out with good volume.  Should pullback a little bit and continue the rally.

DXO hourly: The trend is still up,  and the upside resistance will be take out.

2009-04-09 Market Watch

Wave counting: it’s still the same.  SPX is either in wave 2 of C which means the rally has started, or wave c of B which means the correction may last for a few more days.  Unless ES 848 is taken out, the second scenario is still possible especially when the technical indicators favor this possibility.

On the hourly chart, it seems the pullback is not completed before diving below 810.  EMA crossover system almost gives a buy signal however further rally is necessary to confirm it.

SPX hourly SPX EMA crossover

On the ESM9 2-hr chart, one can see that the resistance zone is actually very strong, and the futures reversed during the midnight trading session instead of approaching the lower edge of the ascending channel.  810 is another important level on the chart, getting close to it will bring ES to the resistance zone again and possibly touch the target set yesterday.

XLF and SKF: financials didn’t move much, however the upside breakout with increasing volume is still more likely.  SKF is right at the support/resistance and has broken out the falling wedge, but this may not mean anything.

XLF daily SKF hourly

Oil: the pullback is not over yet on the daily chart.

daily CL hourly

Gold: it kissed back the breakout level and turned back down.

daily

Market breadth: today the market breadth is much stronger than previous two days in this week.

2009-04-07 Market Watch

Today the market pulled back further and all sectors have a moderate correction without making a significant lower low.  Simply judging from the daily chart, the up trend is intact and the intermediate trend should continue.  The EOD sell off finally came back, which makes me wonder if institutional buys become more cautious and may be unconfident to the coming days.  The after-market bottom-fishing is also rather weak compare with previous days.

Sector glance

Wave counting: currently the preferred counting is the primary wave (2) in the form 5-3-5 corrective wave, in other words, SPX is in wave B correction and the wave C will be started a few days later to reach the final top.  For the target of the pullback, note that: MA 50 is at ~790; the previous swing low is at ~780.  Both levels provide strong support.  Assume this counting is correction and the length of wave C is no less than wave A, then the final target will be 946.  With the assumption of the intermediate term up trend, the first warning will be SPX under 780, and 770 will be the last fence of bulls.

SPX daily

On the following chart, it seems the target of the pullback would be 810 or below.  However the consolidation will continue before the trend is clearly and materially reversed to the down.  The “SPX EMA crossover” chart shows a sell signal but I suspect it won’t last very long.  Note that on 1.0.3 S&P 500 SPDRs (SPY 30 min), the gap has been filled, STO is approaching to the oversold level, however both fast and slow MACD give a sell signal.  Tomorrow I expect a further pullback, U-turn, and steady rise at the end of day to finish the wave B of the primary wave (2).

SPX hourly SPX EMA crossover.

XLF and SKF: On the daily chart, XLF does not seem being weakened.  The upside resistance is still not taken out however it’s necessary to take immediate action once it breaks out.  SKF hourly chart shows a falling wedge pattern, and it closed right at the resistance.  It’s going to have a big movement very soon but let’s hope the direction is at the upside.

XLF daily SKF hourly

Crude oil: the daily chart still looks bullish since it’s right at the ascending trend line and the support level.  If the crude oil sells off and dives under $45, the intermediate term rally of the broad market could terminate prematurely.  On the hourly chart, it seems the futures is at a weak support and will approach to a more sensible one by dropping $1 further.

daily CL hourly

US dollar: the rise of US dollar is no good to the stock market.  On the daily chart of US dollar index futures, the short-term descending trend line is being challenged, and the technical indicators show an uptrend.  The key level is at 85.64-85.65, which is where it collapsed and kissed back.  By taking out this overhead resistance, bears will control the entire market firmly.

daily hourly

Gold: The one day wonder might be a sign of worsened sentiment of the early stage of kiss-goodbye.  The trend is down.

Market breadth: the market breadth data (UVOL/DVOL, ADVN/DECN) shows that today’s market is weaker than yesterday.  Note that 2.8.0 CBOE Options Equity Put/Call Ratio is at the edge of the breakout, any further drop of the market could possibly cause the rise of CPCE and signal the intermediate-term top.  2.8.1 CBOE Options Total Put/Call Ratio has no firework setup, and this is encouraging for bears.

2009-04-06 Market Watch

   SPX daily wave counting: no change.  Here is the preferred counting on ES.

SPX hourly.  Target of pullback (if it does): 800-810

XLF daily.  Breakout should happen very soon.

SKF hourly.  Wait for complete breakdown or upside breakout of the falling wedge.

Crude oil daily.  See if it can reach $45 and bounce back up.

Gold daily.  Down trend started.

TAN daily.  It may have a pullback before breakout at the upside.