Thursday, April 17, 2014

Thursday is the last trading session for the week, as Friday is an exchange holiday. Options expiration, which would normally be due tomorrow, is moved up one day to Thursday to compensate for the Good Friday observance. 

It’s not a perfect picture situation when an on-going TD Setup is interrupted prior to a “9” count. That’s what happened yesterday when the Nasdaq and Russell 2000 did not record a “9”, erasing the previous active TD Buy Setups. As an aside, the Russell 2000 mini futures (TF) did manage a TD Buy Setup @9. Therefore, it may serve as reference at some point. 

Between finished TD Setups and alternating price flips, all characteristics of an indecisive market, the next best method is to locate even shorter timeframes for reference points. Since the S&P 500 (SPX) 60 minute timeframe is the most expressive in revealing all the TD Sequential counts, it becomes the primary chart to determine the market’s next intention.  If this is a “sell the rallies” moment, then it should commence early in the session. Also note the weekly SPX bullish price flip stands at 1866.52, doable for today. Charts below. 


S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL

Neutral until further notice to avoid potential whipsaws.

ImageImageOn the 60 minute SPX (top chart), there is a qualified TD Sell Setup @9 just under the 1869.66 TDST Resistance. The interpretation is the SPX should fail at this point and at least retest the lower boundaries of the range. A successful retest above 1842.98 would keep the current TD Sell Setup active. Movement above the TDST Resistance level would necessitate focus back to the 4 hour SPX chart, currently in an active TD Sell Setup @3.  


S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

Back to bearish if SPX closes below 1830.61, next Monday’s price flip. 

ImageNo call for an official bullish outlook unless the last SPX “13” count recycles higher. 


S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1866.52 (updated April 14th).


S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).


EQUITY SETUP UPDATE: APPLE (AAPL)

Holding support. 

ImageApple’s recent history of respecting the TD Setups on the daily bodes well to those bullishly inclined. A qualified TD Buy Setup @9 trading above the 501.53 TDST Resistance level sets up another good risk reward long play. 


 

 

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Wednesday, April 16, 2014

ImageThe overnight official GDP for China printed 7.4% for the year. Depending on who you ask, the numbers are completely distorted, and the print should be closer to 5.7% when annualized from quarterly numbers. While it is a conundrum for China to prevent a hard landing, the weekly Shanghai Composite Index (SSEC) is just a stimulus package away from a breakout if the People’s Bank of China (PBoC) acts. 

Retail sales for China ticked higher to 12.2% from the previous year. Many mid-level shopping malls do have good foot traffic, but the high-end malls are a problem. Citing the IFC mall in Shanghai, it sports the usual high-end stores, but the only visible pedestrians inside are the security guards. Retail workers stand idly with long faces, and the only activity is in the City Super, a grocery store where expats can get familiar food products at ridiculous prices. 

A decent up opening for the US indices. Watching the Nasdaq and the Russell 2000 in particular. They both stand a good chance to finish a full “perfected” TD Buy Setup and may prove to be a better barometer than the S&P 500 (SPX) going forward. Alternating pockets of strength and weakness equates to a sideways market. 


S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL

Neutral until further notice. 

ImageEven if the 4 hour SPX flips bearish, there is probably no value in shorting since the daily timeframes are at price exhaustion levels. 


S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Flip to neutral if the SPX cannot close below 1833.08, and if both the Nasdaq and Russell 2000 close above 4054.11 and 1127.66, respectively.  

ImageImageImageEquity markets are forming at least a temporary bottom. This is evident in the Nasdaq and the RUT, where both indices exhibit “perfected” TD Buy Setups. There is some indecision on future direction since the Nasdaq is trading under the TDST Support at 4057.12 and the RUT is trading above it at 1103.93. 


S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1866.52 (updated April 14th).


S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).


EQUITY UPDATE: TWITTER (TWTR)

ImageTwitter finally broke out of the downtrend just above the TDST Support level at 40.40 with a convincing bullish price flip. It did so with a multitude of over-lapping counts, but the recent “perfected” TD Buy Setup may have been it. The next minor hurdle stems from the 47.44 TD Resistance, and with Twitter’s initiation bullish candle, it should not have any problems breaking it. From a fundamental view, Twitter continues to commit to growth with acquisitions to boost revenue, and key shareholders are refraining from selling their lock-up shares, all supportive to TWTR.


