General Market Analysis

General Market Analysis contains charts and commentary relating to all aspects of the financial markets including: US and Global stock and bond markets; gold & commodities; bonds & currencies; key market moving stocks; etc…

Apr 182014
 

Here’s some interesting time symmetry that I noticed while looking at the very long-term charts of the US markets. This is a 20-year chart of the $OEX (S&P 100 Index)*. I decided to use the $OEX vs. the $SPX on this chart mainly because at the end of the 2000-2002 bear market, the $SPX managed to eek out a marginal new low in Mid Oct 2002 following the Mid-July reaction low while the $OEX bottomed on that July low, ending the bear market and kicking off the 2002-2007 bull market. I drew a horizontal line from the beginning of the steep bull run that kicked off in Dec ’94, which defined the most powerful leg of the ’90-’07 secular bull market. That final 5.25 year run was essentially it’s own cyclical bull market that kicked off following a yearlong deer market. The line terminates at the end of that bull market in March 2000. I then copied two exact replicas of that line (which would be identical in time, of course) and placed those at the beginning of the ’02-’07 bull market and the ’09-current bull market.

$OEX Bull Market Durations

$OEX Bull Market Durations

Interesting to see that not only are these three bull markets defined by clear uptrend lines but the previous two were essentially identical in duration. If history were to repeat itself, this bull market would have about 5 more weeks before printing the final top. I will say that is not Continue reading »

Apr 172014
 

Not much new to report as the market continues to bounce after hitting the initial downside targets on the daily charts. With prices quickly approaching my second & preferred bounce target, I plan to book partial or possibly full profits on the long side hedges and possibly start strategically adding back short exposure. Although T2 (86.80) is my preferred bounce target, I am nearly as open to a continued move up to my 3rd and final bounce target (T3 at 87.60), although I would expect a decent reaction off the T2 level before we get there (assuming that we do). If & when prices manage to take out the T3 level by a decent margin, I will share my thoughts at that time.

QQQ 60 minute April 17th

QQQ 60 minute April 17th

For those with a long-term bullish view who added long exposure around the T4 level, consider raising or trailing stops in order to let your winners ride while protecting profits, as new highs in the market is certainly a possibility. For those who share my longer-term bearish outlook, there are plenty of Active Short Trades that will be offering objective short entries or add-ons to an existing position as they bounce back to resistance. Finally, for those not sure which way to be positioned during all this recent volatility, staying on the sidelines (in cash) is probably the best trade that you can make at this time.

Apr 152014
 

Just to clarify or expand on the previous 60 minute QQQ chart & comments, we did get a 60 minute close below the recent lows in the Q’s but by the slightest margin. Much more importantly, the three broad US indices that I focus my analysis on; the $SPX, $NDX, & $RUT are all still sitting essentially on or above key support (my long-standing first downside targets on the daily charts). Of course support is support until broken and although I still favor prices ultimately breaking below these support levels, at this time I continue to favor a bounce off the initial tag of these levels. As I’ve also repeatedly stated over the last several trading sessions, my degree of confidence on the near-term directions of the markets (and hence, any possible bounce) is not very strong and so my preference remains to keep things light by hedging up close to a market neutral portfolio (taking some long exposure to offset a large number of swing short trades that have yet to hit my preferred targets).

The daily charts of the $NDX, $SPX & $RUT below show the $NDX basically still trading at my first target level with both the $SPX & $RUT still slightly above their respective first downside targets, which are likely to be tagged before any meaningful bounce. If that happens, the $NDX would likely go slightly lower & thereby overshooting this support level by a relatively small margin. Only a solid break below these target/support levels on all three indices would convince me to remove my long hedges as that would likely open the door to a move down to the next target levels. As always, the live links to these charts are accessible from both the sidebar on the Homepage as well as the Live Chart Links page.

Apr 152014
 

The Q’s continue to bounce along support with bullish divergences in place. Until/unless we get a solid break and 60 minute close below the recent lows, this is still an objective area to book some short-side profits and/or take some long exposure (pure-play or hedging).

