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.