 

 

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Tuesday, April 15, 2014

The viewing of the Tetrad total lunar eclipse or the “blood moon” comes around just a few times every 500 years, making these events a fairly rare occurrence. TD Buy Setups can also fit into that category. The daily S&P 500 (SPX) has not seen a TD Buy Setup since May of 2012, and it would be fitting to see it finally finish off that elusive “9” count TD Buy Setup, possibly tomorrow…maybe with a little geomagnetic help too.


S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH

Back to neutral if SPX cannot close below 1822.11 mid-day or 1815.90 end-of-day.

ImageWhile the 4 hour SPX counts are technically on a TD Buy Setup, the markets are exhibiting selling exhaustion just above the 1812.74 symmetrical 100% Fibonacci extension starting from the 1897.28 high. It would not be too problematic if the 4 hour SPX loses the TD Buy Setup, but it would be beneficial if it can stay aligned with the daily chart, providing more accuracy in determining a tradeable bounce.


 S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Neutral if SPX closes above 1851.96 (updated April 14th).


 S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1866.52 (updated April 14th).


 S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).

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Monday, April 14, 2014

The market selloff since the top 10 days ago has the appearance of an overzealous bullish purge rather than a paradigm shift to a bear market. Expensive momentum stocks are leading lower but cheap emerging market equities are on the upswing, reflecting the market rotational shift to value. However, trading should remain treacherous as markets continue to rebalance the excesses, leading to an uneven 2014.

Earnings will step up the pace and likely drive equities from here. The first few hours will provide some clues on short term market direction, outlined in the Short Term Outlook below:


 S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH

Switch to neutral if SPX closes above 1833.42.

ImageImageThe 2 hour SPX is closing in on bar “9” TD Buy Setup, but it will be negated if the SPX should close above 1830.93 in the first two hours of the trading session. This is the first step in offering clues for stabilization if the SPX is successful. Rather than overcomplicate the trading flowchart, the 4 hour chart will remain the primary chart. Short term bearish momentum will stay intact if the SPX closes below 1833.42 today.


 S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Neutral if SPX closes above 1851.96.

ImageIf the SPX can push under the psychological 1800 level, there is viable price target with the 1761.39 TD Trend Factor aligned near the 200 day moving average.


S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1866.52.

ImageImageImageImageThe SPX is at the weekly inflection point, testing the boundaries of the uptrend held together over a year. With the Nasdaq and Russell 2000 showing considerable weakness, it is probable the SPX will break below the illustrated trendline, providing additional clarification of at least a choppy year.


S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).


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Friday, April 11, 2014

Yesterday’s “land grab” below S&P 500 (SPX) 1840 was a surprise. There were no efforts to buy the market nor any efforts to defend the 1840 support. The break under SPX 1840 is the first major indication to gauge the overall complexion of the market. If the SPX closes under 1841.13 today, the weekly chart will keep the TD Buy Setup alive at bar “3”, and if the SPX has trouble recapturing 1840 throughout the remainder of the month, the SPX monthly chart will record the first price flip since May of 2012.ImageThe above charts are representations of the major indices for the futures markets. Most of the time they correlate closely with their related cash markets. However, the interest here is the raw timing of reversal points strictly on the daily charts. The S&P 500 e-mini futures has shown true accuracy when projecting the reversal points. The TD Sell Countdown @13 and TD Combo Sell @13 were nearly perfect in capturing the initial high and the following marginal high. The Nasdaq e-mini futures decided to run-up into a blowoff top shortly after recording a TD Combo Sell @13. The Russell 2000 futures did not respond as well; though the top was a TD Combo Sell @12, one count short of a “13”. This is an illustration of one timeframe. Adding others and observing confluence of other indicators will be highly beneficial in determining the probability of a potential reversal.

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S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH

Flip back to neutral if SPX closes above 1845.04, the daily price flip. 

ImageIt’s a clean break below the short duration TDST levels. Barring a surprise similar to yesterday, the TD Buy Setup should follow through with a qualified “9”. How it aligns with other timeframes and indicators will help identify a potential bounce. These will be explored next week. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Neutral if SPX closes above 1845.04.

ImageNow that the SPX has broken a widely watched key support, the next three days leading up to a “9” will help extrapolate the longer term charts. 

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1841.13 at the close of April 11th (updated April 7th).

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S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).