QQQ 60 minute April 15th

QQQ 60 minute April 15th

Apr 142014
 

My 4th & final intermediate-term target was hit on Friday. That, coupled with the bullish divergences in place on the 60 minute time frame, means that the 1% gap up today was likely the beginning of a larger counter-trend rally. Blue horizontal lines mark my bounce targets with T2 (86.80) my preferred target at this time & T3 (87.60) my current final target. Only a move 1% or more below Friday’s lows will negate this scenario. Keep in mind that I took us a while to get down here and so it might take several days, possibly weeks, to retrace a third or half of the move down from the March 7th peak in the $NDX/QQQ (my 2nd & 3rd targets come in around the 38.2% & 50% Fibonacci retracement levels of the entire move off the highs). As such, the market updates might be light for a while unless anything significant develops.

QQQ 60 minute April 14th

QQQ 60 minute April 14th

Just to clarify, a preferred target on RSOTC is the profit target on a trade which hits the “sweet-spot” on the R/R curve whereas the final target is the level at which the R/R on the trade no longer remains clearly skewed in the direction of that move. Typically, but not always, the final target is the level at which I believe a trend reversal is likely as well. I will often book full or partial profits at my preferred target while I will always book full profits at my final target, assuming that I still hold some or all of the position.

 

 

Apr 142014
 

As of now, I have two levels on the QQQ (Nasdaq 100) that I am targeting. My preferred bounce target is 86.80 with a minor resistance level at the 85.30-85.35ish level that may or may not come into play.  These targets are based upon several factors including horizontal resistance levels & Fibonacci clusters but I have to say that my degree of confidence in the near-term direction of the market is not high enough to warrant positioning aggressive long or short & therefore, I plan to keep most or all of the QQQ long hedges taken before the close on Friday until the 86.80 level is reached -OR- both the $SPX & $NDX make an impulsive break below Friday’s lows. That plan can change at any time but for now, I’d like to keep things light and just watch the market action as the dust settles from the recent sharp sell-off. I’ll post some updated index charts after the markets opens today.

Apr 112014
 

We now have that lower low that I was leaning towards in the $NDX/QQQ, just like we had when the market bottomed at this support level back in early February immediately before prices exploded up to new all-time highs (see arrows). Although I don’t expect a bounce of that magnitude, nor am I even sure that we will get one, I took precautionary measures to partially hedge my remaining short positions here buy going long the QQQ (via various leveraged derivatives). My plan is to see how the markets follow through early next week before either moving back towards an aggressive short position or increasing my hedges and further reducing my short exposure.  Updated 60 minute chart below.

QQQ 60 minute 2 April 11th

QQQ 60 minute 2 April 11th

Apr 112014
 

Just to elaborate on my previous market comments, any bounce that may or may not materialize around the current support level on the Nasdaq 100 is expected to be a counter-trend rally in what I still believe to be the early stages of a much larger downtrend. Today the $NDX hit the first of four downside profit targets that have been listed on the $NDX live daily chart for some time now. My expectation at this time, which could change depending on how the charts play out going forward, is that before all is said & done, the $NDX will have fallen to my 4th & final (at this time) target which comes in around the 3150 level or the primary uptrend line on that chart, whichever comes first. That could take as long as several months or a short as several days, should the nearby support levels give way quickly.

With that being said, in order to most effectively utilize the trade ideas on RSOTC one must align the entries & exits of those trades with their own unique trading style and typical time frame. For example, very active, short-term traders like myself might opt to micro-manage a swing trade listing multiple price targets by booking profits as the earlier targets are hit (assuming the short-term charts confirm that a bounce is likely) while re-entering the position on the bounce with the intention of swinging the trade down to the final target(s). A less active, longer-term swing or trend trade might opt to ride out any short-term counter-trend bounces in the position with the intent of holding out for the 3rd or 4th target.

The bottom line is that trying to time all the minor swings in the market is not always easy and typically something best attempted by more seasoned traders. Those traders or investors that are longer-term bullish at this time should focus on initiating or adding to positions on pullbacks to support or breakouts of bullish chart patterns. For example, I’ve recently highlighted how well the 40-week EMA has defined major bull and bear trends in AAPL (Apple Inc.). After breaking down from the recently highlighted symmetrical triangle pattern on the daily chart, AAPL has now fallen to the 40-week EMA (which is the same as the 200 EMA on the daily chart), thereby offering an objective long entry, again for those who believe that the current correction has most likely run it’s course.  Those with a longer-term bearish view could wait for a solid weekly close or two below the 40-week EMA in order to establish a swing short position on the stock.

