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.