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Thursday, April 10, 2014

Sales of European junk debt is turning up some record numbers when it became well known the European Central Bank (ECB) will stand behind the European Union. ECB chief, Mario Draghi, practically mandated “ready to do whatever it takes” to save the euro. That vote of confidence put the weakest eurozone country, Greece, back in the bond market, raising 3 billion euros @ 4.75%. It’s been a long arduous journey for Greece and it’s far from over. In between the troika continuing to prescribe painful austerity measures, bitter feelings among those affected won’t fade away anytime soon. ImageFrom a DeMark picture, the Dow Jones Greece Index (DWGCD), gives the big picture of the unrelenting bear market Greece had to endure. From the monthly chart above, a cluster of monthly price exhaustion signals began to pop up on May of 2011, but it took the very last “13” from TD Buy Countdown, June of 2012, when the market finally found a bottom. Currently, the DJ Greece index is nearing a TD Sell Setup “9”, recording possibly next month. Since it appears the Setup may record underneath the 929.35 TDST Resistance, it is probable Greece is not ready to break out into an all out bull market just yet. 

As for the US markets, the S&P 500 (SPX) 50 point range between 1840 – 1890 is still being respected. It would not be surprising if this spills over to a wider scale through the weekly and months charts in response to factors relating to the quantitative easing wind down. If the SPX does not turn lower today, the next chance for the market to begin testing the 1840 bottom will be tomorrow as the 2 hour SPX and daily charts are confluent. More below. 

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S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL

Flip back to bearish if SPX closes below 1852.14.

ImageImageWhen markets become a trader’s market, TD Setups are more prominent on the charts. If this still matters, the 2 hour SPX chart can record a TD Sell Setup @9 today, paving the way to probe the lower end of the range again. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

Flip back to bearish if SPX closes below 1845.04 -OR-  if all the following indices close below their respective levels: SPX 1865.09, Nasdaq 4127.73, Russell 2000 (RUT) 1153.38. 

ImageImageImageImageTD Buy Setup is still active, but it take a monumental catalyst to the downside for this to continue. What is more probable and it could happen today, “13’s” for TD Sell Countdown can be recorded for the Dow and SPX. One general rule for a qualified TD Sell Countdown is the high of the “13” bar must be equal to or greater than bar 8’s close. “13’s” are close at hand if SPX trades at or above 1872.25. For the Dow, it is 16,437.18. The Nasdaq is currently on count “11” for TD Sell Countdown; it can qualify if 4198.99 is matched. The RUT is currently a non-factor. If these “13’s” are achieved, the next step is to observe if the market is just pausing or reversing.  

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1841.13 at the close of April 11th (updated April 7th).

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S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).

 

 

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Wednesday, April 9, 2014

ImageThe primary currency indicator for equities, US Dollar/Yen cross (USD/JPY), sold off immensely in yesterday’s session, chiefly due to the head of the Bank of Japan (BoJ), stymieing additional stimulus. The USD/JPY selloff (rising yen) has been correlating to equities since it is tied to interest rate differentials, which is part of the carry trade strategy. Bets for a lower yen is currently a crowded trade. If the USD/JPY cross sells under 101.54 and especially 100.74, observe the equity markets if the USD/JPY selloff becomes unsettled. 

ImageThe next graphic is borrowed from the Zero Hedge site. Via Credit Suisse, they provided a monthly chart of an aggressive version of TD Combo Sell, which shows a pair of selloffs correlating with a recorded “13″. Their Chicken Little bias aside, the sheer amount of information Zero Hedge provides daily is impressive. Here’s the full article: http://www.zerohedge.com/news/2014-04-08/cs-warns-volume-demark-raise-topping-threat-stocks

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S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH

Flip to neutral if SPX cannot close below 1844.93.

ImageImageThe idea behind the TD Buy Setup component of TD Sequential is momentum. If the SPX cannot produce 9 consecutive closes lower than 4 bars earlier, then momentum is considered lost and other surrounding timeframes should be consulted. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1865.09, tomorrow’s bullish price flip. 

ImageThe TTM_Squeeze will really get wound up if the SPX continues to hover above the 1840 level for a few more sessions. It is situated where the market can get uncomfortable rather quickly once the break under 1840 becomes a recognition point. 

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH

Flip to neutral if SPX closes above 1841.13 at the close of April 11th (updated April 7th).

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S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH

Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).

 

 

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