AAPL weekly April 11th

AAPL weekly April 11th

Again, we may or may not get a tradable bounce in the $NDX from this current support level and as such, I plan to update some of the trade ideas that still offer an objective entry for those looking to add any long or short exposure at this time. As I might be updating a number of trade ideas today, email notification may not be sent out on each update so best to check the site throughout the day or over the weekend if looking for any trade ideas at this time. On a final note, for the most part, I try to avoid establishing any new positions on a Friday, especially towards the end of the day due to the extra overnight risk associated with weekends. Based on all the volatility lately, chances are that the market is going to gap one way or the other on Monday and that gap could be sizable.

Apr 112014
 

The fourth & final near-term target on the previously posted string of QQQ 60 & 120 minute charts has now been hit. This is also the same as the first target that has been listed on the $NDX daily live chart for a while now. Therefore, the odds for a bounce from or around this level are elevated at this time. Adding to the case for a bounce from these levels is the fact that we have some pretty steep potential positive divergences forming on the 60 minute time frame, a criteria that I look for during a market correction to signal the likelihood of a meaningful (tradable) bounce or end to the correction & resumption of the primary uptrend.  This potential divergence (at least in my book) will be confirmed once we get a bearish crossover on the MACD, thereby putting a higher low in place against a lower low in prices on the QQQ (and a higher low in the RSI as well).

As such, I have reduced a considerable amount of short exposure and may take some longs in order to hedge or possible go net long for a bounce. However, it wouldn’t surprise me to see one last thrust below this morning’s lows before a meaningful rally takes place. The possibility of a continued sell-off towards my lower price targets on the daily charts can’t be ruled out at this point either. Translation: Although I am leaning towards a bounce from around current levels, my degree of confidence isn’t very high and as such, I am moving towards a more market neutral positioning until the dust settles and I have a better read on the next direction of the market. Also, my best guess for a “micro-call” on the market action today would be for one more thrust to a marginal new low today (below the LOD put in shortly after the open today) before a meaningful rally in the market.  Again, that’s just my best guess and calling all the minor zigs and zags of the market can be difficult.  Best of luck in your trading.

Updated 60 minute QQQ & the daily $NDX charts below.         Click here to view the live daily chart of the $NDX

QQQ 60 minute April 11th

QQQ 60 minute April 11th

$NDX daily April 11th

$NDX daily April 11th

 

Apr 092014
 

Today’s late day rally, which was sparked by the release of the FOMC minutes at 2pm ET, not only stopped cold literally one cent shy of my former downside target (T2) from my QQQ 60/120 minute time frame (remember: support, once broken, becomes resistance) but it also stopped to the exact penny at the previous posted former support, now resistance level at 187.15 on the SPY 60/120 minute charts. Although the potential bear flag highlighted on the 60 min SPY chart posted this morning did not pan out (nor did it come close to triggering a sell signal & hence, the pattern was not validated), the more bullish of the two scenarios from this morning’s QQQ 120 minute chart is playing out so far with prices peaking exactly at the top of that scenario (the former T2 level at 87.88).

Below are the previously posted 60 & 120 minute charts for the SPY & QQQ along with the updated end of day charts.  As stated earlier today, there’s still plenty of upside left before the current downtrend is called into jeopardy and with the markets closing right at resistance, we’ll just have to wait until tomorrow to see if these scenarios continue to play out with the markets moving lower tomorrow (even allowing for a possible gap & crap at the open which would briefly overshoot these resistance levels).

Whether or not this was the end of a counter-trend rally or not, as only time will tell, one thing that I feel strong about is the fact today’s bounce back to these resistance levels, which also lined up perfectly with the 61.8% Fib retracement of the prior move down in the QQQ, was about as objective an area to add short exposure as it gets (assuming that one’s bias is bearish, of course). For those who are bullish, my suggestion would be to wait for at least a solid move (and 60 minute candlestick close) above these level before adding much more long exposure. Although I added a fair amount of short exposure into the close today, going forward my preferred will be to add any more short exposure on market weakness, not strength.

s2Member®