Friday, May 23, 2013

Thursday’s post had some S&P 500 (SPX) downside targets, most notably the SPX 1590-1600 area. Since the current assesement is for further downside, the chart above has some retracement areas where bears can re-short. A steadfast move above SPX 1670 would require a re-think on the bearish outlook. An Elliott wave one on the five minute chart is at 1672.96. An upside break above that would certainly damage the bear case. Also, DeMark TD propulsion, which determines the probability of higher prices if the threshold level is broken to the upside is sitting at SPX 1671.20. Couple these two together gives traders a defined bull/bear line. A DeMark TD Sequential look at SolarCity (SCTY) and the Market Vectors solar energy etf (KWL). I’m trying to determine if there is enough juice for another higher high for SCTY. Under TD Sequential, it appears it is in the late stages as one more higher high should complete a “perfected” 9 count TD Sell Setup. Also, there is a competing count with TD Sell Countdown currently at bar 7 and could complete in close proximity of the “perfected” TD Sell Setup. The KWL chart has already produced a 13 so the solar group as a whole should be consolidating or correcting. While SCTY can achieve another higher high, it will just be entertainment value as I do not see the risk/reward in it at the moment. 

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If my assumptions are correct, SPX should see the 1670 area just to reject it and have prices turn south. If the four hour SPX chart shows a TD Sell Setup at the same time, that will help hone in on the potential turn. If SPX consolidates above 1670, that’s a bullish sign, which sounds almost unbelievable. ( updated after close of market )  

Thursday, May 23, 2013

Since the start of the last November bull run, every S&P 500 (SPX) selloff was met with buyers at the 3% level. It’s like some kind of buy switch when the SPX is confronted with that level. Knowing that, it is a good period to re-evaluate where the SPX wants to go from here. Given the nature of the bearish reversal which has turned global, I am expecting the SPX to eventually turn lower after a period of digestion. The first support is at  SPX 1590-1600 area where there are enough confluent factors besides 1600 being a round number. What is helping me navigate the short term direction, the e-mini S&P 500 futures (ES_F)  has perfect equidistant parallel channels. It’s already broken through the midpoint. If this selloff is real, it would be proper for ES_F to stay in this channel. 

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Not many scared bulls which is giving more incentive for lower prices. Not concerned if yesterday was a major top or an A/B/C correction at this point since I can make a case for both. Outlook is bearish until signs say otherwise. (updated mid trading day)

 

 

Wednesday, May 22, 2013

To keep an overall DeMark TD Sequential perspective on the S&P 500 (SPX), the monthly have recorded back to back 13′s. The weekly has recorded a 13 two weeks ago, and the daily has recorded three signals since mid-April. Also, the next TD trend factor at SPX 1679.46 is very near.  The four hour chart has seen the 9 count TD Sell Setup and it’s close to finishing a 13 count TD Sell Countdown. The whole time frame confluence is indicating this spectacular uptrend is about to end. 

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Positioned neutral but will look to find a point to during the day to get short again as I continue to feel the market is vulnerable. It’s all about Bernanke his intraday testimony.      ( updated before market opening ) 

Tuesday, May 21, 2013

On the four hour S&P 500 (SPX) chart, the market did a couple cheap down drafts but nothing impulsive. While the 9 count TD Sell Setup recorded at the end of last Friday, the TD Sell Countdown is still active. Since the SPX is currently trading above bar 9′s high of 1667, everything remains on the table for short term direction.A look at Netflix (NFLX) shows a daily chart nearly void of TD Sequential. Since early May, it looked as though a 9 count TD Sell Setup was about to be recorded but, bar 6, as shown above, produced an outside day aka bearish engulfing candle. That’s a sell signal in itself and perhaps a 9 count TD Sell Setup will not complete. Looking at the NFLX weekly chart, there is more of a definitive DeMark price exhaustion signal. A 13 count TD Sell Countdown will likely record this week which supports the daily bearish outlook. Touching upon AAPL again from the May 16th post,  it appears the TD Buy Setup has been interrupted. This removes the high probable bounce that was outlined then. Until the respective TDST levels are taken out or a new TD Setup is recorded, AAPL is considered directionless. 

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Tomorrow will have Fed chief Ben giving his economic outlook to Congress. Given the emphasis on QE tapering, this event should be viewed as big as a normal Fed monetary policy meeting. For index positioning, I will revert back to neutral on a close above SPX 1667 or intraday 30 minute close above 1673.  ( As I type this, SPX is trading at 1672.70. Updated mid trading day)

 

Monday, May 20, 2013

Even a short term pullback is elusive. The S&P 500 (SPX) has made an another high from the completed TD Sell Setup on the four hour chart. Since there is no immediate downside commitment, the 13 count TD Sell Countdown is also in consideration. If the 9 count TD Sell Setup still matters, trading under the SPX 1667 is a must by the end of the day. If the selloff as suggested by the four hour chart is short, or non existent, then the closest price objective for the SPX is at the 1679.46 level. The Russell 2000 (RUT) has already surpassed both the 998.30 TD trend factor level and the round number 1000 level without any initial concerns.  DeMark buy signs are showing up on the gold complex as represented by the SPDR gold etf (GLD). Looking ahead, the undercut of the GLD 134.60 TDST supports the notion the recent low of 130.51 will eventually be taken out. The TD Buy Setup is currently on the 8 count and for the TD Buy Countdown, a possible 13 count today.  Outlook is a bounce here or maybe tomorrow and then see what sticks on the upside or the short term.

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With price target after price target being taken out and an endless supply of final Elliott wave counts, maybe the question should be how vertical can the equity markets go. Records are being broken everyday. Will flip back to neutral if SPX 1667 holds by the end of the day. (updated mid trading day)

Friday, May 17, 2013

The markets recorded a daily bearish harami candle yesterday but just as every other bearish candles of late, equities cannot follow through to the downside. At this point, a perfected 9 count is still pending on the four hour time frame for the S&P 500 (SPX). This requirement will be met when the SPX at least matches the prior high of 1661.49. The intraday high so far is 1660.74 which is close but technically does not qualify. Here are the weekly TD Sequentials for the major indices expanded out to include 2012. The monthly counts can be viewed from the May 1st post. The SPX recorded a 13 count TD Combo Sell last week and the Nasdaq (COMPQ) will record a TD Combo Sell this week. The Russell 2000 (RUT) recorded a 13 count TD Combo Sell two weeks ago and if the market still has spark, TD Sell Countdown is two weeks away. The confluent nature of all timeframes suggest price exhaustion is in the eye of the storm. 

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Back to neutral again and the game plan going forward is I’m giving the SPX the benefit of the doubt and expect the four hour TD Sell Setup to follow through and pick off the old 1661.49 high. I will consider it the last high bar and will seek out a reversal late today or next Monday. If the high has not been taken out by the last hour, I will flip back to bearish just by concluding the market is following the same script as yesterday where it spent much of the day in sideways mode before the sell orders were invoked. (updated mid-trading day)

Thursday, May 16, 2013

From the four hour S&P 500 (SPX) chart above, yesterday’s high at SPX 1661.49 has not been taken out. As long as that is the case, a bearish price flip on the SPX daily chart will become a possibility in the coming days. This will give hope to the bears which has been running thin lately. I have been tracking the TD Sequential four hour chart since June of last year and it has a pretty good track record at the respective turn points. However, it has become more fickle lately since the mid-April melt-up. Currently there are two competing counts between TD Sell Countdown and TD Sell Setup. Both are currently on an 8 count but I more focused on the TD Sell Setup that may come today. A “perfected” TD Sell Setup will occur with either bar 8 or bar 9 matches or exceeds the high of SPX 1661.49. If this does not occur today, then it could occur tomorrow, Friday. Update for Apple (AAPL). Apple has dropped enough where the initial wave higher from the lows of 385 has been halted. It’s not officially dead since the 61.8% Fibonacci level has not been breached yet but the odds are better for a consolidation period. From the chart above is a hypothetical of what may come next week. If a 9 count TD Setup can occur around the TDST support at 392.5, then there would be a reasonable chance AAPL can bounce. We’ll keep an eye on this. 

The equity markets are very vulnerable so there would not be any disappointment if a “perfected” 9 count is not recorded on the four hour time frame. The only concern from my positioning is if the market decides to rip even higher. (updated mid-trading day)